Chapter 6

Chapter 6: Global Aspects of Marketing
Multiple Choice - Terminology/Concept

E c
1.
The marketing of goods and services outside an organizations home country

(whether in one or several markets) is known as
a. direct exporting.
c. international marketing.
b. indirect exporting.
d. multinational marketing.
E a
2.
While a(n) ___ firm engages in marketing operations in many foreign countries,
the firms domestic market is still its dominant one.
a. international
c. global
b. exporting
d. glocal
D c
3.
A ___ firm is a worldwide player with the greatest geographic business scope.
a. multinational
c. global
b. international
d. glocal
E c
4.
Countries have different rates of productivity due to their natural resources,

climate, technology, labor costs, and other factors. This represents the countrys
a. differential advantage.
c. comparative advantage.
b. trade surplus.
d. balance of trade.
D d
5.
Which of the following best explains the concept of comparative advantage?

a. Comparative advantage is generally based on economic and demographic
trends.
b. Developing and less-developed countries are potentially attractive due to the
rapid growth of their populations.
c. High competition increases a countrys efficiency in a particular area.
d. Countries with different rates of productivity benefit by exporting products in
which they have high productivity for those in which they have low
productivity.
D a
6.
Which concept forms the economic justification for trade between countries?
a. Comparative advantage
c. Comparative currency values
b. Product life cycle
d. Differential advantage
E d
7.
What percent of the worlds population growth is in developing and lessdeveloped countries?
a. 25
c. 75
b. 50
d. 90
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D a
8.
A company may prolong a products life cycle through international marketing by

exporting a product
a. that is in the mature stage in its home market to a foreign market with high
growth prospects.
b. with high growth in the firms home market to a foreign market with high
growth prospects.
c. to a country with a high standard of living.
d. to a country with a high population growth rate.
E c
9.
The worlds leading importer countries are the United States,

a. Japan, China, and the Phillipines.
b. Germany, Japan, Italy, and Singapore.
c. Germany, China, Great Britain, France, and Japan.
d. Germany, Japan, China, and Vietnam.
E b
10.
The worlds largest importer is

a. Great Britain.
b. the United States.
c. West Germany.
d. Japan.
D b
11.
Which statement about trade deficits is correct?

a. A trade deficit occurs when exports exceed imports.
b. The United States has the greatest merchandise deficit of any country in the
world.
c. In 1980, the United States had its first trade deficit.
d. The dependence of the United States on foreign natural resources has no
effect on its trade deficit.
E b
12.
The amount by which the value of a countrys exports exceeds the value of its
imports is that countrys
a. comparative advantage.
c. trade deficit.
b. trade surplus.
d. import-export balance.
D b
13.
Which of these is NOT a major cause of the U.S. trade deficit?

a. The mediocre image of U.S. products to many U.S. residents
b. The weak U.S. dollar relative to the Euro
c. Manufacturing products in the United States with imported parts and
materials
d. The decision of U.S. firms to virtually exit such markets as televisions and
VCRs
102

D d
14.
Which of these is the most valid explanation for firms committing cultural errors
in international markets?
a. Political instability is difficult to monitor.
b. Products are priced too high for the market chosen.
c. A firm uses a nonstandardized marketing strategy.
d. The firm does not employ foreign personnel in high ranking positions in its
foreign offices.
D b
15.
Which one of the following best represents an illustration of an international

marketing error due to lack of cultural awareness?
a. A product is priced too high, based upon residents economic means.
b. The brand name has an unanticipated double meaning to a countrys
residents.
c. The permit for a factory is delayed due to the need to register plans with a
countrys environmental protection agency.
d. Competition is higher than anticipated due to the start-up of a domestic
competitor.
D a
16.
A firm can best increase its awareness of a foreign countrys culture by

a. hiring foreign nationals.
b. having its domestic marketing research department conduct special studies
for each region.
c. setting up production facilities in foreign countries.
d. entering into export arrangements in foreign countries.
E c
17.
Which of the following best illustrates the definition of a countrys standard of

living?
a. The value of the goods and services produced in a country
b. A countrys gross domestic product per capita
c. The average quantity and quality of goods and services that are owned and
consumed in a country
d. A countrys stability of currency
D d
18.
A countrys per-capita gross domestic product (GDP) figure may be misleading

since
a. it does not reflect a populations size.
b. it does not reflect a countrys trade deficit.
c. it does not reflect a countrys stage of industrialization.
d. a few very wealthy residents may boost per-capita GDP.
103

E a
19.
Countries stages of economic growth are often placed into which three
categories?
a. Industrialized, developing, and less-developed
b. Less-developed, growing, and mature
c. Industrialized, emerging, and pre-industrialized
d. Industrialized, emerging, and growth
E a
20.
Which stage of economic development most accurately characterizes the United

States, Australia, and the nations in Western Europe?
a. Industrialized countries
b. Newly emerging free-market economies
c. Post-industrialized countries
d. Mature countries
E b
21.
In what category of economic growth would a country be placed if it is

characterized by rising education and technology, and per-capita GDP of $4,000
to $9,000?
a. Less-developed countries
c. Emerging countries
b. Developing countries
d. Industrialized countries
E a
22.
Which stage of economic growth best describes the largest number of countries
in Latin America?
a. Developing countries
c. Pre-industrialized countries
b. Less-developed countries
d. Emerging countries
E a
23.
Nations in what stage of economic development have two-thirds of the worlds

population but less than 15 percent of world income?
a. Less-developed
c. Pre-industrialized
b. Developing
d. Emerging
E d
24.
The greatest marketing opportunities generally occur in industrialized countries

because of their
a. high population growth.
b. high currency stability.
c. low degree of product ownership in many product categories.
d. higher incomes and standard of living.
D b
25.
When a foreign country devalues its currency relative to the dollar, it

a. lessens the efforts of nationalism.
b. makes imports more costly to that countrys populace.
c. makes that countrys exports more costly to U.S. residents.
d. increases that countrys trade deficit.
104

D d
26.
Which statement about the effect of currency devaluation on a countrys balance

of trade is correct?
a. A currency devaluation increases a countrys imports.
b. A currency devaluation reduces a countrys exports.
c. A currency devaluation has no impact on a countrys balance of trade.
d. A currency devaluation improves the countrys balance of trade.
E a
27.
A countrys efforts to become self-reliant and raise its status in the eyes of the
world community is best known as
a. nationalism.
c. comparative advantage.
b. trade advocacy.
d. a local content law.
E a
28.
Government stability is generally measured on the basis of

a. consistency of policies and the orderliness in installing leaders.
b. economic growth and currency devaluations.
c. the frequency and magnitude of currency devaluations.
d. a countrys use of embargos and local content laws.
E b
29.
A U.S.-based firm can protect itself from political instability through

a. insurance available through OPEC.
b. insurance available through OPIC.
c. insisting on payment in U.S. dollars.
d. local content laws.
E c
30.
The most common form of trade restriction is a(n)

a. trade quota.
c. tariff.
b. local content law.
d. embargo.
E a
31.
A tax placed on imported goods by a foreign government is a(n)

a. tariff.
c. embargo.
b. levy.
d. trade tax.
E c
32.
The strictest form of trade quota is a(n)

a. local content law.
b. trade protection instrument.
E c
33.
c. embargo.
d. tariff.
What trade restriction encourages manufacturers to establish local plants in

foreign countries?
a. Domestic stability law
c. Local content laws
b. Embargo
d. Trade quota
105

D c
34.
Which form of trade restriction seeks to directly increase local employment?

a. Domestic stability law
c. Local content laws
b. Embargo
d. Trade quota
E b
35.
The concept of reducing impediments to international trade among all nations is

central to the
a. European Community Agreement.
b. World Trade Organization.
c. Overseas Private Investment Corporation.
d. Latin American Integration Association.
E d
36.
The European Union rules call for

a. all members to join the European Free Trade Association.
b. all members to participate in the World Trade Organization.
c. common standards for all products and services to be developed and
implemented with NAFTA.
d. no trade restrictions with members, and a uniform tariff with nonmembers.
D c
37.
Which statement concerning the European Union (EU) is NOT correct?

a. The combined gross domestic product of EU member nations is slightly more
than that of the United States.
b. One of the EUs challenges is to install a common currency, the Euro, across
all of the member counties.
c. The EU agreement calls for increased free trade between EU members and
members of other regional economic communities.
d. The EU agreement seeks common standards to increase the flow of capital
and people.
D c
38.
Which statement concerning the North American Free Trade Agreement

(NAFTA) is NOT correct?
a. NAFTA is within 10 percent of the size of the European Union in terms of
population.
b. The goal of NAFTA is to remove tariffs and other trade restrictions among its
members.
c. Like the EU, there is some movement on a common currency among NAFTA
members.
d. There have been some discussions about including some emerging Latin
American nations in NAFTA.
106

D a
39.
Which one of the following is NOT a basic international organizational format?

a. Management contracting
c. Exporting
b. Joint venture
d. Direct ownership
E c
40.
With which of these organizational formats does a firm reach international

markets by selling directly through its own sales force or indirectly through
foreign merchants or agents?
a. Direct ownership
c. Exporting
b. Management contracting
d. Joint venture
E c
41.
Which of these organizational formats represents a companys lowest level of

commitment to international marketing?
a. Joint venture
c. Exporting
b. Contract manufacturing
d. Direct ownership
E c
42.
Which basic international organizational format enables firms to share expertise,

costs, and/or connections with key persons?
a. Direct ownership
c. Joint venture
b. Management contracting
d. Exporting
D d
43.
Which one of the following is NOT a major advantage of the direct ownership
organizational format for international marketing?
a. Full control over all phases of production and marketing
b. Marketing plans that are sensitive to local needs
c. Potential savings in labor costs
d. Low risk due to nationalism
E a
44.
Which one of the following is a major advantage of a standardized or global

approach to international market planning?
a. Marketing and production economies
b. An image tailored to country or regional preferences
c. High opportunities for input from foreign personnel
d. High sensitivity to local needs
E a
45.
What approach to international marketing works best when a firms foreign

markets are similar to its home country?
a. Standardized
c. Mixed
b. Nonstandardized
d. Direct
107

D d
46.
What international product-planning strategy enables a firm to best capitalize on

economies of scale?
a. Forward invention
c. Backward invention
b. Product adaptation
d. Straight extension
D c
47.
Firms that appeal to developing and less-developed countries often must produce
less complex items for these markets due to poorer consumer education, lower
incomes, and lower education. This strategy best illustrates which productplanning strategy?
a. Straight extension
d. Forward invention
D b
48.
Which international product-planning strategy is the most time consuming and

requires the highest capital investment?
a. Backward invention
c. Straight extension
b. Forward invention
d. Product adaptation
D a
49.
High overlap in media circulation exists among many European countries. Which
international promotion planning strategy best takes advantage of this overlap?
a. Standardized
c. Mixed
b. Nonstandardized
d. Global
E c
50.
A firm sells a product in a foreign country at a price that is considerably lower

than that in the firms home market. This illustrates what type of international
pricing strategy?
c. Dumping
b. Backward invention
d. Psychological pricing
Multiple Choice - Applied/Comprehensive/Integrative

D a
51.
The major difference between international and multinational marketing is that

multinational marketing is more prone to
a. allocate resources without regard to national boundaries.
b. operate only in its home country.
c. use standardized marketing plans.
d. utilize exporting.
108

D a
52.
Low labor costs, preferential climate conditions, and high-quality mineral

deposits are examples of
a. a countrys comparative advantage.
b. conditions in less-developed countries.
c. conditions in industrialized countries.
d. a countrys marketing mix.
D c
53.
What concept is best illustrated when developing countries exchange raw

materials (extracted and semi-processed with low-priced labor) for hightechnology products from industrialized countries?
a. The balance of trade
c. Comparative advantage
b. The product life cycle
d. Nationalism
E d
54.
Although the market for washing machines is mature in the United States, in
many developing countries, home washing machine market penetration is low.
This best illustrates what international marketing concept?
a. Comparative advantage
c. Product differentiation
b. The balance of trade
d. The product life cycle
D a
55.
A U.S. firm decides to sell a lot of discontinued computer products abroad

(rather than sell these products to a discount retailer in the United States)
because the manufacturer
a. does not want to spoil the domestic market for full-price computers.
b. seeks to earn monies on the basis of currency shifts.
c. is concerned about legislation relating to dumping.
d. wishes to expand its sales abroad to take advantage of sales opportunities.
D c
56.
A weak U.S. dollar should have a positive effect on the trade deficit because
a. it reduces U.S. companies price-earnings ratios.
b. it increases a foreign investors tax rate.
c. U.S. exports are less costly, while imports of foreign goods are more costly.
d. U.S. exports are more costly, while import costs are less costly.
E d
57.
The United States should be best able to reduce its trade deficit by
a. insisting on dollars as payment for all foreign transactions.
b. insisting on joint ventures as an alternative to direct ownership.
c. selling its assets in foreign countries to foreign nationals.
d. reducing trade restrictions on U.S. products in foreign markets.
109

D a
58.
A common scenario that often results in international cultural errors is to

a. use a standardized approach to marketing where a nonstandardized approach
is appropriate.
b. use foreign personnel as key inputs in the planning process.
c. develop plans on a decentralized basis, where applicable.
d. rely on marketing research studies that suggest that important cultural
differences exist.
E d
59.
Donuts were originally not popular in some Latin American countries because
residents assumed that someone ate the middle. This illustrates a(n)
a. misunderstanding relative to a countrys economic environment.
b. example of a countrys technological environment.
c. example of nationalism, applied to a food product.
d. lack of cultural awareness of this market.
D c
60.
Which of the following measures allows market analysts to most closely measure
a countrys stage of economic development?
a. The relative costs of a market basket of goods
b. Average household income
c. The proportion of a countrys residents who have incomes within given
ranges
d. Gross domestic product per capita
E b
61.
Over the next ten years, the market for Internet-based telephone services should
probably have the fastest growth rate in what type of countries?
a. Post-industrial
c. Developing
b. Industrialized
d. Subsistence
E d
62.
The major attraction of industrialized countries as a target market is their

a. high population growth rate.
b. high market penetration rate for most products.
c. relatively low tariffs on all imported goods.
d. high standard of living.
D a
63.
The market for central air conditioning is primarily an industrial good in a

developing country. It is primarily a consumer good in a(n)
a. industrialized country.
c. developing country.
b. post-developing country.
d. less-developed country.
110

D b
64.
In the short run, consumer-goods manufacturers will generate their greatest sales
in ___ countries; their long-run sales potential will probably be greater in ___
countries.
a. developing, less-developed
c. less-developed, developing
b. industrialized, less-developed
d. less-developed, industrialized
D d
65.
A firm seeking untapped markets with the greatest long-term marketing

opportunities from a broad variety of goods and services should seek distribution
in ___ countries.
a. industrialized
c. developing
b. pre-industrialized
d. less-developed
E d
66.
Physical distribution facilities are poorest for countries at which stage of

economic development?
a. Industrialized
c. Developing
b. Pre-industrialized
d. Less-developed
D c
67.
A U.S.-based firm consolidates all foreign sales and profits in its profit-and-loss
statement. The sales are made in a foreign currency but reported in U.S. dollars
in the firms profit-and-loss statement. An important subsidiary exists in a foreign
country where the currency has just been devalued, relative to the U.S. dollar, by
50 percent. What effect will the currency devaluation have on the reporting of
the subsidiarys sales (in U.S. dollars)?
a. Sales will be increased by 50 percent.
b. Sales will be reduced by 30 percent.
c. Sales will be reduced by 50 percent.
d. Sales will be reduced by 70 percent.
Questions 68 and 69 are linked to this scenario: A small manufacturer of consumer food
products seeks to increase its international sales. The firms marketing manager has been
assigned by the firms president to examine the economic environment of several regions,
with particular emphasis on currency devaluations.
D b
68.
In general, currency devaluations are LEAST likely to occur in what type of

country?
a. Underdeveloped
c. Developing
b. Industrialized
d. Less-developed
111

E b
69.
What pricing strategy can the firm use to reduce the risk of currency
devaluations?
a. Set all prices in a foreign countrys currency.
b. Set all prices in U.S. dollars.
c. Set all prices in a foreign currency at the official exchange rate (based on the
actual U.S. dollar price).
d. Set all prices in a foreign currency at the unofficial (black market) exchange
rate (based on the desired U.S. dollar price).
D c
70.
A U.S. manufacturer opening a manufacturing plant in a foreign country with

high political stability should seek to reduce its risk through
a. hiring foreign nationals as key executives.
b. undertaking a joint venture with another U.S. partner.
c. utilizing exporting as a form of company organization.
d. borrowing funds from a U.S. bank.
D a
71.
A less-developed nation wants to stimulate foreign investment, to reduce its

unemployment, and to encourage its manufacturing industries to grow. Which
form of trade restriction best accomplishes these multiple objectives?
a. Local content laws
c. Embargos
b. Quotas
d. Tariffs
D d
72.
Which statement concerning the World Trade Organization (WTO) is NOT

correct?
a. The WTO is the only international organization dealing with the global rules
of trade between nations.
b. The WTO has replaced GATT.
c. The WTO has a trade dispute settlement process among its member nations.
d. The WTO seeks to promote free trade among members of the same
economic community.
D c
73.
Which statement concerning the European Union (EU) is NOT correct?

a. The combined gross domestic product (GDP) of the EU nation members is
more than the GDP for the United States.
b. The EU is seeking to remove both economic (tariff-based) and noneconomic
barriers to trade among its members.
c. The EU agreement will result in no significant improvement on delays caused
by Customs Office inspections among member countries.
d. The combined population of EU members is greater than that of the United
States.
112

Questions 74 and 75 are linked to this scenario: A small U.S.-based manufacturer of
electronics has decided to market some of its products in international markets.
D b
74.
The firm has low financial resources, and realizes significant cost savings in
manufacturing through economies of scale. In addition, it wishes to limit its
financial exposure in the event that its products are not accepted in its new
international markets. What form of company organization should you
recommend?
a. Direct ownership
c. Joint venture
b. Exporting
d. Management contracting
D a
75.
What type of company organization should you recommend for the manufacturer
as a means of complying with local content laws? The manufacturer desires to
minimize its total investment, as well as its financial risk and is now willing to
raise its prices to reflect the higher production costs.
a. Joint venture
c. Direct ownership
b. Exporting
d. Licensing
D b
76.
Local content laws are best satisfied by which form of joint venture?
a. Exporting
c. Joint ownership
b. Contract manufacturing
d. Direct ownership
D b
77.
Which approach to international marketing is most appealing to a firm that plans

to be a low-cost provider?
a. Nonstandardized approach
c. Mixed approach
b. Standardized approach
d. Joint venture
D a
78.
Which approach to international marketing is most likely to be insensitive to a

countrys cultural environment?
a. Standardized approach
c. Mixed approach
b. Nonstandardized approach
d. Joint venture
D b
79.
Which approach to international marketing involves decentralized planning and

implementation?
c. Mixed approach
d. Joint venture
D b
80.
Which approach to international marketing is the most costly to implement?

c. Mixed approach
d. Joint venture
113

D d
81.
A firm has one automated plant for its multiple markets (to maximize production
economies) but tailors promotional efforts to reflect differences in major foreign
markets. This illustrates a
a. product adaptation strategy.
c. nonstandardized approach.
b. standardized approach.
d. glocal marketing approach.
E a
82.
Which product planning strategy is most compatible with a standardized

approach to market planning?
a. Straight extension
E b
83.
Which international product-planning strategy enables a firm to lower its total

production costs?
a. Product adaptation
b. Straight extension
E d
84.
Which of these international product-planning strategies is most likely to be used

by firms that engage in exporting?
c. Product adaptation
E a
85.
Which approach to product planning is most often used in developing and lessdeveloped countries?
c. Product adaptation
D a
86.
Which approach to product planning is most often used by a firm with a large
financial commitment to a nonstandardized approach?
b. Backward invention
d. Product adaptation
E a
87.
In some markets, goods are transshipped from one channel member to another
without the knowledge or permission of the manufacturer. What area of
international marketing is most affected by transshipment?
a. Distribution planning
c. Price planning
b. Promotion planning
d. Product planning
114

D d
88.
A cosmetics manufacturer markets products in Europe. The firm advertises in a

French-language television network that reaches beyond France, its primary
target market, to several additional countries. Which approach to promotion
planning should the firm use?
a. Mixed
c. Nonstandardized
b. Brand extension
d. Standardized
E a
89.
The standardization of prices in international marketing is most likely to occur

when
a. two or more countries both belong to an economic community, such as the
European Union.
b. one country is industrialized; the other is less developed.
c. transportation costs between countries are high.
d. a forward product planning strategy is used.
D d
90.
A firms pricing strategy is LEAST likely to be standardized when a firm employs

which of the following international marketing strategies?
b. Centralized approach
d. Dumping
True-False - Terminology/Concept
D T
91.
Large multinational companies often allocate their resources without regard to

national boundaries, even though they have a home country in terms of
ownership and top management.
E F
92.
The concept of comparative advantage assumes that countries have equal rates
of productivity for a wide variety of goods and services.
E F
93.
The majority of world population growth is in industrialized countries.
E T
94.
Products are often in different stages in the product life cycle in different
countries.
E F
95.
The United States is the worlds largest importer and third-largest exporter.
E T
96.
While the United States has a trade deficit with regard to goods, it has a trade
surplus with regard to services.
E T
97.
Trade restrictions in foreign markets contribute to the U.S. trade deficit.
115
D F
98.
A rise in the value of the Japanese yen relative to the U.S. dollar should increase
the U.S. trade deficit with Japan.
D F
99.
By operating out of a home office with little local foreign input, a firm can gain a
great awareness of foreign cultures.
D T
100.
Conducting marketing research in less-developed nations is particularly difficult.
D T
101.
A multinational firm can increase its cultural awareness through decentralizing

marketing personnel by region or country.
E T
102.
One way of measuring the relative standard of living in a country is to measure

ownership and consumption of selected goods in selected countries.
E T
103.
Industrialized nations have the highest degree of literacy and the highest percapita income.
E F
104.
The largest portion of the worlds population lives in developing countries.
E F
105.
In general, the greatest marketing opportunities occur in developing countries

due to their high population growth.
D T
106.
A country can reduce its trade deficit through devaluing its currency.
E T
107.
A country with a high degree of nationalism may seize the assets of multinational
firms or revoke a foreign firms license to operate.
E F
108.
Risks of nationalism, such as asset takeover and the prevention of transfer of

funds, cannot be insured through the Overseas Private Investment Corporation.
E F
109.
The most common form of foreign trade restriction is a local content law.
D T
110.
Local content laws attempt to increase investment and to provide employment in

a foreign country.
E F
111.
The main contribution of the World Trade Organization (WTO) is the economic
community exclusion.
D T
112.
While the European Union was successful in adopting plans for greater
standardization, it has not been able to enact a common currency.
116
D T
113.
A firm can generally satisfy local content laws through a joint venture.
D F
114.
Direct ownership is the most suitable form of overall company organization

when nationalism risks are high.
D T
115.
Of the three different forms of international marketing company organization,

direct ownership offers the highest degree of control to the company.
D T
116.
A nonstandardized approach to international marketing generally has marketing

and production diseconomies because of variations in product design, assembly,
advertising, and packaging.
D F
117.
A straight extension product-planning strategy is a form of a nonstandardized

marketing plan.
D F
118.
A forward invention product-planning strategy generally involves a lower

investment and lower risk than a product adaptation strategy.
E T
119.
Physical distribution facilities are typically poorer in developing countries than in

industrialized countries.
E F
120.
In dumping, foreign firms sell their products for below cost in both their home
and foreign markets.
True-False - Applied/Comprehensive/Integrative
E F
121.
International marketing is a more complex form of multinational marketing.
D T
122.
The comparative advantage of a country is a similar concept to the differential

advantage of an individual firm.
D F
123.
A major reason for the U.S. trade deficit is that the United States has significant
comparative advantages for a variety of products.
D T
124.
A country can generally lower its trade deficit through trade restrictions.
D F
125.
A country could generally increase its trade deficit through a currency

devaluation.
117
D T
126.
Most of the problems associated with a companys researching the cultural

environments of foreign markets pertain to less-developed and developing
countries, not to industrialized countries.
E F
127.
A firm can improve its cultural awareness by using market research specialists at
its headquarters location.
E T
128.
Color preferences by Chinese consumers for red and black can represent a
cultural opportunity to international marketers.
D F
129.
The standard of living in a country is based upon production while the gross
domestic product is based upon consumption.
D F
130.
Currency devaluation (the decline of a foreign currencys value in relation to the

U.S. dollar) is likely to increase the standard of living and reduce the inflation
rate in the foreign country.
D T
131.
The greatest marketing opportunities in developing countries are based upon

their high population growth rates and low ownership rates for many durable
products.
D F
132.
By requiring payment in Mexican pesos, a U.S. firm can pass on the risks of
currency devaluation of pesos to its Mexican consumers.
E F
133.
All risks of nationalism can be protected through insurance.
E F
134.
The most severe action a country can take to restrict foreign products from
entering its market is a trade quota.
D F
135.
Local content laws can often result in a firms being more likely to commit
cultural blunders in its international markets.
D T
136.
Local content laws are more likely to be used by developing than by

industrialized countries.
E T
137.
The goal of the European Union (EU) is to have an open marketplace, free of all
trade restrictions among its members.
E T
138.
As a result of the North American Free Trade Agreement (NAFTA), the flow of
goods and services among the United States, Canada, and Mexico has increased.
118
D F
139.
Marketing plans are most sensitive to a foreign markets unique needs in the
exporting company organization form.
D T
140.
A joint venture is an appropriate form of company organization when the risk of

cultural errors is high.
D T
141.
Exporting, licensing, and contract manufacturing are more suitable forms of joint
ventures than joint ownership where the risk of nationalism is high.
D T
142.
Contract manufacturing agreements are usually in accord with local content

laws.
E F
143.
Direct ownership is an appropriate form of international company organization

when the risk of nationalism and political instability is high.
D F
144.
A firms market research study indicated that value (low price relative to product
quality) was the most important attribute to international consumers in all of its
key markets. The firms most appropriate strategy in market planning should be a
glocal approach.
D F
145.
Differences in measurement systems between the United States and other

countries of the world may require that U.S. firms use a straight extension
strategy for product planning.
D F
146.
A firm decided that while a straight extension strategy was most appropriate,
promotional appeals for its clothing products had to be changed based upon
cultural differences. Style was more important in some countries, fit in others,
and durability in others. A pure standardized approach to market planning is most
appropriate.
D T
147.
Backward invention is an example of a product adaptation strategy.
E T
148.
Unlike some other parts of an international marketing strategy, distribution

planning often requires the development of long-term relationships.
D T
149.
The degree of standardization in promotion planning needs to reflect the

spillover of promotions across different countries that have different cultures.
D T
150.
Predatory pricing relates to a firms selling goods below cost in an attempt to

destroy competitors. Dumping is a special case of predatory pricing.
119
Essay
151.
Differentiate between international and multinational marketing.
152.
a. How can the concept of comparative advantage be used to explain the reason
for international trade?
b. What are the comparative advantages of a developing country versus an
industrialized country? Explain your answer.
153.
a. What actions could the U.S. undertake to lower its trade deficit with China?
b. What should Chinese firms do about the trade deficit? Why?
154.
a. What are the special obstacles to conducting international marketing

research?
b. Discuss several appropriate ways for a firm to conduct cultural research in
less-developed countries. Include the advantages and disadvantages of each
alternative.
155.
a. Explain the concept of currency stability. Describe the effect of devaluation

(a reduction in a foreign currencys value in relation to the U.S. dollar) on a
host countrys balance of payments and on foreign firms that operate in that
country.
b. How can an international company minimize the possible adverse effects of
currency instability in a foreign currency?
156.
a. Comment on the economic implications of the North American Free Trade

Agreement (NAFTA).
b. What are the different ramifications for NAFTA member nations and for firms
in countries not belonging to NAFTA?
157.
Under what circumstances should a firm use an exporting form of company

organization? Direct ownership? A joint venture? Explain your answers.
158.
You have been asked to study the market for dishwasher detergents in Latin
America. Your client, a U.S.-based large appliance manufacturer, is particularly
interested in whether it should use a standardized, nonstandardized, or glocal
approach for its international marketing efforts. Develop a checklist to be used in
comparing the alternatives.
159.
What are the pros and cons of the four international product-planning strategies?
160.
Discuss the major issues in developing an international distribution strategy. How

do these issues differ from distribution planning in the domestic market?
120

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Chapter 6: Global Aspects of Marketing

Multiple Choice - Terminology/Concept

The marketing of goods and services outside an organizations home country

Countries have different rates of productivity due to their natural resources,

Which of the following best explains the concept of comparative advantage?

Chapter 6: Global Aspects of Marketing

Multiple Choice - Terminology/Concept

A company may prolong a products life cycle through international marketing by

The worlds leading importer countries are the United States,

The worlds largest importer is

Which statement about trade deficits is correct?

Which of these is NOT a major cause of the U.S. trade deficit?

Chapter 6: Global Aspects of Marketing

Multiple Choice - Terminology/Concept

Which one of the following best represents an illustration of an international

A firm can best increase its awareness of a foreign countrys culture by

Which of the following best illustrates the definition of a countrys standard of

A countrys per-capita gross domestic product (GDP) figure may be misleading

Chapter 6: Global Aspects of Marketing

Multiple Choice - Terminology/Concept

Which stage of economic development most accurately characterizes the United

In what category of economic growth would a country be placed if it is

Nations in what stage of economic development have two-thirds of the worlds

The greatest marketing opportunities generally occur in industrialized countries

When a foreign country devalues its currency relative to the dollar, it

Chapter 6: Global Aspects of Marketing

Multiple Choice - Terminology/Concept

Which statement about the effect of currency devaluation on a countrys balance

Government stability is generally measured on the basis of

A U.S.-based firm can protect itself from political instability through

The most common form of trade restriction is a(n)

A tax placed on imported goods by a foreign government is a(n)

The strictest form of trade quota is a(n)

What trade restriction encourages manufacturers to establish local plants in

Chapter 6: Global Aspects of Marketing

Multiple Choice - Terminology/Concept

Which form of trade restriction seeks to directly increase local employment?

The concept of reducing impediments to international trade among all nations is

The European Union rules call for

Which statement concerning the European Union (EU) is NOT correct?

Which statement concerning the North American Free Trade Agreement

Chapter 6: Global Aspects of Marketing

Multiple Choice - Terminology/Concept

Which one of the following is NOT a basic international organizational format?

With which of these organizational formats does a firm reach international

Which of these organizational formats represents a companys lowest level of

Which basic international organizational format enables firms to share expertise,

Which one of the following is a major advantage of a standardized or global

What approach to international marketing works best when a firms foreign

Chapter 6: Global Aspects of Marketing

Multiple Choice - Terminology/Concept

What international product-planning strategy enables a firm to best capitalize on

Which international product-planning strategy is the most time consuming and

A firm sells a product in a foreign country at a price that is considerably lower

Multiple Choice - Applied/Comprehensive/Integrative

The major difference between international and multinational marketing is that

Chapter 6: Global Aspects of Marketing

Multiple Choice - Applied/Comprehensive/Integrative

Low labor costs, preferential climate conditions, and high-quality mineral

What concept is best illustrated when developing countries exchange raw

A U.S. firm decides to sell a lot of discontinued computer products abroad

Chapter 6: Global Aspects of Marketing

Multiple Choice - Applied/Comprehensive/Integrative