TEST BANK for International Marketing, 18th Edition Cateora, Graham, Gilly, Money by StudyGuide

TEST BANK International Marketing, 18th Edition Philip Cateora, John Graham, Mary Gilly, Bruce Money

TABLE OF CONTENTS Part One an Overview1. The Scope and Challenge of International Marketing CHAPTER 2. The Dynamic Environment of International Trade Part Two The Cultural Environment of Global Market CHAPTER 3. History and Geography: The Foundations of Culture CHAPTER 4. Cultural Dynamics in Assessing Global Markets CHAPTER 5. Culture, Management Style, and Business Systems CHAPTER 6. The Political Environment: A Critical Concern CHAPTER 7. The International Legal Environment: Playing by the Rules Part Three Assessing Global Market Opportunities CHAPTER 8. Developing a Global Vision through Marketing Research CHAPTER 9. Economic Development and the Americas CHAPTER 10. Europe, Africa, and the Middle East CHAPTER 11.The Asia Pacific Region

Part Four Developing Global Marketing Strategies CHAPTER 12. Global Marketing Management: Planning and Organization CHAPTER 13. Products and Services for Consumers CHAPTER 14. Products and Services for Businesses CHAPTER 15. International Marketing Channels CHAPTER 16. Integrated Marketing Communications and International Advertising CHAPTER 17. Personal Selling and Sales Management CHAPTER 18. Pricing for International Markets Part Five Implementing Global Marketing Strategies CHAPTER 19. Inventive Negotiations with International Customers, Partners, and Regulators

International Marketing, 18e (Cateora) Chapter 1 The Scope and Challenge of International Marketing 1) Today, becoming international is a luxury only some companies can afford. 2) Companies from the Netherlands are the leading group of investors in the United States. 3) International marketing involves selling of a company's goods and services to consumers or users in more than one nation for a profit. 4) The main difference between domestic and international marketing lies in the different concepts of marketing. 5) An international marketer must deal with at least two levels of uncontrollable uncertainty. 6) The geography and infrastructure of a country are uncontrollable factors that influence the business decisions of a company in an international market. 7) The uncontrollable factors affecting international marketing are limited to political forces, economic climate, and competitive structure. 8) The level of technology in a country is a controllable element for international marketers. 9) The uncontrollable factors a company has to deal with decrease with the number of foreign markets in which it operates. 10) The controllable elements for marketers can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. 11) Political and legal forces, economic climate, and competition are some of the domestic environment's controllable factors. 12) The foreign policies of a country are one example of a home-country element that has a direct effect on a firm's international marketing success. 13) Abolition of apartheid in South Africa is an example of a positive effect on foreign policy, an uncontrollable element, in an international marketing scenario. 14) Commercial contracts with a Chinese company can only be entered into if that company is considered a "legal person." 15) The process of evaluating the uncontrollable elements in an international marketing program may involve cultural, political, and economic shock. 16) Level of technology typically remains unchanged across countries, making it a fairly controllable factor in international marketing. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) Political and legal issues a company may face abroad are mitigated by the "alien status" of the company. 18) The political details and the ramifications of political and legal events are often more transparent in a domestic situation than they are in a foreign market. 19) The political/legal environment is a controllable element for international marketers because of their potent ability to lobby and influence legislation in foreign markets. 20) The uncontrollable elements of the foreign business environment include the culture. 21) A foreign company is always subject to the political whims of the local government to a greater degree than a domestic firm. 22) John refuses to buy Japanese products because he considers this as a way of selling out to a nation that was once our enemy. John is using a self-reference criterion to make his decision. 23) The self-reference criterion is closely related to collectivism—or the importance of the group. 24) Renata just ate cookies and, therefore, feels justified in refusing food offered by her Middle Eastern host. In this instance, Renata's self-reference criterion has just saved her from making a cultural blunder. 25) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that emphasizes the need for ethnocentrism. 26) Family reference and upbringing provides a complete basis for understanding one's culture and no additional study is required to become aware of cultural norms and activities. 27) The most effective approach to build global awareness into an organization is to increase the diversity mix of the employee profile for entry-level jobs. 28) Traditional manufacturing companies possess the most favorable factors for doing business internationally. 29) A company in the "no direct foreign marketing" stage of international marketing involvement does not actively cultivate customers outside national boundaries. 30) The global marketing concept views the marketplace as consisting of one primary domestic market that is complimented by several smaller regional markets.

31) What is one of the most dynamic trends that is affecting current global business strategies? A) the trend toward buying American cars in Europe B) the trend toward the acceptance of the free market system among developing countries C) the trend toward using English as the global language D) the trend toward establishing a world currency E) the trend toward providing aid to developing and less developed nations 32) What event spurred the final downfall of the U.S. economy in 2008 when world trade experienced its deepest decline in more than 50 years? A) The stock market ended at a record high. B) The U.S. and Cuba joined forces. C) The Senate and House failed to compromise on interest rates. D) The housing market collapsed. E) The voters elected a third-party candidate. 33) How has globalization impacted domestic markets in the United States? A) Companies with only domestic markets have been able to sustain their customary rates of growth. B) Multinational companies are making more profits from their domestic operations compared to their earnings from the foreign markets. C) Only multinational companies with large production facilities have outperformed their strictly domestic U.S. counterparts. D) The domestic companies have reduced their manufacturing employment more than U.S. multinationals. E) Multinational manufacturing companies in all industries and sizes have outperformed their domestic counterparts. 34) What is an essential requirement for experienced, as well as new, firms to succeed in international markets? A) adhering strictly to their traditional methods of production and operations B) focusing primarily on their production to exclusively meet domestic demand C) venturing into multiple markets by investing in all of them at once D) committing themselves completely to foreign markets E) having beneficial relations with lobbyists of foreign markets 35) Jason's department is responsible for the business activities designed to plan, price, promote, and direct the flow of his company's small appliance products to consumers in various nations around the world for a profit. What is his department in charge of? A) internal marketing B) importing C) performance appraisal D) international marketing E) domestic trade

36) What is considered the most critical difference between domestic marketing and international marketing? A) the difference in marketing principles being followed B) the different concepts of marketing C) the difference in marketing theories being followed D) the environment in which marketing plans must be implemented E) the basic processes used to market products and services 37) Marketers must be especially cognizant of ________ for both domestic and international markets because of the dominantly uncontrollable nature of this factor. A) price B) promotion C) research activities D) political/legal forces E) channels of distribution 38) ________ is a controllable element for an international marketer. A) Level of technology B) Geography and infrastructure C) Channels-of-distribution D) Cultural forces E) Competitive forces 39) What is an uncontrollable element for an international marketer? A) firm characteristics B) channels-of-distribution C) price D) research E) level of technology 40) For an international marketer, the ________ can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. A) competitive structure B) economic climate C) structure of distribution D) environmental factors E) controllable elements 41) Ian works for a sports equipment manufacturer in Boston and is responsible for shipping products across the United States. What is one factor that would be uncontrollable for Ian? A) firm characteristics B) competitive structure C) channels of distribution D) price of the product E) promotional measures 4 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

42) Which political action is most likely to favor international marketing? A) placing trade embargoes on Cuba owing to widespread political instability in the country B) the U.S. government placing a trade ban on Libya owing to rampant terrorism C) South Africa abolishing apartheid and the U.S. lifting the embargo D) tariff hike for imports established by China E) the U.S. government coupling human rights issues with foreign trade policy 43) What is an accurate description of the relationship between international business and domestic business? A) The domestic economic climate has no effect on a company's competitive position in foreign markets. B) Domestic businesses must focus on capital mobility toward international businesses before capital generation. C) Countries must not restrict foreign investment even if domestic economic conditions deteriorate. D) The ability to invest abroad is to a large extent a function of domestic economic vitality. E) Domestic businesses are more viable than international businesses as capital tends to move toward minimum use. 44) How can "alien status" unfavorably affect a company? A) prejudiced treatment by the host country's politicians and legal authorities B) an inflated balance of trade C) a sharp rise in domestic and international demand D) lower trade tariffs in the host country E) an economic situation of the magnitude of the Great Depression 45) With respect to the environment in which a business operates, factors such as competition, political and legal forces, and economic climate would all be classified as A) controllable elements. B) uncontrollable elements. C) tractable elements. D) demographic elements. E) cultural elements. 46) ________ is a controllable element in both domestic and international marketing environments. A) Economic climate B) Competition within the home country C) Price of products D) Political force E) Foreign policy

47) The marketing tasks of an international marketer differ from that of a domestic marketer as the A) international marketer has fewer uncontrollable elements to deal than a domestic marketer. B) level of technology and cultural forces are controllable elements for the international marketer. C) structure of distribution is an uncontrollable element for the international marketer. D) competitive structure is one of the controllable factors for an international marketer. E) international marketer is less concerned about geography and infrastructure than the domestic marketer. 48) Kelly Reeves is in charge of a new marketing effort directed toward Peru. In order for her company to market effectively and distribute to all of Peru's major cities, Kelly must devise a logistics plan for crossing the Andes Mountains on a daily basis. Which of these foreign environment uncontrollable variables would be a chief concern as Kelly devises her firm's logistics plan? A) price B) product C) geography and infrastructure D) promotional strategies E) channels of distribution 49) Compared to the foreign environment variables, which of the following uncontrollable variables is least likely to affect a domestic marketer? A) political forces B) competitive structure C) economic climate D) cultural forces E) legal forces 50) Angelica Wu is preparing a marketing plan for her company for the upcoming year's business activities. She knows that she should begin her plan by examining the variables she has some control over. These controllable variables would include price, product, channels-ofdistribution, and A) level of technology. B) political forces. C) competition. D) economic climate. E) promotion.

51) M&G Inc., a company producing musical instruments, had dominated its home market for several years before venturing into international markets. The company was focusing more on international operations until Beige N, a German company in the same business, entered its home market. Beige N started selling good quality products at prices much lower than M&G's and affected its sales adversely. Which of the following elements in the marketing environment has affected the business of M&G Inc. with the market entry of Beige N? A) level of technology B) structure of distribution C) competition in the domestic market D) cultural forces E) promotion of the product 52) Shondra McDonald, a marketing manager at a hearing aid manufacturing firm, is asked to review the marketing opportunities of her company in a foreign market. She is aware that she can modify certain elements of the marketing environment to suit the foreign market needs. She focuses her attention on the uncontrollable factors that might affect the firm's business prospects. Which of the following uncontrollable elements is most likely to affect the company's business prospects in the foreign market? A) pricing policies in the domestic market B) research methodologies used by her company C) promotional activities required to market the product D) level of technology in the targeted market E) product distribution channels adopted by his company 53) The uncontrollable issue of ________ faced by a company abroad is often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. A) research B) channel of distribution C) product specification D) politics E) product promotion 54) Which scenario best illustrates the political and legal issues faced by companies because of their "alien status" when they attempt to do business in foreign countries? A) a company doing moderate business in international markets because of violent history of its home country B) a company being forced by the local government to share its core competencies in order to continue doing business C) a product not being widely accepted in the foreign market because of its irrelevance to the customers D) a company utilizing an identical promotional campaign it used in the domestic country E) a company not succeeding in a foreign market because its product pricing is above the purchasing power of the local customers

55) Adaptation on the part of an international marketer is best described as A) a conscious effort to make themselves aware of the home cultural reference in their analyses and decision making. B) a conscious effort to anticipate the influences of both the foreign and domestic uncontrollable factors on a marketing mix and then to adjust the marketing mix to minimize the effects. C) the notion that people in one's own company or country know best how to do things. D) the process of identifying the similarities that exists between the domestic and foreign markets. E) an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions and then to adjust the marketing mix in order to closely reflect these decisions. 56) A natural off shoot of a person's self-reference criterion is ________ that also creates a concern for the international marketer. A) sympathy B) self-actualization C) ethnocentrism D) empathy E) collectivism 57) ________ is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. A) Xenocentrism B) Holism C) Self-reference criterion D) Segregation E) Orientalism 58) People seldom stop to think about a reaction; they simply react. Thus, when faced with a problem in another culture, their tendency is to react instinctively and refer to their ________ for a solution. A) self-space principle B) segregation principle C) integration criterion D) space command criterion E) self-reference criterion 59) Parul believes that her culture and country know how to do things best and she looks down on the cultural habits of other countries. What is Parul exhibiting? A) differentiation B) marketing myopia C) ethnocentrism D) multiculturalism E) pluralism

60) What characteristic would impede the ability of a person to assess a foreign market in its true light? A) polycentrism B) pluralism C) xenocentrism D) ethnocentrism E) relativism 61) Brett, who is from Ohio, has taken a job in Thailand. Last week, he was confronted with a personnel issue and resolved it by saying that "In the U.S., you would be given one warning and then fired for this type of behavior." Brett did not take into account that company standards might differ in Thailand and the employee was acting appropriately. Which obstacle to international marketing does this demonstrate? A) collectivism B) self-reference criterion C) tragedy of the commons D) individualism E) marketing myopia 62) The most effective way to control the influence of ethnocentrism and the self-reference criterion is to A) reduce interaction with a culturally diverse audience. B) design products and services in a traditional manner. C) recognize their effects on our behavior. D) learn at least two foreign languages to understand the cultural differences. E) establish beneficial relations with the host country's government. 63) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion (SRC) influences. What is the first step in this analysis? A) redefining the problem without the SRC influence B) solving the problem for the optimum business goal situation C) isolating the SRC influence in the problem D) defining the business problem or goal in home-country cultural traits, habits, or norms E) examining the isolated SRC influence to see how it complicates the problem 64) Why does understanding one's own culture require additional study? A) to find out why cultural traits in one's own country does not affect market behavior B) because much of the cultural influence on market behavior is at the subconscious level C) since without which, understanding the cultural traits of one's own country is impossible D) because an average manager must have extensive cultural knowledge of all countries in the world E) because cultural influence on one's own market behavior is generally minimal

65) A globally aware manager is characterized by A) using one's home culture's values alone to market one's products in foreign countries B) accepting the cultural ways of another individual as his or her own C) tolerating cultural differences and allowing others to be different and equal D) discarding one's home culture's standards to adopt the global cultural standards E) controlling any influences that the global cultural standards may have on the marketing process 66) Tomas is a manager at a frozen food company and wants to understand the way people in different countries think and act so that the company can respond to their needs appropriately. What is the best aid he can use to accomplish this? A) a sound financial background B) better political connections C) an understanding of foreign investment opportunities D) an understanding of macroeconomics E) knowledge of the foreign country's history 67) What is the most effective way to achieve organizational global awareness? A) hiring entry-level employees based on the sole criterion of global awareness B) organizing frequent employee trips to foreign cultures to increase their sensitivity C) increasing the diversity mix of the front-level employee profile D) having a culturally diverse senior executive staff or board of directors E) promoting social networking as a means to improve inter-cultural communication 68) Which firm seems better equipped for internationalization? A) a firm that sells its products only to those foreign customers who directly contact the firm B) a firm that has a production capacity that is larger than home market demand C) a firm that focuses its production activities on meeting the demands in the home market D) a firm that has a culturally diverse employee profile but few competitive offerings at the global level E) a firm that has little intention of maintaining a continuous market representation 69) Which firm has a better chance of accelerating the internationalization process? A) Box-Co has key managers well-networked internationally. B) Ironworks International uses more traditional manufacturing practices. C) Piano Plus primarily focuses all its operations and production capacities to meet the domestic market needs. D) Animal Awareness and Action refrains from using the Internet as its major communication platform. E) Kenilworth Karts has larger home markets and smaller production capacities.

70) When considering the stages of international marketing involvement, it is important to remember that A) a firm essentially progresses through the stages in a linear order. B) the international marketing stage is a direct result of temporary surpluses caused by variations in production levels or demand. C) a larger home market with a smaller production base favors internationalization. D) a firm may be in more than one stage simultaneously. E) at the global marketing level, a firm focuses on market segmentation based on geographical borders. 71) In the context of stages of international marketing involvement, a company's product reaches a foreign market without any conscious effort on the part of a marketer during which stage of the process? A) infrequent foreign marketing stage B) regular foreign marketing stage C) no direct foreign marketing stage D) international marketing stage E) global marketing stage 72) Watson's, a firm that specializes in dog food and grooming products, has a very wellestablished domestic market. The company does not actively sell its products outside national borders but provides goods to customers who contact them directly or place orders with them through the Internet. Watson's is currently in the ________ stage of international marketing involvement. A) frequent foreign marketing B) active foreign marketing C) global marketing D) regular foreign marketing E) no direct foreign marketing 73) While Heidi's company does not typically sell internationally, they have a temporary surplus in the small appliances they manufacture and decide to promote them in other countries. Which stage of international marketing involvement does this represent? A) infrequent foreign marketing stage B) regular foreign marketing stage C) no direct foreign marketing stage D) international marketing stage E) global marketing stage 74) Natasha's company seeks markets all over the world and attempts to sell products that are a result of planned production for markets in various countries. Which stage best characterizes the stage of international marketing involvement for Natasha's company? A) infrequent foreign marketing B) domestic marketing C) no direct foreign marketing D) international marketing E) internal marketing 11 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

75) Marta's company treats the world, including the home market in Spain, as one market. Market segmentation decisions no longer focus on national borders. Instead, market segments are defined by income levels, usage patterns, and other factors that span countries and regions. Which of the following stages best characterizes the stage of international marketing involvement for Marta's company? A) infrequent foreign marketing B) test marketing C) no direct foreign marketing D) internal marketing E) global marketing 76) Kentax Corporation makes industrial cleaning products and decides to enter the international marketing arena by marketing its products to China, Japan, and South Korea, with separate marketing strategies for each country. Which of the following approaches is most likely used by Kentax Corporation to formulate its international policies and strategies? A) domestic market extension B) multidomestic market C) mass marketing D) regional marketing E) standardized marketing 77) What factor is favorable when determining whether or not a company should consider internationalization efforts? A) A company currently has large home markets but smaller production capacities. B) A company has home country managers who have never worked outside of the home country. C) A company wants to pair with an existing international company to access technology. D) A company has minimal storage and transportation capabilities. E) A company has high-technology resources already in place. 78) What is true of firms in the first two stages of international marketing involvement—no direct foreign marketing and infrequent foreign marketing? A) They do not begin internationalization at these stages. B) They take a strategic approach to decision making regarding international expansion. C) They are more reactive in nature and embark on internationalization without planning. D) They intend to maintain a continuous market representation in foreign markets. E) They are a result of dedicated production capacity maintained for foreign markets. 79) In what stage of international marketing involvement do companies primarily focus all their operations and production to service domestic market needs, even though they have a permanent productive capacity devoted to the production of goods to be marketed in foreign markets? A) no direct foreign marketing B) internal marketing C) regular foreign marketing D) international marketing E) financial marketing 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

80) In the infrequent foreign marketing stage of international marketing involvement, firms A) sell products that are a result of planned production in markets in various countries. B) no longer make market segmentation decisions on the basis of national borders. C) have a global perspective and view the entire world as one market. D) have more than half their sales revenues coming from international markets. E) have no intention of maintaining continuous market representation in foreign markets. 81) A firm that is involved with the international marketing stage of marketing involvement will A) have its primary focus of operations and production on servicing domestic market needs. B) reduce foreign sales activity. C) consider profit expectations from foreign markets as a bonus in addition to regular domestic profits. D) plan both marketing and production of goods outside the home market. E) consider international marketing only when there is a surplus of goods. 82) What is the most profound change for firms at the global marketing stage of internationalization? A) More than half of the multinational firm's revenue is generated from domestic markets. B) Sales to foreign markets are made as and when goods become available. C) Temporary surpluses marketed in foreign markets is the only element of internationalization. D) Companies treat the world, along with home market, as one market. E) Domestic demand always exceeds the firm's production capacity. 83) Which one of the following firms/products reflects a global marketing orientation? A) skin-care products aimed at African American women B) a company promoting Latino jazz musicals C) a firm producing highly cost-effective and durable computers to attract students and young people under 25 D) a famous restaurant in Singapore specializing in Eurasian fusion food E) a Japanese to English translation software 84) For a company at the ________ stage of internationalization, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. A) domestic market extension B) no direct foreign marketing C) global marketing D) internal marketing E) infrequent foreign marketing 85) Describe the four trends that have been pointed to as influencers for the role of international business for the future. Explain how these four trends will affect international business. 86) Discuss some of the U.S.-based companies that are now foreign controlled and describe how U.S. companies have been affected by this. 87) Explain the key difference between domestic and international marketing. 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

88) How can a manager construct a marketing program designed for optimal adjustment to the uncertainty of the business climate? 89) List and briefly explain the domestic environment uncontrollable elements that influence an international marketer. 90) Kendrik's Boston-based company would like to expand into Europe. How will competition within the United States affect international marketing for Kendrik? 91) Explain how the "alien status" of a company amplifies the political and legal issues faced by the company in a foreign market. 92) What are the two primary obstacles to success in international marketing and how do they affect the international marketer? 93) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion influences. List the four steps that make up the framework for such an analysis. 94) Explain why a company might choose to use infrequent foreign marketing.

International Marketing, 18e (Cateora) Chapter 1 The Scope and Challenge of International Marketing 1) Today, becoming international is a luxury only some companies can afford. Answer: FALSE Explanation: For a growing number of companies, being international is no longer a luxury but a necessity for economic survival. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-01 The benefits of international markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) Companies from the Netherlands are the leading group of investors in the United States. Answer: FALSE Explanation: Foreign direct investment in the United States is more than $3 trillion. Companies from the United Kingdom lead the group of investors, with companies from Japan, the Netherlands, Canada, and France following, in that order. Difficulty: 1 Easy Topic: Benefits and Challenges of Foreign Direct Investment Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) International marketing involves selling of a company's goods and services to consumers or users in more than one nation for a profit. Answer: TRUE Explanation: International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) The main difference between domestic and international marketing lies in the different concepts of marketing. Answer: FALSE Explanation: The difference between domestic and international marketing lies not with different concepts of marketing but with the environment within which marketing plans must be implemented. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) An international marketer must deal with at least two levels of uncontrollable uncertainty. Answer: TRUE Explanation: The international marketer must deal with at least two levels of uncontrollable uncertainty instead of one. Uncertainty is created by the uncontrollable elements of all business environments, but each foreign country in which a company operates adds its own unique set of uncontrollable factors. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) The geography and infrastructure of a country are uncontrollable factors that influence the business decisions of a company in an international market. Answer: TRUE Explanation: The uncontrollable international environment includes political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 1 Easy Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) The uncontrollable factors affecting international marketing are limited to political forces, economic climate, and competitive structure. Answer: FALSE Explanation: The uncontrollable international environment includes political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 1 Easy Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The level of technology in a country is a controllable element for international marketers. Answer: FALSE Explanation: The uncontrollable international environment includes political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 2 Medium Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) The uncontrollable factors a company has to deal with decrease with the number of foreign markets in which it operates. Answer: FALSE Explanation: The more the foreign markets in which a company operates, the greater is the possible variety of foreign environmental factors with which to contend. Difficulty: 2 Medium Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) The controllable elements for marketers can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. Answer: TRUE Explanation: The successful manager constructs a marketing program designed for optimal adjustment to the uncertainty of the business climate. The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Political and legal forces, economic climate, and competition are some of the domestic environment's controllable factors. Answer: FALSE Explanation: Domestic environment uncontrollable factors include home-country elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) The foreign policies of a country are one example of a home-country element that has a direct effect on a firm's international marketing success. Answer: TRUE Explanation: Domestic environment uncontrollable elements include home-country elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition. A political decision involving foreign policy can have a direct effect on a firm's international marketing success. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) Abolition of apartheid in South Africa is an example of a positive effect on foreign policy, an uncontrollable element, in an international marketing scenario. Answer: TRUE Explanation: Positive effects occur when changes in foreign policy offer countries favored treatment. Such was the case when South Africa abolished apartheid and the embargo was lifted. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Commercial contracts with a Chinese company can only be entered into if that company is considered a "legal person." Answer: TRUE Explanation: Commercial contracts can be entered into with a Chinese company or individual only if that company or person is considered a "legal person." To be a "legal person" in China, the company or person must have registered as such with the Chinese government. Difficulty: 1 Easy Topic: How Resources and Capabilities Influence Competitive Dynamics Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) The process of evaluating the uncontrollable elements in an international marketing program may involve cultural, political, and economic shock. Answer: TRUE Explanation: The process of evaluating the uncontrollable elements in an international marketing program often involves substantial doses of cultural, political, and economic shock. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) Level of technology typically remains unchanged across countries, making it a fairly controllable factor in international marketing. Answer: FALSE Explanation: The level of technology is an uncontrollable element that can often be misread because of the vast differences that may exist between developed and developing countries. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) Political and legal issues a company may face abroad are mitigated by the "alien status" of the company. Answer: FALSE Explanation: Political and legal issues a business faces abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) The political details and the ramifications of political and legal events are often more transparent in a domestic situation than they are in a foreign market. Answer: TRUE Explanation: In a domestic situation, political details and the ramifications of political and legal events are often more transparent than they are in some foreign countries. In many foreign countries, corruption may prevail, foreigners may receive unfair treatment, or the laws may be so different from those in the home country that they are misinterpreted. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) The political/legal environment is a controllable element for international marketers because of their potent ability to lobby and influence legislation in foreign markets. Answer: FALSE Explanation: Political/legal forces and the level of technology are two of the uncontrollable aspects of the foreign environment along with economic forces, competitive forces, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) The uncontrollable elements of the foreign business environment include the culture. Answer: TRUE Explanation: The more significant elements in the uncontrollable international environment include political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 1 Easy Topic: Environmental Analysis and Market Screening Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) A foreign company is always subject to the political whims of the local government to a greater degree than a domestic firm. Answer: TRUE Explanation: In many foreign countries, corruption may prevail, foreigners may receive unfair treatment, or the laws may be so different from those in the home country that they are misinterpreted. A foreign company is foreign and thus always subject to the political whims of the local government to a greater degree than a domestic firm. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) John refuses to buy Japanese products because he considers this as a way of selling out to a nation that was once our enemy. John is using a self-reference criterion to make his decision. Answer: TRUE Explanation: The self-reference criterion is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. Closely connected is ethnocentrism, that is, the notion that people in one's own company, culture, or country know best how to do things. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 23) The self-reference criterion is closely related to collectivism—or the importance of the group. Answer: FALSE Explanation: The self-reference criterion is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. Closely connected is ethnocentrism, that is, the notion that people in one's own company, culture, or country know best how to do things. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

24) Renata just ate cookies and, therefore, feels justified in refusing food offered by her Middle Eastern host. In this instance, Renata's self-reference criterion has just saved her from making a cultural blunder. Answer: FALSE Explanation: When faced with a problem in another culture, our tendency is to react instinctively and refer to our SRC for a solution. Our reaction, however, is based on meanings, values, symbols, and behavior relevant to our own culture and usually different from those of the foreign culture. Such decisions are often not good ones. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 25) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that emphasizes the need for ethnocentrism. Answer: FALSE Explanation: To avoid errors in business decisions, the knowledgeable marketer will conduct a cross-cultural analysis that isolates the self-reference criterion influences and maintain vigilance regarding ethnocentrism. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) Family reference and upbringing provides a complete basis for understanding one's culture and no additional study is required to become aware of cultural norms and activities. Answer: FALSE Explanation: Understanding one's own culture may require additional study, because much of the cultural influence on market behavior remains at a subconscious level and is not clearly defined. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

27) The most effective approach to build global awareness into an organization is to increase the diversity mix of the employee profile for entry-level jobs. Answer: FALSE Explanation: The most effective approach to build global awareness into an organization is to have a culturally diverse senior executive staff or board of directors. Difficulty: 2 Medium Topic: Creating a Global Mindset Learning Objective: 01-05 The increasing importance of global awareness. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 28) Traditional manufacturing companies possess the most favorable factors for doing business internationally. Answer: FALSE Explanation: Research has revealed a number of factors favoring faster internationalization: (1) companies with either high-technology or marketing-based resources appear to be better equipped to internationalize than more traditional manufacturing kinds of companies; (2) smaller home markets and larger production capacities appear to favor internationalization; and (3) firms with key managers well networked internationally are able to accelerate the internationalization process. Difficulty: 2 Medium Topic: Choosing An International Business Strategy Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) A company in the "no direct foreign marketing" stage of international marketing involvement does not actively cultivate customers outside national boundaries. Answer: TRUE Explanation: A company in the stage of "no direct foreign marketing" does not actively cultivate customers outside national boundaries; however, this company's products may reach foreign markets. Sales may be made to trading companies as well as foreign customers who directly contact the firm. Difficulty: 2 Medium Topic: Choosing An International Business Strategy Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

30) The global marketing concept views the marketplace as consisting of one primary domestic market that is complimented by several smaller regional markets. Answer: FALSE Explanation: At the global marketing stage of international marketing involvement, companies treat the world, including their home market, as one market. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 31) What is one of the most dynamic trends that is affecting current global business strategies? A) the trend toward buying American cars in Europe B) the trend toward the acceptance of the free market system among developing countries C) the trend toward using English as the global language D) the trend toward establishing a world currency E) the trend toward providing aid to developing and less developed nations Answer: B Explanation: Of all the events and trends affecting global business today, four stand out as the most dynamic, the ones that will influence the shape of international business beyond today's "bumpy roads" and far into the future: (1) the rapid growth of the World Trade Organization and regional free trade areas such as the North American Free Trade Area and the European Union; (2) the trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and eastern Europe; (3) the burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders; and (4) the mandate to manage the resources and global environment properly for the generations to come. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 01-01 The benefits of international markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

32) What event spurred the final downfall of the U.S. economy in 2008 when world trade experienced its deepest decline in more than 50 years? A) The stock market ended at a record high. B) The U.S. and Cuba joined forces. C) The Senate and House failed to compromise on interest rates. D) The housing market collapsed. E) The voters elected a third-party candidate. Answer: D Explanation: Lower government interest rates had yielded a refinancing stampede, distributing the cash that fueled the consumer spending, which finally began flagging in early 2008. Then in September and October of that year, the housing bubble burst, and the world financial system teetered on collapse. The ever faithful American consumer stopped buying, and world trade experienced its deepest decline in more than 50 years, a drop of 11.0 percent. Difficulty: 2 Medium Topic: The Changing Nature of the Global Economy Learning Objective: 01-01 The benefits of international markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 33) How has globalization impacted domestic markets in the United States? A) Companies with only domestic markets have been able to sustain their customary rates of growth. B) Multinational companies are making more profits from their domestic operations compared to their earnings from the foreign markets. C) Only multinational companies with large production facilities have outperformed their strictly domestic U.S. counterparts. D) The domestic companies have reduced their manufacturing employment more than U.S. multinationals. E) Multinational manufacturing companies in all industries and sizes have outperformed their domestic counterparts. Answer: E Explanation: Companies with only domestic markets have found increasing difficulty in sustaining their customary rates of growth, and many are seeking foreign markets in which to expand. Companies with foreign operations find that foreign earnings are making an important overall contribution to total corporate profits. Multinationals of all sizes and in all industries outperformed their strictly domestic U.S. counterparts. Furthermore, U.S. multinationals reduced their manufacturing employment, both at home and abroad, more than domestic companies. Difficulty: 2 Medium Topic: The Changing Nature of the Global Economy Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

34) What is an essential requirement for experienced, as well as new, firms to succeed in international markets? A) adhering strictly to their traditional methods of production and operations B) focusing primarily on their production to exclusively meet domestic demand C) venturing into multiple markets by investing in all of them at once D) committing themselves completely to foreign markets E) having beneficial relations with lobbyists of foreign markets Answer: D Explanation: For firms venturing into international marketing for the first time and for those already experienced, the requirement is generally the same: a thorough and complete commitment to foreign markets and, for many, new ways of operating. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 35) Jason's department is responsible for the business activities designed to plan, price, promote, and direct the flow of his company's small appliance products to consumers in various nations around the world for a profit. What is his department in charge of? A) internal marketing B) importing C) performance appraisal D) international marketing E) domestic trade Answer: D Explanation: International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

36) What is considered the most critical difference between domestic marketing and international marketing? A) the difference in marketing principles being followed B) the different concepts of marketing C) the difference in marketing theories being followed D) the environment in which marketing plans must be implemented E) the basic processes used to market products and services Answer: D Explanation: The difference lies not with different concepts of marketing but with the environment within which marketing plans must be implemented. The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 37) Marketers must be especially cognizant of ________ for both domestic and international markets because of the dominantly uncontrollable nature of this factor. A) price B) promotion C) research activities D) political/legal forces E) channels of distribution Answer: D Explanation: Political/legal forces represent the uncontrollable element that domestic and international marketers need to consider. Price, promotion, research activities, and channels of distribution are all controllable elements for international marketers. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

38) ________ is a controllable element for an international marketer. A) Level of technology B) Geography and infrastructure C) Channels-of-distribution D) Cultural forces E) Competitive forces Answer: C Explanation: Channels-of-distribution represent a controllable element for an international marketer. The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 39) What is an uncontrollable element for an international marketer? A) firm characteristics B) channels-of-distribution C) price D) research E) level of technology Answer: E Explanation: The uncontrollable elements of the foreign environment are political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Refer to Exhibit 1.3 The International Marketing Task. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

40) For an international marketer, the ________ can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. A) competitive structure B) economic climate C) structure of distribution D) environmental factors E) controllable elements Answer: E Explanation: The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. The controllable elements include product, price, promotion, distribution, and research activities. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 41) Ian works for a sports equipment manufacturer in Boston and is responsible for shipping products across the United States. What is one factor that would be uncontrollable for Ian? A) firm characteristics B) competitive structure C) channels of distribution D) price of the product E) promotional measures Answer: B Explanation: Competitive forces, political/legal forces, and economic climate are the three domestic uncontrollable elements in marketing. Price, promotion, firm characteristics, and channels of distribution are all controllable elements for international marketers. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

42) Which political action is most likely to favor international marketing? A) placing trade embargoes on Cuba owing to widespread political instability in the country B) the U.S. government placing a trade ban on Libya owing to rampant terrorism C) South Africa abolishing apartheid and the U.S. lifting the embargo D) tariff hike for imports established by China E) the U.S. government coupling human rights issues with foreign trade policy Answer: C Explanation: A political decision involving foreign policy can have a direct effect on a firm's international marketing success. Conversely, positive effects occur when changes in foreign policy offer countries favored treatment. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 43) What is an accurate description of the relationship between international business and domestic business? A) The domestic economic climate has no effect on a company's competitive position in foreign markets. B) Domestic businesses must focus on capital mobility toward international businesses before capital generation. C) Countries must not restrict foreign investment even if domestic economic conditions deteriorate. D) The ability to invest abroad is to a large extent a function of domestic economic vitality. E) Domestic businesses are more viable than international businesses as capital tends to move toward minimum use. Answer: D Explanation: The capacity to invest in plants and facilities, either in domestic or foreign markets, is to a large extent a function of domestic economic vitality. It is generally true that capital tends to flow toward optimum uses; however, capital must be generated before it can have mobility. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

44) How can "alien status" unfavorably affect a company? A) prejudiced treatment by the host country's politicians and legal authorities B) an inflated balance of trade C) a sharp rise in domestic and international demand D) lower trade tariffs in the host country E) an economic situation of the magnitude of the Great Depression Answer: A Explanation: The "alien status" of a business means that, when viewed as an outsider, it can be seen as an exploiter and receive prejudiced or unfair treatment at the hands of politicians, legal authorities, or both. Difficulty: 2 Medium Topic: Managing Political Risk and Differences Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 45) With respect to the environment in which a business operates, factors such as competition, political and legal forces, and economic climate would all be classified as A) controllable elements. B) uncontrollable elements. C) tractable elements. D) demographic elements. E) cultural elements. Answer: B Explanation: With respect to the environment in which a business operates, factors such as competition, political and legal forces, economic climate would all be classified as uncontrollable elements. Refer to Exhibit 1.3 The International Marketing Task. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

46) ________ is a controllable element in both domestic and international marketing environments. A) Economic climate B) Competition within the home country C) Price of products D) Political force E) Foreign policy Answer: C Explanation: Price is a controllable element in both domestic and international marketing. Factors such as competition, political and legal forces, and economic climate would all be classified as uncontrollable elements. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 47) The marketing tasks of an international marketer differ from that of a domestic marketer as the A) international marketer has fewer uncontrollable elements to deal than a domestic marketer. B) level of technology and cultural forces are controllable elements for the international marketer. C) structure of distribution is an uncontrollable element for the international marketer. D) competitive structure is one of the controllable factors for an international marketer. E) international marketer is less concerned about geography and infrastructure than the domestic marketer. Answer: C Explanation: The uncontrollable elements of the foreign environment are political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

48) Kelly Reeves is in charge of a new marketing effort directed toward Peru. In order for her company to market effectively and distribute to all of Peru's major cities, Kelly must devise a logistics plan for crossing the Andes Mountains on a daily basis. Which of these foreign environment uncontrollable variables would be a chief concern as Kelly devises her firm's logistics plan? A) price B) product C) geography and infrastructure D) promotional strategies E) channels of distribution Answer: C Explanation: Geography and infrastructure will be a chief concern for Kelly in devising a logistics plan to extend marketing across the Andes. The uncontrollable elements of the foreign environment are political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 49) Compared to the foreign environment variables, which of the following uncontrollable variables is least likely to affect a domestic marketer? A) political forces B) competitive structure C) economic climate D) cultural forces E) legal forces Answer: D Explanation: Cultural forces are not included as an uncontrollable element for the domestic marketer, while they constitute an uncontrollable element for the international marketer. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

50) Angelica Wu is preparing a marketing plan for her company for the upcoming year's business activities. She knows that she should begin her plan by examining the variables she has some control over. These controllable variables would include price, product, channels-ofdistribution, and A) level of technology. B) political forces. C) competition. D) economic climate. E) promotion. Answer: E Explanation: Angelica Wu would include the variable of promotion while preparing a marketing plan for her company as it is a controllable variable. Price, product, promotion, research, firm characteristics, channels of distribution, and research are the controllable elements for a domestic marketer. Refer to Exhibit 1.3 The International Marketing Task. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 51) M&G Inc., a company producing musical instruments, had dominated its home market for several years before venturing into international markets. The company was focusing more on international operations until Beige N, a German company in the same business, entered its home market. Beige N started selling good quality products at prices much lower than M&G's and affected its sales adversely. Which of the following elements in the marketing environment has affected the business of M&G Inc. with the market entry of Beige N? A) level of technology B) structure of distribution C) competition in the domestic market D) cultural forces E) promotion of the product Answer: C Explanation: The entry of Beige N into the domestic market has brought about competition for M&G Inc. Competition within the home country can have a profound effect on the international marketer's task. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

52) Shondra McDonald, a marketing manager at a hearing aid manufacturing firm, is asked to review the marketing opportunities of her company in a foreign market. She is aware that she can modify certain elements of the marketing environment to suit the foreign market needs. She focuses her attention on the uncontrollable factors that might affect the firm's business prospects. Which of the following uncontrollable elements is most likely to affect the company's business prospects in the foreign market? A) pricing policies in the domestic market B) research methodologies used by her company C) promotional activities required to market the product D) level of technology in the targeted market E) product distribution channels adopted by his company Answer: D Explanation: The level of technology is different for different countries. Being an uncontrollable element, it is most likely to affect the hearing aid manufacturing firm's business in the foreign market. The uncontrollable elements in an international environment include political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. These forces constitute the principal elements of uncertainty an international marketer must cope with in designing a marketing program. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 53) The uncontrollable issue of ________ faced by a company abroad is often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. A) research B) channel of distribution C) product specification D) politics E) product promotion Answer: D Explanation: Political and legal issues face a business, whether it operates at home or in a foreign country. However, the issues abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 22 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

54) Which scenario best illustrates the political and legal issues faced by companies because of their "alien status" when they attempt to do business in foreign countries? A) a company doing moderate business in international markets because of violent history of its home country B) a company being forced by the local government to share its core competencies in order to continue doing business C) a product not being widely accepted in the foreign market because of its irrelevance to the customers D) a company utilizing an identical promotional campaign it used in the domestic country E) a company not succeeding in a foreign market because its product pricing is above the purchasing power of the local customers Answer: B Explanation: The "alien status" of a foreign business has two dimensions: It is alien in that foreigners control the business and in that the culture of the host country is alien to management. The alien status of a business means that, when viewed as an outsider, it can be seen as an exploiter and receive prejudiced or unfair treatment at the hands of politicians, legal authorities, or both. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 55) Adaptation on the part of an international marketer is best described as A) a conscious effort to make themselves aware of the home cultural reference in their analyses and decision making. B) a conscious effort to anticipate the influences of both the foreign and domestic uncontrollable factors on a marketing mix and then to adjust the marketing mix to minimize the effects. C) the notion that people in one's own company or country know best how to do things. D) the process of identifying the similarities that exists between the domestic and foreign markets. E) an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions and then to adjust the marketing mix in order to closely reflect these decisions. Answer: B Explanation: Adaptation is a conscious effort on the part of an international marketer to anticipate the influences of both the foreign and domestic uncontrollable factors on a marketing mix and then to adjust the marketing mix to minimize the effects. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

56) A natural off shoot of a person's self-reference criterion is ________ that also creates a concern for the international marketer. A) sympathy B) self-actualization C) ethnocentrism D) empathy E) collectivism Answer: C Explanation: The primary obstacles to success in international marketing are a person's selfreference criterion (SRC) and an associated ethnocentrism. The SRC is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 57) ________ is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. A) Xenocentrism B) Holism C) Self-reference criterion D) Segregation E) Orientalism Answer: C Explanation: The self-reference criterion is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

58) People seldom stop to think about a reaction; they simply react. Thus, when faced with a problem in another culture, their tendency is to react instinctively and refer to their ________ for a solution. A) self-space principle B) segregation principle C) integration criterion D) space command criterion E) self-reference criterion Answer: E Explanation: When confronted with a set of facts, a person reacts spontaneously on the basis of knowledge assimilated over a lifetime—knowledge that is a product of the history of his or her culture. Seldom stopping to think about a reaction, a person simply reacts. Thus, when faced with a problem in another culture, the tendency is to react instinctively and refer to his or her self-reference criterion for a solution. A person's reaction, however, is based on meanings, values, symbols, and behavior relevant to his or her own culture and usually different from those of the foreign culture. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 59) Parul believes that her culture and country know how to do things best and she looks down on the cultural habits of other countries. What is Parul exhibiting? A) differentiation B) marketing myopia C) ethnocentrism D) multiculturalism E) pluralism Answer: C Explanation: Ethnocentrism is the notion that people in one's own company, culture, or country know best how to do things Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

60) What characteristic would impede the ability of a person to assess a foreign market in its true light? A) polycentrism B) pluralism C) xenocentrism D) ethnocentrism E) relativism Answer: D Explanation: Ethnocentrism is the notion that people in one's own company, culture, or country know best how to do things. Ethnocentrism is generally a problem when managers from affluent countries work with managers and markets in less affluent countries. It impedes the ability to assess a foreign market in its true light. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 61) Brett, who is from Ohio, has taken a job in Thailand. Last week, he was confronted with a personnel issue and resolved it by saying that "In the U.S., you would be given one warning and then fired for this type of behavior." Brett did not take into account that company standards might differ in Thailand and the employee was acting appropriately. Which obstacle to international marketing does this demonstrate? A) collectivism B) self-reference criterion C) tragedy of the commons D) individualism E) marketing myopia Answer: B Explanation: The primary obstacles to success in international marketing are a person's selfreference criterion (SRC) and an associated ethnocentrism. The SRC is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

62) The most effective way to control the influence of ethnocentrism and the self-reference criterion is to A) reduce interaction with a culturally diverse audience. B) design products and services in a traditional manner. C) recognize their effects on our behavior. D) learn at least two foreign languages to understand the cultural differences. E) establish beneficial relations with the host country's government. Answer: C Explanation: The most effective way to control the influence of ethnocentrism and the selfreference criterion is to recognize their effects on our behavior. An awareness of the need to be sensitive to differences and to ask questions when doing business in another culture can help you avoid many of the mistakes possible in international marketing. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 63) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion (SRC) influences. What is the first step in this analysis? A) redefining the problem without the SRC influence B) solving the problem for the optimum business goal situation C) isolating the SRC influence in the problem D) defining the business problem or goal in home-country cultural traits, habits, or norms E) examining the isolated SRC influence to see how it complicates the problem Answer: D Explanation: Defining the business problem or goal in home-country cultural traits, habits, or norms is the first step provided in the analysis framework to avoid errors in business decisions owing to SRC. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

64) Why does understanding one's own culture require additional study? A) to find out why cultural traits in one's own country does not affect market behavior B) because much of the cultural influence on market behavior is at the subconscious level C) since without which, understanding the cultural traits of one's own country is impossible D) because an average manager must have extensive cultural knowledge of all countries in the world E) because cultural influence on one's own market behavior is generally minimal Answer: B Explanation: Understanding one's own culture may require additional study, because much of the cultural influence on market behavior remains at a subconscious level and is not clearly defined. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 65) A globally aware manager is characterized by A) using one's home culture's values alone to market one's products in foreign countries B) accepting the cultural ways of another individual as his or her own C) tolerating cultural differences and allowing others to be different and equal D) discarding one's home culture's standards to adopt the global cultural standards E) controlling any influences that the global cultural standards may have on the marketing process Answer: C Explanation: Tolerance is understanding cultural differences and accepting and working with others whose behaviors may be different from yours. You do not have to accept as your own the cultural ways of another, but you must allow others to be different and equal. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-05 The increasing importance of global awareness. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

66) Tomas is a manager at a frozen food company and wants to understand the way people in different countries think and act so that the company can respond to their needs appropriately. What is the best aid he can use to accomplish this? A) a sound financial background B) better political connections C) an understanding of foreign investment opportunities D) an understanding of macroeconomics E) knowledge of the foreign country's history Answer: E Explanation: Knowledge of history is important because the way people think and act is influenced by their history. For example, some Latin Americans' reluctance toward foreign investment or Chinese reluctance to open completely to outsiders can be understood better if you have a historical perspective. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-05 The increasing importance of global awareness. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 67) What is the most effective way to achieve organizational global awareness? A) hiring entry-level employees based on the sole criterion of global awareness B) organizing frequent employee trips to foreign cultures to increase their sensitivity C) increasing the diversity mix of the front-level employee profile D) having a culturally diverse senior executive staff or board of directors E) promoting social networking as a means to improve inter-cultural communication Answer: D Explanation: Global awareness can be obtained through personal relationships in other countries. But perhaps the most effective approach is to have a culturally diverse senior executive staff or board of directors. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 01-05 The increasing importance of global awareness. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

68) Which firm seems better equipped for internationalization? A) a firm that sells its products only to those foreign customers who directly contact the firm B) a firm that has a production capacity that is larger than home market demand C) a firm that focuses its production activities on meeting the demands in the home market D) a firm that has a culturally diverse employee profile but few competitive offerings at the global level E) a firm that has little intention of maintaining a continuous market representation Answer: B Explanation: One of the factors favoring faster internationalization is smaller home markets and larger production capacities. Many companies begin tentatively in international marketing, growing as they gain experience and gradually changing strategy and tactics as they become more committed. Difficulty: 2 Medium Topic: Choosing An International Business Strategy Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 69) Which firm has a better chance of accelerating the internationalization process? A) Box-Co has key managers well-networked internationally. B) Ironworks International uses more traditional manufacturing practices. C) Piano Plus primarily focuses all its operations and production capacities to meet the domestic market needs. D) Animal Awareness and Action refrains from using the Internet as its major communication platform. E) Kenilworth Karts has larger home markets and smaller production capacities. Answer: A Explanation: Firms with key managers well-networked internationally are able to accelerate the internationalization process. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

70) When considering the stages of international marketing involvement, it is important to remember that A) a firm essentially progresses through the stages in a linear order. B) the international marketing stage is a direct result of temporary surpluses caused by variations in production levels or demand. C) a larger home market with a smaller production base favors internationalization. D) a firm may be in more than one stage simultaneously. E) at the global marketing level, a firm focuses on market segmentation based on geographical borders. Answer: D Explanation: Though presented in a linear fashion, it cannot be inferred that a firm progresses from one stage to another; quite to the contrary, a firm may begin its international involvement at any one stage or be in more than one stage simultaneously. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 71) In the context of stages of international marketing involvement, a company's product reaches a foreign market without any conscious effort on the part of a marketer during which stage of the process? A) infrequent foreign marketing stage B) regular foreign marketing stage C) no direct foreign marketing stage D) international marketing stage E) global marketing stage Answer: C Explanation: A company in the no direct foreign marketing stage does not actively cultivate customers outside national boundaries; however, this company's products may reach foreign markets. Sales may be made to trading companies as well as foreign customers who directly contact the firm Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

72) Watson's, a firm that specializes in dog food and grooming products, has a very wellestablished domestic market. The company does not actively sell its products outside national borders but provides goods to customers who contact them directly or place orders with them through the Internet. Watson's is currently in the ________ stage of international marketing involvement. A) frequent foreign marketing B) active foreign marketing C) global marketing D) regular foreign marketing E) no direct foreign marketing Answer: E Explanation: Watson's does not actively cultivate customers outside national boundaries; however, the company's products may reach foreign markets. Therefore, it is in the no direct foreign marketing stage of international marketing involvement. In this stage, sales may be made to trading companies as well as foreign customers who directly contact a firm. As companies develop websites on the Internet, many receive orders from international Internet users Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 73) While Heidi's company does not typically sell internationally, they have a temporary surplus in the small appliances they manufacture and decide to promote them in other countries. Which stage of international marketing involvement does this represent? A) infrequent foreign marketing stage B) regular foreign marketing stage C) no direct foreign marketing stage D) international marketing stage E) global marketing stage Answer: A Explanation: Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore, sales to foreign markets are made as goods become available with little or no intention of maintaining continuous market representation. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

74) Natasha's company seeks markets all over the world and attempts to sell products that are a result of planned production for markets in various countries. Which stage best characterizes the stage of international marketing involvement for Natasha's company? A) infrequent foreign marketing B) domestic marketing C) no direct foreign marketing D) international marketing E) internal marketing Answer: D Explanation: Natasha's company seeks markets all over the world and sells products that are a result of planned production for markets in various countries. Therefore, it is in the international marketing stage. Companies in the international marketing stage are fully committed to and involved in international marketing activities. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 75) Marta's company treats the world, including the home market in Spain, as one market. Market segmentation decisions no longer focus on national borders. Instead, market segments are defined by income levels, usage patterns, and other factors that span countries and regions. Which of the following stages best characterizes the stage of international marketing involvement for Marta's company? A) infrequent foreign marketing B) test marketing C) no direct foreign marketing D) internal marketing E) global marketing Answer: E Explanation: Marta's company is in the global marketing stage of international marketing involvement as it treats the world, including their home market, as one market. Market segmentation decisions are no longer focused on national borders. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

76) Kentax Corporation makes industrial cleaning products and decides to enter the international marketing arena by marketing its products to China, Japan, and South Korea, with separate marketing strategies for each country. Which of the following approaches is most likely used by Kentax Corporation to formulate its international policies and strategies? A) domestic market extension B) multidomestic market C) mass marketing D) regional marketing E) standardized marketing Answer: B Explanation: Kentax Corporation is fully committed to and involved in international marketing activities with a multidomestic strategy. Such companies seek markets all over the world and sell products that are a result of planned production for markets in various countries. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 77) What factor is favorable when determining whether or not a company should consider internationalization efforts? A) A company currently has large home markets but smaller production capacities. B) A company has home country managers who have never worked outside of the home country. C) A company wants to pair with an existing international company to access technology. D) A company has minimal storage and transportation capabilities. E) A company has high-technology resources already in place. Answer: E Explanation: Research has revealed a number of factors favoring faster internationalization: (1) Companies with either high-technology and/or marketing-based resources appear to be better equipped to internationalize than more traditional manufacturing kinds of companies; (2) smaller home markets and larger production capacities appear to favor internationalization; and (3) firms with key managers well networked internationally are able to accelerate the internationalization process. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

78) What is true of firms in the first two stages of international marketing involvement—no direct foreign marketing and infrequent foreign marketing? A) They do not begin internationalization at these stages. B) They take a strategic approach to decision making regarding international expansion. C) They are more reactive in nature and embark on internationalization without planning. D) They intend to maintain a continuous market representation in foreign markets. E) They are a result of dedicated production capacity maintained for foreign markets. Answer: C Explanation: The first two stages of international marketing involvement are more reactive in nature and often do not represent careful strategic thinking about international expansion. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 79) In what stage of international marketing involvement do companies primarily focus all their operations and production to service domestic market needs, even though they have a permanent productive capacity devoted to the production of goods to be marketed in foreign markets? A) no direct foreign marketing B) internal marketing C) regular foreign marketing D) international marketing E) financial marketing Answer: C Explanation: At the regular foreign marketing level, the firm has permanent productive capacity devoted to the production of goods and services to be marketed in foreign markets. The primary focus of operations and production is to service domestic market needs. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

80) In the infrequent foreign marketing stage of international marketing involvement, firms A) sell products that are a result of planned production in markets in various countries. B) no longer make market segmentation decisions on the basis of national borders. C) have a global perspective and view the entire world as one market. D) have more than half their sales revenues coming from international markets. E) have no intention of maintaining continuous market representation in foreign markets. Answer: E Explanation: Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore, sales to foreign markets are made as goods become available, with little or no intention of maintaining continuous market representation. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 81) A firm that is involved with the international marketing stage of marketing involvement will A) have its primary focus of operations and production on servicing domestic market needs. B) reduce foreign sales activity. C) consider profit expectations from foreign markets as a bonus in addition to regular domestic profits. D) plan both marketing and production of goods outside the home market. E) consider international marketing only when there is a surplus of goods. Answer: D Explanation: Companies in the international marketing stage are fully committed to and involved in international marketing activities. Such companies seek markets all over the world and sell products that are a result of planned production for markets in various countries. This planning generally entails not only the marketing but also the production of goods outside the home market. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

82) What is the most profound change for firms at the global marketing stage of internationalization? A) More than half of the multinational firm's revenue is generated from domestic markets. B) Sales to foreign markets are made as and when goods become available. C) Temporary surpluses marketed in foreign markets is the only element of internationalization. D) Companies treat the world, along with home market, as one market. E) Domestic demand always exceeds the firm's production capacity. Answer: D Explanation: At the global marketing level, the most profound change is the orientation of the company toward markets and associated planning activities. At this stage, companies treat the world, including their home market, as one market. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 83) Which one of the following firms/products reflects a global marketing orientation? A) skin-care products aimed at African American women B) a company promoting Latino jazz musicals C) a firm producing highly cost-effective and durable computers to attract students and young people under 25 D) a famous restaurant in Singapore specializing in Eurasian fusion food E) a Japanese to English translation software Answer: C Explanation: For a firm with a global marketing orientation, market segmentation decisions are no longer focused on national borders. Instead, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

84) For a company at the ________ stage of internationalization, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. A) domestic market extension B) no direct foreign marketing C) global marketing D) internal marketing E) infrequent foreign marketing Answer: C Explanation: At the global marketing stage of internationalization, market segmentation decisions are no longer focused on national borders. Instead, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. Difficulty: 1 Easy Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 85) Describe the four trends that have been pointed to as influencers for the role of international business for the future. Explain how these four trends will affect international business. Answer: Of all the events and trends affecting global business today, four stand out as the most dynamic, the ones that will influence the shape of international business far into the future. These are: (1) the rapid growth of the World Trade Organization and new free trade agreements around the world; (2) the trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and eastern Europe; (3) the burgeoning impact of the Internet, mobile phones, and other global media on the dissolution of national borders; and, (4) the mandate to properly manage the resources and global environment for the generations to come. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-01 The benefits of international markets. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

86) Discuss some of the U.S.-based companies that are now foreign controlled and describe how U.S. companies have been affected by this. Answer: Student examples may vary. Many familiar U.S. companies are now foreign controlled or headed in that direction. When you drop in at a 7-Eleven convenience store or buy Firestone tires, you are buying directly from Japanese companies. Some well-known brands no longer owned by U.S. companies are Carnation (Swiss), The Wall Street Journal (Australian), and the all-American Smith & Wesson handgun that won the U.S. West, which is owned by a British firm. The last U.S.-owned company to manufacture TV sets was Zenith, but even it was acquired by South Korea's LG Electronics Inc., which manufactures TVs and other products. Pearle Vision, Universal Studios, and many more are currently owned or controlled by foreign multinational businesses (see Exhibit 1.1). Foreign direct investment in the United States is more than $3 trillion. Companies from the United Kingdom lead the group of investors, with companies from the Japan, the Netherlands, Canada, and France following, in that order. Once the private domain of domestic businesses, the vast U.S. market that provided an opportunity for continued growth must now be shared with a variety of foreign companies and products. Companies with only domestic markets have found increasing difficulty in sustaining their customary rates of growth, and many are seeking foreign markets in which to expand. Companies with foreign operations find that foreign earnings are making an important overall contribution to total corporate profits. A four-year Conference Board study of 1,250 U.S. manufacturing companies found that multinationals of all sizes and in all industries outperformed their strictly domestic U.S. counterparts. They grew twice as fast in sales and earned significantly higher returns on equity and assets. Furthermore, U.S. multinationals reduced their manufacturing employment, both at home and abroad, more than domestic companies. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) Explain the key difference between domestic and international marketing. Answer: The only difference between the definitions of domestic marketing and international marketing is that in the latter case, marketing activities take place in more than one country. This apparently minor difference, "in more than one country," accounts for the complexity and diversity found in international marketing operations. If this is the case, what is the difference between domestic and international marketing? The answer lies not with different concepts of marketing but with the environment within which marketing plans must be implemented. The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-02 The changing face of U.S. business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) How can a manager construct a marketing program designed for optimal adjustment to the uncertainty of the business climate? Answer: Assuming the necessary overall corporate resources, structures, and competencies that can limit or promote strategic choice, the marketing manager blends price, product, promotion, channels-of-distribution, and research activities to capitalize on anticipated demand. These controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) List and briefly explain the domestic environment uncontrollable elements that influence an international marketer. Answer: The aspects of the domestic environment uncontrollable elements include homecountry elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition. A political decision involving foreign policy can have a direct effect on a firm's international marketing success. The domestic economic climate is another important home-based uncontrollable variable with far-reaching effects on a company's competitive position in foreign markets. The capacity to invest in plants and facilities, either in domestic or foreign markets, is to a large extent a function of domestic economic vitality. Competition within the home country can also have a profound effect on the international marketer's task. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) Kendrik's Boston-based company would like to expand into Europe. How will competition within the United States affect international marketing for Kendrik? Answer: Competition within a home country affects a company's domestic and international plans. Competition within the home country can have a profound effect on the international marketer's task. Students' examples might vary. For more than a century, Eastman Kodak dominated the U.S. film market and could depend on achieving profit goals that provided capital to invest in foreign markets. However, the competitive structure changed when Fuji Photo Film became a formidable competitor by lowering film prices in the United States, opening a $300 million plant, and soon gaining 12 percent of the U.S. market. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) Explain how the "alien status" of a company amplifies the political and legal issues faced by the company in a foreign market. Answer: Political and legal issues a business faces abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. The alien status of a foreign business has two dimensions: It is alien in that foreigners control the business and in that the culture of the host country is alien to management. The alien status of a business means that, when viewed as an outsider, it can be seen as an exploiter and receive prejudiced or unfair treatment at the hands of politicians, legal authorities, or both. Political activists can rally support by advocating the expulsion of the "foreign exploiters," often with the open or tacit approval of authorities. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-03 The scope of the international marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) What are the two primary obstacles to success in international marketing and how do they affect the international marketer? Answer: The primary obstacles to success in international marketing are a person's selfreference criterion (SRC) and an associated ethnocentrism. The SRC is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. Closely connected is ethnocentrism, that is, the notion that people in one's own company, culture, or country know best how to do things. Ethnocentrism is generally a problem when managers from affluent countries work with managers and markets in less affluent countries. Both the SRC and ethnocentrism impede the ability to assess a foreign market in its true light. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion influences. List the four steps that make up the framework for such an analysis. Answer: The steps are: (1) define the business problem or goal in home-country cultural traits, habits, or norms; (2) define the business problem or goal in foreign-country cultural traits, habits, or norms through consultation with natives of the target country—make no value judgments; (3) isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem; and, (4) redefine the problem without the SRC influence and solve for the optimum business goal situation. Difficulty: 1 Easy Topic: The Nature of Cross-Cultural Risk Learning Objective: 01-04 The importance of the self-reference criterion (SRC) in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) Explain why a company might choose to use infrequent foreign marketing. Answer: Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore, sales to foreign markets are made as goods become available, with little or no intention of maintaining continuous market representation. As domestic demand increases and absorbs surpluses, foreign sales activity is reduced or even withdrawn. In this stage, little or no change is seen in the company organization or product lines. However, few companies fit this model today because customers around the world increasingly seek long-term commercial relationships. Furthermore, evidence suggests that financial returns from such short-term international expansions are limited. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 01-06 The progression of becoming a global marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 2 The Dynamic Environment of International Trade 1) The Marshall Plan was developed by the United States as a method to assist Europe in rebuilding after World War II. 2) The GATT became part of the World Trade Organization in 1995 with the ratification of the Uruguay Round agreements. 3) The United States faced decreasing competition in export markets beginning in 1970 with the ending of the Vietnam War. 4) By the year 1971, the United States was selling less to other countries than it bought from them; that is, the United States had a trade deficit. 5) The Organization for Economic Cooperation and Development (OECD) estimates that the economies of the developed world will expand at much faster rates when compared to the developing economies. 6) A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time. 7) In a balance-of-payments record, the current account is a record of direct investment, portfolio investment, and short-term capital movements to and from countries. 8) When reviewing a balance-of-payments statement, you would check the reserves account to view exports and imports of gold. 9) When foreign currencies can be traded for more dollars, U.S. products and companies are more expensive for the foreign customer and exports decrease. 10) Establishing a tariff on fabrics imported from Uruguay so that U.S. manufacturers sell more fabrics is an example of a protectionist measure. 11) In general, economists do not recognize "protection of the home market" as a valid argument for protectionist measures. 12) Quotas, boycotts, monetary barriers, and market barriers are examples of tariff barriers. 13) In general, a tariff will decrease inflationary pressures. 14) Tariffs are often used as reprisals against protectionist moves of trading partners. 15) The United States has placed a limit on the tons of sugar that can be imported into the country. This is an example of a tariff. 16) An import license limits the quantities that can be imported on a case-by-case basis. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) Voluntary export restraints are common in the agricultural industry when an agreement is made between the importing and exporting countries for a restriction on the volume of exports. 18) An embargo sets a limit on the quantity of goods one country can sell to another. 19) In the context of blocked currency, blockage is accomplished by refusing to allow an importer to exchange its national currency for the currency of the seller. 20) It is mandatory for importers who want to buy a foreign good from a foreign country to apply for a business permit in that country. 21) An exchange permit issued by a government can stipulate an unfavorable rate of exchange depending on the desires of the government. 22) The United States and other countries require some products to contain a percentage of "local content" to gain admission to their markets. 23) Antidumping laws encourage foreign producers to sell their products at a higher cost than the cost of production and create more opportunities for free trade. 24) The Omnibus Trade and Competitiveness Act of 1988 focuses on assisting businesses to be more competitive in world markets, but does not get involved in trade practices. 25) Under the Omnibus Trade and Competitiveness Act, the U.S. president has the authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products. 26) One advantage of the Omnibus Trade and Competitiveness Act is a more flexible process to obtain export licenses. 27) The GATT panels were formed to resolve bilateral trade disputes and have both advisory and enforcement powers. 28) The decisions taken by the World Trade Organization in solving trade disputes among members are binding ones. 29) The International Monetary Fund was created before World War II to help individual states regain economic profitability. 30) As both special drawing rights (SDRs) and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to gold and silver rather than dollars.

31) After World War II, the United States led efforts to provide financial and industrial development assistance to rebuild Japan and channeled funds to foster economic growth in the underdeveloped world. These efforts were primarily aimed at A) halting the growth of Nazi Germany. B) dampening the spread of communism. C) dampening the spread of capitalism. D) building a stronger defense force. E) creating a worldwide trade bloc to counter the OPEC countries' clout. 32) After World War II, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. As a result, most of the noncommunist economies in the world A) stagnated. B) grew significantly. C) failed. D) quickly matched the U.S. economy. E) faced high inflation rates. 33) What was the most apparent reciprocal impact of the foreign economic assistance given by the United States following World War II? A) European countries formed an alliance to counter the OPEC countries' clout. B) Outflow of labor to the recipient countries increased dramatically. C) All recipient countries appointed Americans to manage their central banks. D) Purchases of U.S. agricultural products, manufactured goods, and services by the recipient countries increased. E) Distribution of economic power and potential became more uneven. 34) What factor was primarily responsible for the excess in production capacity in the United States after World War II? A) The United States government raised the tariffs on most imports by 60%. B) Many firms from other nations shifted their production facilities to the United States. C) Domestic demand was at a historic low and resulted in excess capacity. D) The returning military after World War II increased the labor supply in the United States. E) The implementation of the Marshall Plan dampened the overseas demand. 35) How did GATT prevent the repeat of the economic disaster that occurred after World War I? A) It provided short-term loans to struggling nations. B) It promoted dumping policies to allow stronger ties between member nations. C) It fostered isolationism for nations that were market leaders. D) It provided for a third party, the United Nations, to negotiate peace treaties. E) It provided a forum for member countries to negotiate a reduction of tariffs and other barriers to trade.

36) Why did the Smoot-Hawley Act play a role in sending the world's economies into the Great Depression? A) It encouraged the majority of world economies to lower tariffs to imported goods. B) It raised U.S. tariffs on thousands of imported goods by more than 60 percent. C) It created an embargo on all agricultural products. D) It divided the United States into factions based on race. E) It forced independent countries to band together to stay economically viable. 37) What was the outcome for GATT after the ratification of the Uruguay Round agreements? A) GATT allowed the United States to increase its import tax. B) GATT became part of the World Trade Organization. C) GATT directly led to the uneven distribution of economic power and potential. D) The European Union decided to stay away from the treaty. E) The original purpose was sidelined in favor of political and military intervention between member states. 38) The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance that followed World War II, led to A) the rise of new global marketing opportunities. B) the decrease in demand for American goods worldwide. C) the dissolution of GATT. D) the spread of communism by the United States. E) the sharp reduction in the production capacity of the United States. 39) Which were the two major challenges faced by U.S. multinational corporations at the close of the 1960s? A) the creation of the Soviet Union and the higher tariffs on imports B) growing jingoistic nationalism and a negative population growth rate in major international markets C) resistance to direct investment and increasing competition in export markets D) increasing Chinese domination in the manufacturing sector and the falling dollar in global markets E) the decreased demand for U.S. goods in the global market and the growing influence of consumer rights advocacy in the home market 40) Post-World War II, worldwide economic growth was in strong evidence and countries that were once classified as less developed were reclassified as A) communist countries. B) free trade economies. C) tier-II countries. D) developed countries. E) newly industrialized countries.

41) Which statement presents the correct picture of the outcome of increased world trade after the 1950s, contrary to Servan-Schreiber's prediction? A) Third World countries have been excluded from this economic growth leading to stark imbalances in wealth. B) The European Union has become the center of world trade, taking the position away from the United States. C) The United States has continuously maintained the positive balance of trade it attained during the 1950s. D) Economic power and potential has become more evenly distributed among the countries of the world. E) SDRs and gold have lost their utility as the basic medium of financial exchange and most monetary statistics have started relating to the U.S. dollar. 42) What is the major reason behind the failure of American MNCs to completely dominate the European markets as predicted by Servan-Schreiber? A) The resurgence of competition for U.S. businesses from all over the world B) The elimination of import taxes in the European countries C) The restructuring of U.S industries D) The decadence of communism E) The dissolution of colonial powers 43) What strategy was employed by the United States to regain its lost market share for capital goods by the late 1990s? A) funding the competitive developing nations B) restructuring its industries to be more "lean and mean" C) decreasing its exports and increasing its imports D) raising average U.S. tariffs on more than 20,000 imported goods by 60 percent E) provoking increased protectionism from other countries 44) Following World War II, it is noted that the West created the trade patterns. This was especially true in which one of the following? A) North America B) Europe C) South America D) Asia E) Central America 45) In the last few years, most of the countries of the world saw a dramatic slowdown in the growth of their economies with the exception of A) the United States. B) Spain. C) China. D) Greece. E) France.

46) The World Bank estimates that five countries whose share of world trade is barely one-third that of the European Union will, by 2020, have a 50 percent higher share than that of the European Union. Which of these countries is included on this list? A) Canada B) Nigeria C) Netherlands D) Indonesia E) Zimbabwe 47) The system of accounts that records a nation's international financial transactions is most accurately called its A) supply chain management system. B) gross domestic product system. C) net domestic product payments. D) balance of payments. E) net national product systems. 48) What is used to ensure that balance-of-payments records are always in balance? A) sum of squares recording system B) bank reconciliation system C) double-entry bookkeeping system D) archival records system E) multifactor recording system 49) A balance-of-payments statement for a country reveals A) how rich or poor a country is financially. B) a record of the country's financial condition. C) a comparison of one country's finances to another country's debt. D) a balanced budget for the country. E) the spending power available to the country for specific goods. 50) What is a defining characteristic of a balance-of-payments statement? A) It is a record of the domestic transactions between the government of a country and the private companies in that country. B) It records all financial transactions between the residents of a country and those of the rest of the world. C) It records the trade policies of the member nations of the WTO. D) It is an annual record of the profitable foreign transactions made by a particular country. E) It is a financial statement in which the credits must exceed the debits. 51) Which of the following falls on the plus side of the U.S. balance of payments? A) payments to the United States for insurance B) the costs of goods imported C) spending by American tourists overseas D) new overseas investments E) the cost of foreign military 6 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

52) Which of the following falls on the minus side of the U.S. balance of payments? A) payments to the United States for insurance B) payments of dividends and interest on investments abroad C) return on capital invested abroad D) new foreign investments in the United States E) spending by American tourists overseas 53) What occurs in the balance of payments account when international payments are greater than receipts? A) a tariff B) inflation C) recession D) a credit E) a deficit 54) The ________ account of the balance-of-payments statement is used to record all merchandise exports, imports, and services plus unilateral transfers of funds. A) current B) capital C) credit D) receivables E) reserves 55) Which account in the balance-of-payments statement is a record of direct investment, portfolio investment, and short-term movement of cash and technology to and from countries? A) current account B) capital account C) credit account D) receivables account E) reserves account 56) The ________ of the balance-of-payments statement is used to record increases or decreases in foreign exchange and increases or decreases in liabilities to foreign central banks. A) current account B) capital account C) credit account D) receivables account E) reserves account 57) What argument regarding the need for protectionism is recognized by economists as valid? A) need to keep money at home B) encouragement of capital accumulation C) industrialization of a low-wage nation D) conservation of natural resources E) maintenance of employment and reduction of unemployment 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

58) Rishi, a protectionist, has seen several small businesses go bankrupt because they were unable to compete with the cheaper prices of goods provided by foreign companies. The cellphone manufacturing industry has just started in the United Kingdom, and Rishi's company is one of the first to try its hand at cell-phone manufacturing. What argument is most likely to be used by Rishi to persuade his government to restrict the import of foreign cell phones from foreign companies? A) protection of an infant industry B) the need to keep money at home C) conservation of natural resources D) national defense E) maintenance of standard of living 59) What is a tariff? A) It is a tax levied by a government on goods being exported out of the country. B) It is a tax paid by individual states to the federal government for goods transferred across state lines. C) It is a tax imposed by a government on goods that are imported into the country. D) It is a limit on the amount of goods that can be imported into the country. E) It is a limit on the amount of goods that can be exported out of the country. 60) In general, tariffs weaken A) inflationary pressures. B) special interests' privileges. C) balance-of-payments positions. D) government control in economic matters. E) the number of reciprocal tariffs by other countries. 61) Which statement is true of tariffs? A) They strengthen balance-of-payments positions. B) They strengthen supply-and-demand patterns. C) They increase special interests' privileges. D) They strengthen international relations. E) They promote competition. 62) The tariff on certain goods is based on the percentage of the determined value of the item being imported. What type of tariff is this? A) compound duty B) quota duty C) specific duty D) reciprocal duty E) ad valorem duty

63) A specific unit or dollar limit applied to a particular type of good is called a(n) A) trade license. B) quota. C) ad valorem duty. D) predatory price. E) exchange rate. 64) A boycott on importing produce from Mexico would be an example of a A) compound duty. B) revenue tariff. C) nontariff barrier. D) specific duty. E) quota embargo. 65) If a country refuses to sell some products to another country, it is utilizing which barrier to trade? A) import credit discriminations B) export subsidies C) voluntary export restraints D) embargoes E) packaging, labeling, or marking standards 66) If a country decided to refuse to allow an importer to exchange its national currency for the sellers' currency, it would be an example of a(n) ________ currency. A) blocked B) spot C) embargo D) taxed E) quota 67) Exporting countries primarily agree to voluntary export restraints (VERs) to A) minimize exposure in the importing country. B) reduce market competitiveness. C) avoid stiffer quotas being set by the importing country. D) take over local industries of the importing country. E) avoid criminal prosecution. 68) A voluntary export restraint is an agreement signed willingly between the importing country and the exporting country for a restriction on the A) overall tax. B) number of businesses eligible for imports. C) volume of exports. D) government's portion of the paid tariff. E) balance-of-payments statements.

69) Voluntary export restraints are commonly used in what industry? A) finance B) furniture C) agriculture D) media E) education 70) The marketing manager for Glorious Products wants to export the company's line of fashion boots to an EU country. However, she discovers that there is a complete restriction on the import of any form of leather into that country. This is an example of A) an orderly market agreement. B) a quota. C) a monetary barrier. D) a voluntary export restraint. E) a boycott. 71) One country refuses to sell goods to its neighboring country based on the belief that the neighboring country harbors radicals and terrorists. In this case, the refusal is referred to as a(n) A) antidumping penalty. B) embargo. C) monetary barrier. D) orderly market agreement. E) voluntary export restraint. 72) In the context of monetary barriers, blockage is ideally accomplished when A) a country refuses to allow an importer to exchange its national currency for the country's currency. B) two countries enter into a voluntary agreement to determine the value of their currencies. C) a country applies a specific unit or dollar limit to a particular type of good. D) money dealers limit the rate at which foreign currencies are exchanged. E) the government of a country imposes a mandatory tax on goods entering at its borders. 73) In order to effectively secure foreign exchange, what is most likely to be used by countries experiencing severe shortages of foreign exchange? A) privatization B) government approval C) spot pricing D) voluntary export restriction E) monopoly 74) What trade policy tool makes it mandatory for its importers who want to buy a foreign good to apply for an exchange permit? A) tariff B) import quota C) blocked currency D) government approval E) export levy 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

75) An exchange permit can stipulate the A) quantity of goods that can be exchanged for a particular sum of foreign currency. B) number of parties that can be involved in an exchange transaction. C) amount to be exchanged that must be deposited in a local bank for a set period. D) quality standards of the goods involved in an exchange. E) number of times one party can avail exchange permits. 76) Active Bicycle Company has just received notice that a shipment of 300 bicycles has been rejected by the customs administration of the recipient country because the bikes did not include a metal plate surrounding the chain. What category of nontariff barriers primarily uses such quality issues as a trade barrier? A) quotas B) licenses C) embargoes D) boycotts E) standards 77) The United States and other countries require some products (automobiles in particular) to contain a percentage of "local content" to gain admission to their markets. This is an example of the stringent usage of ________ to restrict trade. A) exchange permits B) embargoes C) blocked currencies D) standards E) antidumping penalties 78) ________ pricing is the practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. A) Basing point B) Spot C) Defensive D) Counterpoint E) Predatory 79) ________ is/are a nontariff barrier that was specifically designed to prevent foreign producers from using predatory pricing to take control of U.S. markets. A) Quotas B) Embargoes C) Blocked currency D) Antidumping laws E) Exchange permits

80) Which trading partner of the United States became its number one "trade problem" at the beginning of the 21st century? A) United Kingdom B) Japan C) Germany D) Canada E) China 81) What legislative decision was designed to primarily deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners? A) the Neutrality Pact of 1941 B) the Omnibus Trade and Competitiveness Act of 1988 C) the League of Nations Act of 1920 D) the Hawley-Smoot Tariff Act of 1930 E) the International Monetary Fund and Bank Act of 1945 82) What was the impetus for the Omnibus Trade and Competitiveness Act? A) Markets in the U.S. were open to most of the world but markets in Europe and many Asian countries were relatively closed. B) The U.S. market was relatively closed to the rest of the world. C) Markets in the U.S. were being driven by foreign demand. D) The trade volume in the U.S. was declining. E) Markets in the U.S. were trading with partners based on how they hoped they would respond rather than how they actually operated. 83) The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the ________ section of the Omnibus Trade and Competitiveness Act. A) market access B) export expansion C) import relief D) foreign exchange regulation E) trade deficit 84) Which section of the Omnibus Trade and Competitiveness Act recognizes that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and possibly severe financial harm? A) the market access section B) the export expansion section C) the import relief section D) the foreign exchange regulation section E) the trade deficit section

85) What is one of the four ongoing activities that support the growth of international trade? A) Warsaw Pact B) Kyoto Protocol C) International Monetary Fund D) World Summit on Sustainable Development E) Treaty of Waitangi 86) Which statements accurately describes the General Agreement on Tariffs and Trade (GATT)? A) The United States, the United Kingdom, and Germany were the only signatories of the original GATT. B) The original agreement provided a process to increase the tariffs on trade goods. C) GATT member nations seek to resolve their trade disputes unilaterally. D) The GATT panels have enforcement powers apart from advisory powers. E) It created an agency to serve as watchdog over world trade. 87) What does GATT use as the primary method to solve global trade problems? A) GATT works with government agencies of trade members. B) GATT uses coercion. C) GATT uses consultation. D) GATT implements the legislative agenda of trade members. E) GATT creates binding agreements between member nations. 88) What agreement makes it possible to challenge the restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels? A) Trade-Related Aspects of Intellectual Property Rights (TRIPs) B) Trade-Related Investment Measures (TRIMs) C) General Agreement on Trade in Services (GATS) D) Marrakesh Agreement E) Stockholm Agreement 89) The Uruguay Round resulted in which institution becoming the successor to the GATT? A) International Monetary Fund B) World Bank C) European Services Forum D) World Trade Organization E) Association of Southeast Asian Nations 90) How are WTO decisions enforced? A) All WTO decisions are enforceable under law. B) Member nations pay a duty to join WTO and this creates natural compliance. C) The World Court reviews and enforces all WTO decisions. D) International pressure to comply with WTO decisions is expected to force compliance. E) Decisions must pass through both houses of Congress to be enforced.

91) __________ are becoming a popular way to circumvent WTO guidelines and impose new duties. A) Antidumping duties B) Basic excise duties C) Special excise duties D) Production taxes E) Manufacturing taxes 92) Several nations that have become frustrated with the slow progress of the most recent round of WTO trade negotiations are A) negotiating bilateral trade agreements. B) forming a rival organization. C) refusing to accept all the rules and regulations imposed by the WTO. D) using legal means to sue the WTO. E) opting out of membership in the WTO. 93) _________ and the World Bank Group are two global institutions created primarily to assist nations in becoming and remaining economically viable. A) Amnesty International B) The World Court C) The International Monetary Fund D) The International Red Cross E) The International Federation of Blue Cross 94) What market barriers led to the creation of the International Monetary Fund? A) trade embargoes B) inflation and recession in Europe C) new taxing bodies governing trade D) inadequate monetary reserves and unstable currencies E) export quotas and higher tariffs 95) Developed by the International Monetary Fund to cope with universally floating exchange rates, ________ represent an average base of value derived from the value of a group of major currencies. A) exchange permits B) special drawing rights C) floating currencies D) gold rates E) dollar parities 96) The special drawing rights (SDRs) developed by the IMF can be thought of as A) black gold. B) exchange permits. C) floating currencies. D) paper gold. E) virtual dollars. 14 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

97) What is a basic criticism of global financial institutions? A) They failed to focus on the aim of reducing inequalities between rich and poor countries. B) They failed to help the Asian countries substantially when they underwent a major financial crisis in the 1990s. C) They failed to respect the autonomy of member nations by deeming any bilateral agreements between members as illegal if made without their approval. D) They failed to foresee and counter the unintended effects of globalization like pollution, exploitation, and cultural extinction. E) They failed to suppress the terrorists who were responsible for the attack in London that coincided with the G8 summit. 98) While unintended, what is an adverse consequence of globalization? A) nationalization of private sector holdings B) lower and more competitive oil prices C) reduced variety and quality of goods and services D) worker exploitation and domestic job losses E) provision of loans from the World Bank 99) Which statement accurately explains the status of protests against global financial institutions? A) Organized protests against global financial institutions have been catching the attention of the world since the establishment of the IMF in 1945. B) The sole focus of the anticapitalist protestors has been the environmental impact of globalization and the need for stability. C) The "antisweatshop" campaigns by students in America have translated into changes in policy. D) The entire gamut of anticapitalist protests have been weak and ineffectual in the face of the tremendous power of global financial institutions. E) The protests against global financial institutions have been organized yet nonviolent as a rule. 100) What steps did the United States take following World War II to minimize the spread of communism around the world? Name at least one specific piece of legislation that was created. 101) Compare the U.S. position in world trade today to when Servan-Schreiber warned Europe about U.S. multinational domination. 102) Why must the balance-of-payments record always be in balance? What does a balanced record signify? 103) Compare and contrast the three accounts of a balance-of-payments statement. 104) Describe the cost to the consumer when protectionist measures are in place. 105) Name three things that can be restricted when tariffs are imposed. 106) Explain the difference between a quota and a licensing limit. 15 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

107) Describe the three areas covered by the Omnibus Trade and Competitiveness Act of 1988 that are considered critical in improving U.S. trade. 108) Describe how the General Agreement on Trade in Services (GATS) helped the United States reduce barriers to international trade in services. 109) Why was the International Monetary Fund (IMF) formed? How does the IMF deal with universally floating rates?

International Marketing, 18e (Cateora) Chapter 2 The Dynamic Environment of International Trade 1) The Marshall Plan was developed by the United States as a method to assist Europe in rebuilding after World War II. Answer: TRUE Explanation: The United States wanted to infuse capitalism throughout the world to dampen the spread of communism. The Marshall Plan was a means to assist Europe in rebuilding after World War II. Difficulty: 2 Medium Topic: Western Europe's Marketplace in the World Economy Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) The GATT became part of the World Trade Organization in 1995 with the ratification of the Uruguay Round agreements. Answer: TRUE Explanation: With the ratification of the Uruguay Round agreements, the GATT became part of the World Trade Organization (WTO) in 1995, and its 117 original members moved into a new era of free trade. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) The United States faced decreasing competition in export markets beginning in 1970 with the ending of the Vietnam War. Answer: FALSE Explanation: At the close of the 1960s, U.S. MNCs were facing resistance to direct investments and increasing competition in export markets. Difficulty: 1 Easy Topic: How Formal Institutions Affect Domestic and International Competition Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

4) By the year 1971, the United States was selling less to other countries than it bought from them; that is, the United States had a trade deficit. Answer: TRUE Explanation: Before 1971, the United States sold more to other countries than it bought from them, so the United States had a favorable balance of trade. By 1971, however, the United States had a trade deficit of $2 billion that grew steadily until it peaked at $160 billion in 1987. Difficulty: 1 Easy Topic: Overview of Trade Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) The Organization for Economic Cooperation and Development (OECD) estimates that the economies of the developed world will expand at much faster rates when compared to the developing economies. Answer: FALSE Explanation: The Organization for Economic Cooperation and Development (OECD) estimates that the economies of developed countries will expand an average of 3 percent annually for the next 25 years, the same rate as in the past 25 years. Conversely, the economies of developing countries will expand an average of 6 percent annually for the next 25 years, higher than the 4 percent rate in the past 25 years. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time. Answer: TRUE Explanation: A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time—usually one year. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

7) In a balance-of-payments record, the current account is a record of direct investment, portfolio investment, and short-term capital movements to and from countries. Answer: FALSE Explanation: In a balance-of-payments statement, the current account is a record of all merchandise exports, imports, and service plus unilateral transfers of funds. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) When reviewing a balance-of-payments statement, you would check the reserves account to view exports and imports of gold. Answer: TRUE Explanation: The reserves account is a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) When foreign currencies can be traded for more dollars, U.S. products and companies are more expensive for the foreign customer and exports decrease. Answer: FALSE Explanation: When foreign currencies can be traded for more dollars, U.S. products (and companies) are less expensive for the foreign customer and exports increase, and foreign products are more expensive for the U.S. customer and the demand for imported goods is dampened. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) Establishing a tariff on fabrics imported from Uruguay so that U.S. manufacturers sell more fabrics is an example of a protectionist measure. Answer: TRUE Explanation: Protectionism occurs when nations utilize legal barriers, exchange barriers, and psychological barriers to restrain the entry of unwanted goods. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) In general, economists do not recognize "protection of the home market" as a valid argument for protectionist measures. Answer: TRUE Explanation: In general, economists recognize arguments regarding protection of an infant industry, national defense, and the industrialization of underdeveloped countries as valid. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) Quotas, boycotts, monetary barriers, and market barriers are examples of tariff barriers. Answer: FALSE Explanation: A tariff is a tax imposed by a government on goods entering at its borders. It is used to encourage development of domestic industry and protect existing industry. Governments may establish such barriers to trade as tariffs and a variety of nontariff barriers including quotas, boycotts, monetary barriers, and market barriers. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) In general, a tariff will decrease inflationary pressures. Answer: FALSE Explanation: In general, tariffs increase inflationary pressures, special interests' privileges, government control and political considerations in economic matters, and the number of tariffs (they beget other tariffs via reciprocity). Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Tariffs are often used as reprisals against protectionist moves of trading partners. Answer: TRUE Explanation: Tariffs can be arbitrary, discriminatory, and require constant administration and supervision. In addition, tariffs are often used as reprisals against protectionist moves of trading partners. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) The United States has placed a limit on the tons of sugar that can be imported into the country. This is an example of a tariff. Answer: FALSE Explanation: A quota is a specific unit or dollar limit applied to a particular type of good. The United States has specific guidelines restricting how many tons of sugar can be imported. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

16) An import license limits the quantities that can be imported on a case-by-case basis. Answer: TRUE Explanation: The fundamental difference between quotas and import licenses as a means of controlling imports is the greater flexibility of import licenses over quotas. Quotas permit importing until the quota is filled while import licenses limit quantities on a case-by-case basis. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) Voluntary export restraints are common in the agricultural industry when an agreement is made between the importing and exporting countries for a restriction on the volume of exports. Answer: TRUE Explanation: A voluntary export restraint (VER) is called voluntary because the exporting country sets the limits; however, it is generally imposed under the threat of stiffer quotas and tariffs being set by the importing country if a VER is not established. It is common in the textiles, clothing, steel, agriculture, and automobile industries. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) An embargo sets a limit on the quantity of goods one country can sell to another. Answer: FALSE Explanation: An embargo is a refusal to sell to a specific country. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) In the context of blocked currency, blockage is accomplished by refusing to allow an importer to exchange its national currency for the currency of the seller. Answer: TRUE Explanation: Blockage is accomplished by refusing to allow an importer to exchange its national currency for the currency of the seller. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) It is mandatory for importers who want to buy a foreign good from a foreign country to apply for a business permit in that country. Answer: FALSE Explanation: Importers who want to buy a foreign good must apply for an exchange permit, that is, permission to exchange an amount of local currency for foreign currency. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) An exchange permit issued by a government can stipulate an unfavorable rate of exchange depending on the desires of the government. Answer: TRUE Explanation: An exchange permit issued by a government can stipulate an unfavorable rate of exchange depending on the desires of the government. Difficulty: 1 Easy Topic: The Main Instruments and Institutions of the Foreign Exchange Market Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) The United States and other countries require some products to contain a percentage of "local content" to gain admission to their markets. Answer: TRUE Explanation: The United States and other countries require some products (automobiles in particular) to contain a percentage of "local content" to gain admission to their markets. This is an example of how countries use standards to protect their domestic industry. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) Antidumping laws encourage foreign producers to sell their products at a higher cost than the cost of production and create more opportunities for free trade. Answer: FALSE Explanation: Antidumping laws were designed to prevent foreign producers from "predatory pricing," a practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) The Omnibus Trade and Competitiveness Act of 1988 focuses on assisting businesses to be more competitive in world markets, but does not get involved in trade practices. Answer: FALSE Explanation: The Omnibus Trade and Competitiveness Act of 1988 is many faceted, focusing on assisting businesses to be more competitive in world markets as well as on correcting perceived injustice in trade practices. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) Under the Omnibus Trade and Competitiveness Act, the U.S. president has the authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products. Answer: TRUE Explanation: The Omnibus Trade and Competitiveness Act gives the U.S. president authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) One advantage of the Omnibus Trade and Competitiveness Act is a more flexible process to obtain export licenses. Answer: TRUE Explanation: The act has resulted in a much more flexible process for obtaining export licenses, in fewer products on the export control list and in greater access to information. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) The GATT panels were formed to resolve bilateral trade disputes and have both advisory and enforcement powers. Answer: FALSE Explanation: GATT member nations seek to resolve their trade disputes bilaterally; if that fails, special GATT panels are set up to recommend action. The panels are only advisory and have no enforcement powers. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) The decisions taken by the World Trade Organization in solving trade disputes among members are binding ones. Answer: TRUE Explanation: The World Trade Organization sets many rules governing trade among its 160 members, provides a panel of experts to hear and rule on trade disputes among members, and, unlike GATT, issues binding decisions. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) The International Monetary Fund was created before World War II to help individual states regain economic profitability. Answer: FALSE Explanation: The International Monetary Fund (IMF) was formed to overcome international market barriers such as inadequate monetary reserves and unstable currencies which are particularly vexing problems in global trade. Difficulty: 2 Medium Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) As both special drawing rights (SDRs) and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to gold and silver rather than dollars. Answer: FALSE Explanation: As both gold and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to SDRs rather than dollars. The SDR is in effect "paper gold" and represents an average base of value derived from the value of a group of major currencies. Difficulty: 1 Easy Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

31) After World War II, the United States led efforts to provide financial and industrial development assistance to rebuild Japan and channeled funds to foster economic growth in the underdeveloped world. These efforts were primarily aimed at A) halting the growth of Nazi Germany. B) dampening the spread of communism. C) dampening the spread of capitalism. D) building a stronger defense force. E) creating a worldwide trade bloc to counter the OPEC countries' clout. Answer: B Explanation: After World War II, as a means to dampen the spread of communism, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) After World War II, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. As a result, most of the noncommunist economies in the world A) stagnated. B) grew significantly. C) failed. D) quickly matched the U.S. economy. E) faced high inflation rates. Answer: B Explanation: As these countries worked to gain economic independence, the financial assistance provided by the United States allowed the economies of most of the noncommunist world to grow and new markets were created. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) What was the most apparent reciprocal impact of the foreign economic assistance given by the United States following World War II? A) European countries formed an alliance to counter the OPEC countries' clout. B) Outflow of labor to the recipient countries increased dramatically. C) All recipient countries appointed Americans to manage their central banks. D) Purchases of U.S. agricultural products, manufactured goods, and services by the recipient countries increased. E) Distribution of economic power and potential became more uneven. Answer: D Explanation: For every dollar the United States invested in the economic development and rebuilding of other countries after World War II, hundreds of dollars more returned in the form of purchases of U.S. agricultural products, manufactured goods, and services. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) What factor was primarily responsible for the excess in production capacity in the United States after World War II? A) The United States government raised the tariffs on most imports by 60%. B) Many firms from other nations shifted their production facilities to the United States. C) Domestic demand was at a historic low and resulted in excess capacity. D) The returning military after World War II increased the labor supply in the United States. E) The implementation of the Marshall Plan dampened the overseas demand. Answer: D Explanation: The overseas demand created by the Marshall Plan and other programs was important to the U.S. economy because the vast manufacturing base built to supply World War II and the swelling labor supply of returning military created a production capacity well beyond domestic needs. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) How did GATT prevent the repeat of the economic disaster that occurred after World War I? A) It provided short-term loans to struggling nations. B) It promoted dumping policies to allow stronger ties between member nations. C) It fostered isolationism for nations that were market leaders. D) It provided for a third party, the United Nations, to negotiate peace treaties. E) It provided a forum for member countries to negotiate a reduction of tariffs and other barriers to trade. Answer: E Explanation: Determined not to repeat the economic disaster that followed World War I, world leaders created the General Agreement on Tariffs and Trade (GATT), a forum for member countries to negotiate a reduction of tariffs and other barriers to trade. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) Why did the Smoot-Hawley Act play a role in sending the world's economies into the Great Depression? A) It encouraged the majority of world economies to lower tariffs to imported goods. B) It raised U.S. tariffs on thousands of imported goods by more than 60 percent. C) It created an embargo on all agricultural products. D) It divided the United States into factions based on race. E) It forced independent countries to band together to stay economically viable. Answer: B Explanation: The Smoot-Hawley Act raised average U.S. tariffs on more than 20,000 imported goods to levels in excess of 60 percent and in retaliation 60 countries erected high tariff walls, and international trade stalled. A major worldwide recession catapulted the world's economies into the Great Depression. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) What was the outcome for GATT after the ratification of the Uruguay Round agreements? A) GATT allowed the United States to increase its import tax. B) GATT became part of the World Trade Organization. C) GATT directly led to the uneven distribution of economic power and potential. D) The European Union decided to stay away from the treaty. E) The original purpose was sidelined in favor of political and military intervention between member states. Answer: B Explanation: With the ratification of the Uruguay Round agreements, the GATT became part of the World Trade Organization (WTO) in 1995, and its 117 original members moved into a new era of free trade. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance that followed World War II, led to A) the rise of new global marketing opportunities. B) the decrease in demand for American goods worldwide. C) the dissolution of GATT. D) the spread of communism by the United States. E) the sharp reduction in the production capacity of the United States. Answer: A Explanation: The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance, led to new global marketing opportunities. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) Which were the two major challenges faced by U.S. multinational corporations at the close of the 1960s? A) the creation of the Soviet Union and the higher tariffs on imports B) growing jingoistic nationalism and a negative population growth rate in major international markets C) resistance to direct investment and increasing competition in export markets D) increasing Chinese domination in the manufacturing sector and the falling dollar in global markets E) the decreased demand for U.S. goods in the global market and the growing influence of consumer rights advocacy in the home market Answer: C Explanation: At the close of the 1960s, U.S. multinational corporations (MNCs) were facing major challenges on two fronts: resistance to direct investment and increasing competition in export markets. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) Post-World War II, worldwide economic growth was in strong evidence and countries that were once classified as less developed were reclassified as A) communist countries. B) free trade economies. C) tier-II countries. D) developed countries. E) newly industrialized countries. Answer: E Explanation: The post-World War II era witnessed worldwide economic growth and countries once classified as less developed were reclassified as newly industrialized countries (NICs). Various NICs such as Brazil, Mexico, South Korea, Taiwan, Singapore, and Hong Kong experienced rapid industrialization. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) Which statement presents the correct picture of the outcome of increased world trade after the 1950s, contrary to Servan-Schreiber's prediction? A) Third World countries have been excluded from this economic growth leading to stark imbalances in wealth. B) The European Union has become the center of world trade, taking the position away from the United States. C) The United States has continuously maintained the positive balance of trade it attained during the 1950s. D) Economic power and potential has become more evenly distributed among the countries of the world. E) SDRs and gold have lost their utility as the basic medium of financial exchange and most monetary statistics have started relating to the U.S. dollar. Answer: D Explanation: As a result of the expansionary trade measures led by the United States, economic power and potential has become more evenly distributed among countries than was the case when Servan-Schreiber warned Europe about U.S. multinational domination. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) What is the major reason behind the failure of American MNCs to completely dominate the European markets as predicted by Servan-Schreiber? A) The resurgence of competition for U.S. businesses from all over the world B) The elimination of import taxes in the European countries C) The restructuring of U.S industries D) The decadence of communism E) The dissolution of colonial powers Answer: A Explanation: Servan-Schreiber's prediction did not come true for many reasons, but one of the more important was that American MNCs confronted a resurgence of competition from all over the world. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) What strategy was employed by the United States to regain its lost market share for capital goods by the late 1990s? A) funding the competitive developing nations B) restructuring its industries to be more "lean and mean" C) decreasing its exports and increasing its imports D) raising average U.S. tariffs on more than 20,000 imported goods by 60 percent E) provoking increased protectionism from other countries Answer: B Explanation: In the 1980s, the United States saw its competitive position in capital goods such as computers and machinery erode sharply. But U.S. industry got a wake-up call and responded by restructuring its industries, in essence, "getting lean and mean." By the late 1990s, the United States was once again holding its own in capital goods, particularly with trade surpluses in the high-tech category. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) Following World War II, it is noted that the West created the trade patterns. This was especially true in which one of the following? A) North America B) Europe C) South America D) Asia E) Central America Answer: D Explanation: By the last decade of the 20th century, Asia was controlled and managed by Asians for the first time in 400 years. During the decades since World War II, the West set the patterns for trade, but increasingly, Asia will be a major force. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) In the last few years, most of the countries of the world saw a dramatic slowdown in the growth of their economies with the exception of A) the United States. B) Spain. C) China. D) Greece. E) France. Answer: C Explanation: The unprecedented and precipitous growth of the U.S. economy in the late 1990s slowed dramatically in the last few years, and of course dramatically so in 2009. Growth in most of the rest of the world has followed suit, with the exception of China. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) The World Bank estimates that five countries whose share of world trade is barely one-third that of the European Union will, by 2020, have a 50 percent higher share than that of the European Union. Which of these countries is included on this list? A) Canada B) Nigeria C) Netherlands D) Indonesia E) Zimbabwe Answer: D Explanation: The World Bank estimates that five countries—Brazil, China, India, Indonesia, and Russia—whose share of world trade is barely one-third that of the European Union will, by 2020, have a 50 percent higher share than that of the European Union. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) The system of accounts that records a nation's international financial transactions is most accurately called its A) supply chain management system. B) gross domestic product system. C) net domestic product payments. D) balance of payments. E) net national product systems. Answer: D Explanation: The system of accounts that records a nation's international financial transactions is called its balance of payments. A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time—usually one year. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) What is used to ensure that balance-of-payments records are always in balance? A) sum of squares recording system B) bank reconciliation system C) double-entry bookkeeping system D) archival records system E) multifactor recording system Answer: C Explanation: As the balance-of-payments record of a nation is maintained on a double-entry bookkeeping system, it must always be in balance. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) A balance-of-payments statement for a country reveals A) how rich or poor a country is financially. B) a record of the country's financial condition. C) a comparison of one country's finances to another country's debt. D) a balanced budget for the country. E) the spending power available to the country for specific goods. Answer: B Explanation: A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time—usually one year. A balance of payments is a record of condition, not a determinant of condition. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) What is a defining characteristic of a balance-of-payments statement? A) It is a record of the domestic transactions between the government of a country and the private companies in that country. B) It records all financial transactions between the residents of a country and those of the rest of the world. C) It records the trade policies of the member nations of the WTO. D) It is an annual record of the profitable foreign transactions made by a particular country. E) It is a financial statement in which the credits must exceed the debits. Answer: B Explanation: A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time—usually one year. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) Which of the following falls on the plus side of the U.S. balance of payments? A) payments to the United States for insurance B) the costs of goods imported C) spending by American tourists overseas D) new overseas investments E) the cost of foreign military Answer: A Explanation: On the plus side of the U.S. balance of payments are merchandise export sales; money spent by foreign tourists; payments to the United States for insurance, transportation, and similar services; payments of dividends and interest on investments abroad; return on capital invested abroad; new foreign investments in the United States; and foreign government payments to the United States. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) Which of the following falls on the minus side of the U.S. balance of payments? A) payments to the United States for insurance B) payments of dividends and interest on investments abroad C) return on capital invested abroad D) new foreign investments in the United States E) spending by American tourists overseas Answer: E Explanation: On the minus side of the U.S. balance of payments are the costs of goods imported, spending by American tourists overseas, new overseas investments, and the cost of foreign military and economic aid. A deficit results when international payments are greater than receipts. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) What occurs in the balance of payments account when international payments are greater than receipts? A) a tariff B) inflation C) recession D) a credit E) a deficit Answer: E Explanation: A deficit results when international payments are greater than receipts. Difficulty: 2 Medium Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) The ________ account of the balance-of-payments statement is used to record all merchandise exports, imports, and services plus unilateral transfers of funds. A) current B) capital C) credit D) receivables E) reserves Answer: A Explanation: The current account shows a record of all merchandise exports, imports, and services plus unilateral transfers of funds. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) Which account in the balance-of-payments statement is a record of direct investment, portfolio investment, and short-term movement of cash and technology to and from countries? A) current account B) capital account C) credit account D) receivables account E) reserves account Answer: B Explanation: The capital account of the balance-of-payments statement is a record of direct investment, portfolio investment, and short-term capital movements to and from countries. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) The ________ of the balance-of-payments statement is used to record increases or decreases in foreign exchange and increases or decreases in liabilities to foreign central banks. A) current account B) capital account C) credit account D) receivables account E) reserves account Answer: E Explanation: The reserves account of the balance-of-payments statement is a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks. Difficulty: 1 Easy Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) What argument regarding the need for protectionism is recognized by economists as valid? A) need to keep money at home B) encouragement of capital accumulation C) industrialization of a low-wage nation D) conservation of natural resources E) maintenance of employment and reduction of unemployment Answer: C Explanation: Countless reasons to maintain government restrictions on trade are espoused by protectionists, but economists in general recognize as valid only the arguments regarding infant industry, national defense, and industrialization of low-wage nations. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) Rishi, a protectionist, has seen several small businesses go bankrupt because they were unable to compete with the cheaper prices of goods provided by foreign companies. The cellphone manufacturing industry has just started in the United Kingdom, and Rishi's company is one of the first to try its hand at cell-phone manufacturing. What argument is most likely to be used by Rishi to persuade his government to restrict the import of foreign cell phones from foreign companies? A) protection of an infant industry B) the need to keep money at home C) conservation of natural resources D) national defense E) maintenance of standard of living Answer: A Explanation: The case tells us that cell-phone manufacturing is a new industry in the United Kingdom. Protecting this infant industry would be the most probable reason for seeking protection from foreign competition. Difficulty: 3 Hard Topic: Economic Development Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

59) What is a tariff? A) It is a tax levied by a government on goods being exported out of the country. B) It is a tax paid by individual states to the federal government for goods transferred across state lines. C) It is a tax imposed by a government on goods that are imported into the country. D) It is a limit on the amount of goods that can be imported into the country. E) It is a limit on the amount of goods that can be exported out of the country. Answer: C Explanation: A tariff is a tax imposed by a government on goods entering at its borders. Tariffs may be used as revenue-generating taxes or to discourage the importation of goods, or for both reasons. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) In general, tariffs weaken A) inflationary pressures. B) special interests' privileges. C) balance-of-payments positions. D) government control in economic matters. E) the number of reciprocal tariffs by other countries. Answer: C Explanation: In general, tariffs weaken balance-of-payments positions, supply-and-demand patterns, and international relations (they can start trade wars). Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) Which statement is true of tariffs? A) They strengthen balance-of-payments positions. B) They strengthen supply-and-demand patterns. C) They increase special interests' privileges. D) They strengthen international relations. E) They promote competition. Answer: C Explanation: In general, tariffs increase inflationary pressures, special interests' privileges, government control and political considerations in economic matters, and the number of tariffs. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) The tariff on certain goods is based on the percentage of the determined value of the item being imported. What type of tariff is this? A) compound duty B) quota duty C) specific duty D) reciprocal duty E) ad valorem duty Answer: E Explanation: In the United States the types of customs duties used are classified as ad valorem duties, specific duties, and compound duty. Ad valorem duties are based on a percentage of the determined value of the imported goods. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

63) A specific unit or dollar limit applied to a particular type of good is called a(n) A) trade license. B) quota. C) ad valorem duty. D) predatory price. E) exchange rate. Answer: B Explanation: A quota is a specific unit or dollar limit applied to a particular type of good. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) A boycott on importing produce from Mexico would be an example of a A) compound duty. B) revenue tariff. C) nontariff barrier. D) specific duty. E) quota embargo. Answer: C Explanation: Nontariff barriers include quotas, boycotts, monetary barriers, and market barriers. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) If a country refuses to sell some products to another country, it is utilizing which barrier to trade? A) import credit discriminations B) export subsidies C) voluntary export restraints D) embargoes E) packaging, labeling, or marking standards Answer: D Explanation: To encourage development of domestic industry and protect existing industry, governments may establish such barriers to trade as U.S. tariffs and a variety of nontariff barriers and import policies including quotas, embargoes, import licensing requirements, minimum import price limits, and proportional restrictions of foreign to domestic goods. An embargo is a refusal to sell to a specific country. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) If a country decided to refuse to allow an importer to exchange its national currency for the sellers' currency, it would be an example of a(n) ________ currency. A) blocked B) spot C) embargo D) taxed E) quota Answer: A Explanation: Blocked currency is used as a political weapon or as a response to difficult balance-of-payments situations. In effect, blockage cuts off all importing or all importing above a certain level. Blockage is accomplished by refusing to allow an importer to exchange its national currency for the sellers' currency. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) Exporting countries primarily agree to voluntary export restraints (VERs) to A) minimize exposure in the importing country. B) reduce market competitiveness. C) avoid stiffer quotas being set by the importing country. D) take over local industries of the importing country. E) avoid criminal prosecution. Answer: C Explanation: A voluntary export restraint (VER) is called voluntary because the exporting country sets the limits; however, it is generally imposed under the threat of stiffer quotas and tariffs being set by the importing country if a VER is not established. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) A voluntary export restraint is an agreement signed willingly between the importing country and the exporting country for a restriction on the A) overall tax. B) number of businesses eligible for imports. C) volume of exports. D) government's portion of the paid tariff. E) balance-of-payments statements. Answer: C Explanation: Similar to quotas are the voluntary export restraints (VERs) or orderly market agreements (OMAs). Common in textiles, clothing, steel, agriculture, and automobiles, the VER is an agreement between the importing country and the exporting country for a restriction on the volume of exports. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) Voluntary export restraints are commonly used in what industry? A) finance B) furniture C) agriculture D) media E) education Answer: C Explanation: A voluntary export restraint (VER) is called voluntary because the exporting country sets the limits on its exports. They are common in textiles, clothing, steel, agriculture, and automobiles. Difficulty: 3 Hard Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) The marketing manager for Glorious Products wants to export the company's line of fashion boots to an EU country. However, she discovers that there is a complete restriction on the import of any form of leather into that country. This is an example of A) an orderly market agreement. B) a quota. C) a monetary barrier. D) a voluntary export restraint. E) a boycott. Answer: E Explanation: A government boycott is an absolute restriction against the purchase and importation of certain goods and/or services from other countries. As the country mentioned in the scenario has absolutely restricted the importation of leather, it has issued a government boycott against leather. Difficulty: 3 Hard Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

71) One country refuses to sell goods to its neighboring country based on the belief that the neighboring country harbors radicals and terrorists. In this case, the refusal is referred to as a(n) A) antidumping penalty. B) embargo. C) monetary barrier. D) orderly market agreement. E) voluntary export restraint. Answer: B Explanation: In this case, the refusal is most accurately referred to as an embargo. An embargo is a refusal to sell to a specific country. Difficulty: 3 Hard Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 72) In the context of monetary barriers, blockage is ideally accomplished when A) a country refuses to allow an importer to exchange its national currency for the country's currency. B) two countries enter into a voluntary agreement to determine the value of their currencies. C) a country applies a specific unit or dollar limit to a particular type of good. D) money dealers limit the rate at which foreign currencies are exchanged. E) the government of a country imposes a mandatory tax on goods entering at its borders. Answer: A Explanation: In the context of monetary barriers, blockage is accomplished by refusing to allow an importer to exchange its national currency for the seller's currency. In effect, blockage cuts off all importing or all importing above a certain level. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) In order to effectively secure foreign exchange, what is most likely to be used by countries experiencing severe shortages of foreign exchange? A) privatization B) government approval C) spot pricing D) voluntary export restriction E) monopoly Answer: B Explanation: Government approval to secure foreign exchange is often used by countries experiencing severe shortages of foreign exchange. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) What trade policy tool makes it mandatory for its importers who want to buy a foreign good to apply for an exchange permit? A) tariff B) import quota C) blocked currency D) government approval E) export levy Answer: D Explanation: Government approval requires that importers who want to buy a foreign good must apply for an exchange permit, that is, permission to exchange an amount of local currency for foreign currency. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) An exchange permit can stipulate the A) quantity of goods that can be exchanged for a particular sum of foreign currency. B) number of parties that can be involved in an exchange transaction. C) amount to be exchanged that must be deposited in a local bank for a set period. D) quality standards of the goods involved in an exchange. E) number of times one party can avail exchange permits. Answer: C Explanation: An exchange permit may stipulate that the amount to be exchanged must be deposited in a local bank for a set period prior to the transfer of goods. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) Active Bicycle Company has just received notice that a shipment of 300 bicycles has been rejected by the customs administration of the recipient country because the bikes did not include a metal plate surrounding the chain. What category of nontariff barriers primarily uses such quality issues as a trade barrier? A) quotas B) licenses C) embargoes D) boycotts E) standards Answer: E Explanation: Standards are sometimes used in an unduly stringent or discriminating way to restrict trade, but the sheer volume of regulations in this category is a problem in itself. Nontariff barriers of this category include standards to protect health, safety, and product quality. As the customs administration of the recipient country has used the quality of goods imported as a reason for restricting trade, it has used standards as a nontariff barrier. Difficulty: 3 Hard Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

77) The United States and other countries require some products (automobiles in particular) to contain a percentage of "local content" to gain admission to their markets. This is an example of the stringent usage of ________ to restrict trade. A) exchange permits B) embargoes C) blocked currencies D) standards E) antidumping penalties Answer: D Explanation: Nontariff barriers of the standards category include standards to protect health, safety, and product quality. The standards are sometimes used in an unduly stringent or discriminating way to restrict trade. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) ________ pricing is the practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. A) Basing point B) Spot C) Defensive D) Counterpoint E) Predatory Answer: E Explanation: Antidumping laws were designed to prevent foreign producers from "predatory pricing," a practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) ________ is/are a nontariff barrier that was specifically designed to prevent foreign producers from using predatory pricing to take control of U.S. markets. A) Quotas B) Embargoes C) Blocked currency D) Antidumping laws E) Exchange permits Answer: D Explanation: Antidumping laws were designed to prevent foreign producers from predatory pricing. Violators are assessed antidumping duties for selling below cost and/or countervailing duties to prevent the use of foreign government subsidies to undermine American industry. Many countries have similar laws, and they are allowed under WTO rules. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) Which trading partner of the United States became its number one "trade problem" at the beginning of the 21st century? A) United Kingdom B) Japan C) Germany D) Canada E) China Answer: E Explanation: At the turn of the century, China took over from Japan as America's number one "trade problem." Difficulty: 1 Easy Topic: Overview of Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) What legislative decision was designed to primarily deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners? A) the Neutrality Pact of 1941 B) the Omnibus Trade and Competitiveness Act of 1988 C) the League of Nations Act of 1920 D) the Hawley-Smoot Tariff Act of 1930 E) the International Monetary Fund and Bank Act of 1945 Answer: B Explanation: The Omnibus Trade and Competitiveness Act of 1988 is many faceted, focusing on assisting businesses to be more competitive in world markets as well as on correcting perceived injustice in trade practices. The trade act was designed to deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) What was the impetus for the Omnibus Trade and Competitiveness Act? A) Markets in the U.S. were open to most of the world but markets in Europe and many Asian countries were relatively closed. B) The U.S. market was relatively closed to the rest of the world. C) Markets in the U.S. were being driven by foreign demand. D) The trade volume in the U.S. was declining. E) Markets in the U.S. were trading with partners based on how they hoped they would respond rather than how they actually operated. Answer: A Explanation: The Omnibus Trade and Competitiveness Act of 1988 is many faceted, focusing on assisting businesses to be more competitive in world markets as well as on correcting perceived injustice in trade practices. The trade act was designed to deal with trade deficits, protectionism, and the overall fairness of our trading partners. Congressional concern centered on the issue that U.S. markets were open to most of the world but markets in Japan, western Europe, and many Asian countries were relatively closed. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the ________ section of the Omnibus Trade and Competitiveness Act. A) market access B) export expansion C) import relief D) foreign exchange regulation E) trade deficit Answer: B Explanation: Export controls, the Foreign Corrupt Practices Act (FCPA), and export promotion were specifically addressed in the export expansion section of the Omnibus Trade and Competitiveness Act. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) Which section of the Omnibus Trade and Competitiveness Act recognizes that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and possibly severe financial harm? A) the market access section B) the export expansion section C) the import relief section D) the foreign exchange regulation section E) the trade deficit section Answer: C Explanation: Recognizing that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and, occasionally, severe financial harm, the import relief section of the Omnibus Trade and Competitiveness Act provides a menu of remedies for U.S. businesses adversely affected by imports. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) What is one of the four ongoing activities that support the growth of international trade? A) Warsaw Pact B) Kyoto Protocol C) International Monetary Fund D) World Summit on Sustainable Development E) Treaty of Waitangi Answer: C Explanation: Four ongoing activities to support the growth of international trade are GATT, the associated WTO, the International Monetary Fund (IMF), and the World Bank Group. Difficulty: 1 Easy Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) Which statements accurately describes the General Agreement on Tariffs and Trade (GATT)? A) The United States, the United Kingdom, and Germany were the only signatories of the original GATT. B) The original agreement provided a process to increase the tariffs on trade goods. C) GATT member nations seek to resolve their trade disputes unilaterally. D) The GATT panels have enforcement powers apart from advisory powers. E) It created an agency to serve as watchdog over world trade. Answer: E Explanation: GATT member nations seek to resolve their trade disputes bilaterally; if that fails, special GATT panels are set up to recommend action. The original agreement provided a process to reduce tariffs and created an agency to serve as watchdog over world trade. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) What does GATT use as the primary method to solve global trade problems? A) GATT works with government agencies of trade members. B) GATT uses coercion. C) GATT uses consultation. D) GATT implements the legislative agenda of trade members. E) GATT creates binding agreements between member nations. Answer: C Explanation: In general, the agreement covers these basic elements: (1) trade shall be conducted on a nondiscriminatory basis; (2) protection shall be afforded domestic industries through customs tariffs, not through such commercial measures as import quotas; and (3) consultation shall be the primary method used to solve global trade problems. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) What agreement makes it possible to challenge the restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels? A) Trade-Related Aspects of Intellectual Property Rights (TRIPs) B) Trade-Related Investment Measures (TRIMs) C) General Agreement on Trade in Services (GATS) D) Marrakesh Agreement E) Stockholm Agreement Answer: B Explanation: As a result of TRIMs, restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels can be challenged. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) The Uruguay Round resulted in which institution becoming the successor to the GATT? A) International Monetary Fund B) World Bank C) European Services Forum D) World Trade Organization E) Association of Southeast Asian Nations Answer: D Explanation: Perhaps the most notable achievement of the Uruguay Round was the creation of a new institution as a successor to the GATT—the World Trade Organization. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) How are WTO decisions enforced? A) All WTO decisions are enforceable under law. B) Member nations pay a duty to join WTO and this creates natural compliance. C) The World Court reviews and enforces all WTO decisions. D) International pressure to comply with WTO decisions is expected to force compliance. E) Decisions must pass through both houses of Congress to be enforced. Answer: D Explanation: Although the WTO has no means of enforcement, international pressure to comply with WTO decisions from other member countries is expected to force compliance. Difficulty: 3 Hard Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) __________ are becoming a popular way to circumvent WTO guidelines and impose new duties. A) Antidumping duties B) Basic excise duties C) Special excise duties D) Production taxes E) Manufacturing taxes Answer: A Explanation: Antidumping duties are becoming a favorite way for nations to impose new duties. The WTO continues to fight these new, creative barriers to trade. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Several nations that have become frustrated with the slow progress of the most recent round of WTO trade negotiations are A) negotiating bilateral trade agreements. B) forming a rival organization. C) refusing to accept all the rules and regulations imposed by the WTO. D) using legal means to sue the WTO. E) opting out of membership in the WTO. Answer: A Explanation: Frustrated with the slow progress of the most recent round of WTO trade negotiations, several countries are negotiating bilateral trade agreements. For example, the United States has signed free trade agreements with twenty countries including Peru, Colombia, Panama, and South Korea. Difficulty: 2 Medium Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) _________ and the World Bank Group are two global institutions created primarily to assist nations in becoming and remaining economically viable. A) Amnesty International B) The World Court C) The International Monetary Fund D) The International Red Cross E) The International Federation of Blue Cross Answer: C Explanation: The International Monetary Fund (IMF) and the World Bank Group are two global institutions created to assist nations in becoming and remaining economically viable. Difficulty: 1 Easy Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) What market barriers led to the creation of the International Monetary Fund? A) trade embargoes B) inflation and recession in Europe C) new taxing bodies governing trade D) inadequate monetary reserves and unstable currencies E) export quotas and higher tariffs Answer: D Explanation: Inadequate monetary reserves and unstable currencies are particularly vexing problems in global trade. So long as these conditions exist, world markets cannot develop and function as effectively as they should. To overcome these particular market barriers that plagued international trading before World War II, the International Monetary Fund (IMF) was formed. Difficulty: 2 Medium Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) Developed by the International Monetary Fund to cope with universally floating exchange rates, ________ represent an average base of value derived from the value of a group of major currencies. A) exchange permits B) special drawing rights C) floating currencies D) gold rates E) dollar parities Answer: B Explanation: Developed by the International Monetary Fund to cope with universally floating exchange rates, special drawing rights (SDRs) represents an average base of value derived from the value of a group of major currencies. Difficulty: 2 Medium Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) The special drawing rights (SDRs) developed by the IMF can be thought of as A) black gold. B) exchange permits. C) floating currencies. D) paper gold. E) virtual dollars. Answer: D Explanation: The SDR is in effect paper gold and represents an average base of value derived from the value of a group of major currencies. Difficulty: 1 Easy Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) What is a basic criticism of global financial institutions? A) They failed to focus on the aim of reducing inequalities between rich and poor countries. B) They failed to help the Asian countries substantially when they underwent a major financial crisis in the 1990s. C) They failed to respect the autonomy of member nations by deeming any bilateral agreements between members as illegal if made without their approval. D) They failed to foresee and counter the unintended effects of globalization like pollution, exploitation, and cultural extinction. E) They failed to suppress the terrorists who were responsible for the attack in London that coincided with the G8 summit. Answer: D Explanation: The basic complaint against the WTO, IMF, and others is the amalgam of unintended consequences of globalization: environmental concerns, worker exploitation and domestic job losses, cultural extinction, higher oil prices, and diminished sovereignty of nations. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) While unintended, what is an adverse consequence of globalization? A) nationalization of private sector holdings B) lower and more competitive oil prices C) reduced variety and quality of goods and services D) worker exploitation and domestic job losses E) provision of loans from the World Bank Answer: D Explanation: The basic complaint against the WTO, IMF, and others is the amalgam of unintended consequences of globalization: environmental concerns, worker exploitation and domestic job losses, cultural extinction, higher oil prices, and diminished sovereignty of nations. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) Which statement accurately explains the status of protests against global financial institutions? A) Organized protests against global financial institutions have been catching the attention of the world since the establishment of the IMF in 1945. B) The sole focus of the anticapitalist protestors has been the environmental impact of globalization and the need for stability. C) The "antisweatshop" campaigns by students in America have translated into changes in policy. D) The entire gamut of anticapitalist protests have been weak and ineffectual in the face of the tremendous power of global financial institutions. E) The protests against global financial institutions have been organized yet nonviolent as a rule. Answer: C Explanation: The protest groups, some of them with responsible intent, have affected policy. For example, "antisweatshop" campaigns, mostly in America and mostly student-led, have had effects beyond college campuses. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

100) What steps did the United States take following World War II to minimize the spread of communism around the world? Name at least one specific piece of legislation that was created. Answer: After World War II, as a means to dampen the spread of communism, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. The Marshall Plan to assist in rebuilding Europe, financial and industrial development assistance to rebuild Japan, and funds channeled through the Agency for International Development were some of the measures taken by the United States to help strengthen the world economy. With the countries newly freed from colonial powers striving to gain economic independence and the financial assistance offered by the United States, most of the noncommunist world's economies grew, and new markets were created. The benefits of the foreign economic assistance given by the United States flowed both ways. For every dollar the United States invested in the economic development and rebuilding of other countries after World War II, hundreds of dollars more returned in the form of purchases of U.S. agricultural products, manufactured goods, and services. In short, the United States helped make the world's economies stronger, which enabled them to buy more from us. Difficulty: 3 Hard Topic: Economic Development Learning Objective: 02-01 The basis for the reestablishment of world trade following World War II. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 101) Compare the U.S. position in world trade today to when Servan-Schreiber warned Europe about U.S. multinational domination. Answer: In short, economic power and potential has become more evenly distributed among countries than was the case when Servan-Schreiber warned Europe about U.S. multinational domination. Instead, the U.S. position in world trade is now shared with other countries. Difficulty: 3 Hard Topic: North America's Marketplace in the World Economy Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

102) Why must the balance-of-payments record always be in balance? What does a balanced record signify? Answer: The system of accounts that records a nation's international financial transactions is called its balance of payments. A balance of payments represents the difference between receipts from foreign countries on one side and payments to them on the other. As the balance-ofpayments record is maintained on a double-entry bookkeeping system, it must always be in balance. As on an individual company's financial statement, the assets and liabilities or the credits and debits must offset each other. And like a company's statement, the fact that they balance does not mean a nation is in particularly good or poor financial condition. A balance of payments is a record of condition, not a determinant of condition. Difficulty: 3 Hard Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 103) Compare and contrast the three accounts of a balance-of-payments statement. Answer: A balance-of-payments statement includes three accounts: the current account—a record of all merchandise exports, imports, and services plus unilateral transfers of funds; the capital account—a record of direct investment, portfolio investment, and short-term capital movements to and from countries; and the official reserves account—a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks. Of the three, the current account is of primary interest to international business. Difficulty: 3 Hard Topic: Balance of Payments Learning Objective: 02-02 The importance of balance-of-payment figures to a country's economy. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

104) Describe the cost to the consumer when protectionist measures are in place. Answer: To give you some idea of the cost to the consumer, consider the results of a recent study of 21 protected industries. The research showed that U.S. consumers pay about $70 billion per year in higher prices because of tariffs and other protective restrictions. On average, the cost to consumers for saving one job in these protected industries was $170,000, much higher than the wages and benefits of the average America manufacturing worker. Unfortunately, protectionism is politically popular, particularly during times of declining wages and/or high unemployment, but it rarely leads to renewed growth in a declining industry. And the jobs that are saved are saved at a very high cost, which constitutes a tax that consumers unknowingly pay. Difficulty: 3 Hard Topic: Trade Restrictions Learning Objective: 02-03 The effects of protectionism on world trade. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 105) Name three things that can be restricted when tariffs are imposed. Answer: The following are the effects of imposing tariffs: In general, tariffs restrict: manufacturers' supply sources choices available to consumers competition Difficulty: 2 Medium Topic: Trade Restrictions Learning Objective: 02-04 The several types of trade barriers. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 106) Explain the difference between a quota and a licensing limit. Answer: As a means of regulating the flow of exchange and the quantity of a particular imported commodity, countries often require import licenses. The fundamental difference between quotas and import licenses as a means of controlling imports is the greater flexibility of import licenses over quotas. Quotas permit importing until the quota is filled; licensing limits quantities on a case-by-case basis. Difficulty: 3 Hard Topic: Trade Restrictions Learning Objective: 02-04 The several types of trade barriers. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

107) Describe the three areas covered by the Omnibus Trade and Competitiveness Act of 1988 that are considered critical in improving U.S. trade. Answer: The Omnibus Trade and Competitiveness Act of 1988 was designed to deal with trade deficits, protectionism, and the overall fairness of America's trading partners. The bill covers three areas considered critical in improving U.S. trade: market access, export expansion, and import relief. Market Access: The issue of the openness of markets for U.S. goods is addressed as market access. The act gives the U.S. president authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products. Export Expansion: The trade act recognizes that some problems with U.S. export competitiveness stem from impediments on trade imposed by U.S. regulations and export disincentives. Export controls, the Foreign Corrupt Practices Act (FCPA), and export promotion were specifically addressed in the export expansion section of the act. Import Relief: Recognizing that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and, occasionally, severe financial harm, the import relief section of the act provides a menu of remedies for U.S. businesses adversely affected by imports. Difficulty: 3 Hard Topic: Trade Restrictions Learning Objective: 02-05 The provisions of the Omnibus Trade and Competitiveness Act. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 108) Describe how the General Agreement on Trade in Services (GATS) helped the United States reduce barriers to international trade in services. Answer: An important objective of the United States in the Uruguay Round was to reduce or eliminate barriers to international trade in services. The General Agreement on Trade in Services (GATS) was the first multilateral, legally enforceable agreement covering trade and investment in the services sector. It provides a legal basis for future negotiations aimed at eliminating barriers that discriminate against foreign services and deny them market access. For the first time, comprehensive multilateral disciplines and procedures covering trade and investment in services were established. Specific market-opening concessions from a wide range of individual countries were achieved, and provision was made for continued negotiations to liberalize telecommunications and financial services further. Difficulty: 3 Hard Topic: The World Trading System, GATT, and the WTO Learning Objective: 02-06 The importance of GATT and the World Trade Organization. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

109) Why was the International Monetary Fund (IMF) formed? How does the IMF deal with universally floating rates? Answer: Inadequate monetary reserves and unstable currencies are particularly vexing problems in global trade. To overcome these particular market barriers that plagued international trading before World War II, the International Monetary Fund (IMF) was formed. Originally 29 countries signed the agreement; now 188 countries are members. To cope with universally floating exchange rates, the IMF developed special drawing rights (SDRs). The SDR is in effect paper gold and represents an average base of value derived from the value of a group of major currencies. Rather than being denominated in the currency of any given country, trade contracts are frequently written in SDRs because they are much less susceptible to exchange-rate fluctuations. Difficulty: 3 Hard Topic: The Role of the World Bank and the International Monetary Fund in the International Monetary System Learning Objective: 02-07 The emergence of the International Monetary Fund and the World Bank Group. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 3 History and Geography: The Foundations Of Culture 1) A country's history influences business decisions such as market entry and personnel decisions. 2) Confucian philosophy, taught throughout Japan's history, emphasizes the basic virtue of loyalty to the country. 3) Working as individuals, rather than together, for a common cause is a fundamental belief in Japanese behavior. 4) Recording of historic events by historians belonging to different cultures gives us a subjective view of history. 5) Mexico's attitude toward America is accurately summed up in the statement—"Geography has made us neighbors, tradition has made us friends." 6) In the context of U.S. foreign policies, the Monroe Doctrine, in its broadest interpretation, meant that the United States surrendered occupation of Cuba to the Soviet Union. 7) Manifest Destiny was used to justify the U.S. annexation of Texas, Oregon, New Mexico, and California. 8) The Monroe Doctrine dictated that there would be no further European colonization in the New World. 9) The Roosevelt Corollary played a significant role in the U.S. acquisition of the Panama Canal. 10) In the context of U.S. foreign policies, the Roosevelt Corollary paved the way for nonAmerican intervention in Latin American affairs. 11) An accurate depiction of the Roosevelt Corollary is "whatever is good for the United States is justifiable." 12) To understand a country's attitudes, prejudices, and fears, it is necessary to look beyond the surface of current events to the inner subtleties of the country's entire past for clues. 13) Altitude, humidity, and temperature extremes are climatic features that affect the uses and functions of products and equipment. 14) While temperatures and rainfall affect trade because they can vary, geographical conditions such as mountains and oceans do not have an effect on trade. 15) Countries that suffer the most from major natural calamities are among the poorest in the world. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

16) In the context of social responsibility and environmental management, the United States continues to be the world's top pollution-causing nation. 17) The process of controlling industrial wastes leads to the issue of disposal of hazardous waste, a by-product of pollution controls. 18) In the context of social responsibility and environmental management, the Basel Convention identified safe dumping zones for hazardous wastes exported by developed nations. 19) The United States leads the fight against pollution with the most stringent greenhouse emission standards in the world. 20) In the context of social responsibility and environmental management, sustainable development is about protecting the environment at all costs. 21) Sustainable development is often frowned upon in the United States because consumers are more interested in style than sustainability. 22) One of the foundations of modern technology is the ability to generate energy because nations are not equal in their ability to produce energy. 23) In much of the underdeveloped world, human labor is the prevalent source of energy. 24) A major reason why China is inefficient in oil usage is because of outdated technology. 25) The amount of renewable energy resources such as wood and solar power has decreased sharply in the last decade. 26) China has emerged as the most efficient user of energy worldwide. 27) According to some economists, economic prosperity is a factor that leads to the decline in fertility rates. 28) Currently, the developing world has a growing population while the industrialized world's population is declining. 29) North America is the region of the world most affected by a steadily declining worker-toretiree ratio. 30) Continuous improvements in electronic communications have facilitated the expansion of trade.

31) The Boston Tea Party is an example of how U.S. history really begins with China because A) China placed a tax on the British who in turn taxed the colonists. B) the British prohibited American traders from dealing directly with China. C) the British recognized China as a more valuable market. D) China attempted to export tea into the colonies. E) most colonists had genealogical roots in China. 32) The ________ was a political protest against the British taxing system. A) Hong Kong Revolution B) Boston Tea Party C) Taiping Rebellion D) First Opium War E) Canton Uprising 33) Which commodity dominated the trade between Britain and China during the early 1800s? A) bamboo B) mother-of-pearl C) silk D) tea E) porcelain 34) What commodity did the English East India Company turn to in order to help Britain erase the tea-caused trade deficit with China during the 1800s? A) watches B) betel nuts C) diamonds D) textiles E) opium 35) What was the result of the First Opium War between the British and China? A) China ceded Hong Kong to Britain. B) Hong Kong was displaced to China at a cost of $10 million pounds. C) China blockaded all British ports. D) Opium was legalized to make trading easier for both countries. E) No taxes were allowed to be levied on opium imports or exports. 36) The opium wars resulted in a loss of confidence in the Chinese government that led to the revolt known as the Taiping Rebellion. How many Chinese lives were lost in this rebellion? A) 2 million B) 40,000 C) 400,000 D) 20–40 million E) 2.4 million

37) Which event is one of the pivotal factors behind the wariness of the Chinese leadership toward foreign influences in general, and religious movements in particular, even today? A) the Boxer Revolution B) the Satsuma Rebellion C) the Nanjing Rebellion D) the Hong Kong Revolution E) the Taiping Rebellion 38) What event ultimately became about foreign access to Chinese trade? A) the Boxer Revolution B) the Satsuma Rebellion C) the Vietnam War D) the Louisiana Purchase E) the Opium Wars 39) How did the British respond in 1839 after the Emperor of China ordered the destruction of opium inventories in Canton? A) The British taxed China for existing inventories. B) The British sunk ships in the Pearl River. C) The British opened all Chinese ports. D) The British joined forces with China and also destroyed its inventories. E) The British made an agreement with America for opium supplies. 40) Japan was an isolated country before the arrival of ________ in 1853. A) Marco Polo B) Admiral Halsey C) Commodore Perry D) Admiral Pennington E) the East India Company 41) Which of the following may best explain why the Japanese have such strong loyalty toward their companies? A) Zen philosophy B) Taoism C) Confucian philosophy D) Buddhism E) Bushido philosophy 42) During the early 1800s, the British taste for tea was creating a huge trade deficit for Britain with what country? A) France B) Italy C) Belgium D) Finland E) China 4 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

43) According to Confucian philosophy, above all else, loyalty should be given to A) family. B) spouse. C) parents. D) company. E) country. 44) What event occurred during the Mexican Revolution? A) the overthrowing of dictator Ernesto Zedillo B) the youth movement against religion C) the nationalization of Mexican oil industry D) the expulsion of North American businessmen E) the support of French arms for revolutionaries 45) On September 13, the president of Mexico, the cabinet, and diplomatic corps assemble to recall "despojo territorial." What is its significance? A) U.S. troops claimed 890,000 square miles of land that became Arizona, California, New Mexico, and Texas. B) U.S. border officials allowed the peaceful crossing of Mexican citizens into the United States. C) Trade barriers were lifted between Mexico and the U.S. D) U.S. and Mexican soldiers defeated the Chinese attempt to take over this land. E) Mexico joined forces with Europe to defeat the U.S. attempt to purchase Louisiana. 46) Which event, leading to the overthrowing of the dictator Díaz, is particularly remembered for the expulsion of foreigners—most notably North American businessmen who were the most visible of the wealthy and influential entrepreneurs? A) the Madero Rebellion B) the Mexican Revolution C) the Los Niños Rebellion D) the Mexican-American War E) the San Patricios Revolution 47) History helps us understand why nations behave the way they do. For this reason, most historians try to present information A) anonymously. B) objectively. C) simultaneously. D) verbally. E) subjectively.

48) Which statement most accurately reflects the feelings of most Mexicans toward the United States in terms of the economy? A) Mexicans trust and favor the United States above other trading partners. B) Mexicans prefer Europeans over the United States with respect to trade. C) Mexico considers the United States a protector who will help it emerge as a world power. D) Mexicans see the United States as a threat to their political, economic, and cultural independence. E) Mexicans see the United States as a land of abundant opportunity and good fortune. 49) Citizens of the United States felt that the Monroe Doctrine provided A) an opportunity for Latin America to become a superpower among nations. B) excessive tariffs on imported goods. C) higher priced goods in the United States. D) protection for Latin America from European colonization. E) a message to Latin America that Russia was in control. 50) Which policy implied that Latin America was only for the United States and European countries should not attempt to control it? A) Monroe Doctrine B) Manifest Destiny C) Confucian philosophy D) Taiping Rebellion pact E) Opium war treaty 51) According to Manifest Destiny, who gave Americans the power to create a model society? A) Roosevelt B) the people C) God D) family E) big business 52) What was the overall end result of the Mexican War of 1846–1848? A) Mexico was forced to cede California to the U.S. B) The U.S. and Mexico signed a nonaggression pact. C) Mexico gave up California and the U.S. gave up Baja California. D) Mexico paid the U.S. $5 million for war damages. E) The U.S. signed a pledge to not invade Mexico again. 53) The idea of Manifest Destiny was used to justify the U.S. annexation of A) Virginia. B) Ohio. C) Pennsylvania. D) New Mexico. E) Carolina.

54) Two main points of the Monroe Doctrine were that ________ was to stop colonization in the New World and not interfere in governments in the Western Hemisphere. A) Asia B) the United States C) Latin America D) Canada E) Europe 55) Manifest Destiny and the ________ were accepted as the basis for U.S. foreign policy during much of the 19th and 20th centuries. A) Roosevelt Corollary B) North American Security Treaty C) Monroe Doctrine D) Grant Mandate E) Hays Corollary 56) The Roosevelt Corollary implies that A) Latin America can control its own economy. B) whatever is good for the United States is justifiable. C) European intervention in Latin America is valid. D) the United States and Europe should work together in Latin America. E) no president should interfere in the affairs of another country. 57) In the context of U.S. foreign policy in the 19th and the 20th centuries, ________, in its broadest interpretation, meant that Americans were a chosen people to create a model society. A) Roosevelt Corollary B) Monroe Doctrine C) Hays Corollary D) Grant Mandate E) Manifest Destiny 58) Manifest Destiny specifically referred to the A) political clout of the United States over European countries. B) territorial expansion of the United States from the Atlantic to the Pacific. C) focus on investment and infrastructure development in Asia-Pacific. D) network of intelligence operations across the world, especially the Communist world. E) "white man's burden" to develop the underdeveloped parts of the world. 59) Abstention of the United States from European political affairs was one of the three basic dicta of the A) Monroe Doctrine. B) North American Security Treaty. C) Hays Corollary. D) Grant Mandate. E) Roosevelt Corollary. 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

60) Which of the following policies was used in the formation of a provisional government in Cuba in 1906? A) the Manifest Destiny B) the Hay Manifesto C) the Wilson Mandate D) the Roosevelt Corollary E) the Gadsden Policy Position 61) The ________, a cornerstone of early U.S. foreign policy, dictated that no further European colonization in the New World would be accepted. A) Madison Corollary B) Monroe Doctrine C) Hays Corollary D) Wilson Policy Position E) Manifest Destiny 62) What was the response of Latin America to policies found in the Monroe Doctrine and the Roosevelt Corollary? A) They were welcomed because they created a stronger economy for all Latin American countries. B) They were used as role models for Latin American legislation. C) They were only considered important for some of the countries in Latin America. D) They were seen as a sign of hope. E) They were considered an unwelcome intrusion in Latin American affairs. 63) When Vicente Fox became Mexico's first opposition party president, he struggled with the drug problem and the violence it created in his country. What did he propose to alleviate this issue? A) He implemented a zero tolerance policy and first offenders were sentenced to jail. B) He decided to only legalize marijuana for medical use. C) He suggested that all drugs be legalized, including LSD, opium, meth, and more. D) He created a cabinet post that would address the issue and come up with a solution. E) He ignored the issue because it was too large for him to control. 64) ________ is the study of the earth's surface, climate, continents, countries, peoples, industries, and resources. A) Geophysics B) Geography C) Cartography D) Demography E) Sociology

65) A country that struggles to export crops because it cannot build transportation around the large mountains that cover most of the terrain is being affected by A) sociology. B) geography. C) cartography. D) demographics. E) geomatics. 66) Which of the following best describes the perception of geographical features such as mountains in the context of economic growth in Europe? A) They provide natural protection from potentially hostile neighbors. B) They are impediments to efficient trade and communication. C) They are natural landmarks that symbolize national treasure. D) They are fortuitous blessings that provide a wealth of natural resources. E) They are symbols of national heritage and history. 67) In the context of social responsibility and environmental management, which of the following is a by-product of pollution controls? A) corporate environmental responsibility B) higher tariffs against developing countries C) the disposal of hazardous waste D) reduced availability of petroleum products E) the emission of greenhouse gases 68) Which of the following countries is the world's top polluter, at present, in almost all respects? A) Brazil B) China C) Sudan D) Afghanistan E) Zimbabwe 69) What effect did the Basel Convention have on world trade? A) It allowed the United States full control over the developing countries of Central America. B) It mandated a total ban on the export of hazardous waste by developed nations. C) It implemented higher tariffs on exports that created greenhouse-gas emissions. D) It required a country to remove tax barriers when importing or exporting to a contingent nation. E) It eliminated anti-dumping policies on electronic devices.

70) ________ development is a joint approach among those who seek economic growth with "wise resource management, equitable distribution of benefits and reduction of negative effects on people and the environment from the process of economic growth." A) Parallel B) Global C) Sustainable D) Unrestricted E) Holistic 71) Most of the energy in the underdeveloped areas of the world comes from what source? A) Nuclear power B) Human labor C) Wind energy D) Geothermal power E) Fossil fuel 72) Which source of energy dominates the world's energy usage? A) Hydroelectric power B) Petroleum products C) Wind energy D) Geothermal power E) Nuclear power 73) The main reasons certain products dominate energy usage around the world is because they are A) easy to store and transport. B) favored by most governments. C) the cheapest form of fuel. D) the most efficient forms of fuel. E) unlimited. 74) Which statement describes the consumption of petroleum products by the United States? A) America is the largest producer of petroleum products. B) America is likely to stay self-sufficient for the next several decades. C) America is the third largest consumer of petroleum products. D) America has become a major importer of petroleum products. E) Petroleum products are no longer the largest source of energy for the U.S. 75) Which country is considered to be the world's most efficient user of energy? A) Canada B) Vietnam C) Japan D) India E) China

76) It has been noted that China is inefficient in oil usage. What seems to be the main reason for this inefficient use of energy? A) government regulations B) consumer consumption C) outdated technology D) lack of alternatives E) preponderance of need 77) Which source of energy is used most in America? A) wind B) solar C) coal D) oil and gas E) wood 78) When studying the dynamics of global population trends, it is important to remember that A) the demand for goods worldwide may have no effect on migration patterns. B) changes in the distribution of population among the world's countries may fail to influence demand. C) the global financial crisis has caused migration from rural to urban areas within countries. D) economic growth forecasts and assumptions about fertility rates are independent of each other. E) the existence of sheer numbers of people is significant in appraising potential consumer markets. 79) Which of the following statements is true with respect to the economic effects of controlling population growth? A) Fertility rates increase proportionately to the rate of economic growth. B) A decline in fertility rate is a function of economic prosperity. C) Lower male-female ratios favor higher fertility rates. D) Developing nations tend to have lower fertility compared to developed nations. E) Higher population growth rates have resulted in increased global trade. 80) The population of the industrialized world is most accurately described as A) increasing at an unprecedented pace. B) in decline and rapidly aging. C) mainly consisting of young adults. D) similar to the population of developing countries. E) remaining constant for a long time.

81) The part of the world with the largest portion of people over 65 years is also the part of the world with the fewest number of people under age 15 years. Based on this, what might occur in this area of the world? A) a conscious effort to slow down rapid urbanization and industrialization. B) a larger focus on automation and technology in industries. C) a heavy tax burden on future workers. D) an increased focus on lower birthrates through incentives. E) an increase in migration to other nations. 82) What would help balance the explosive population expansion in less developed countries and the worker shortage in industrialized regions? A) stable worker-to-retiree ratio B) free flow of immigration C) better senior retirement programs D) prenatal sex scanning E) provisions for higher pension 83) What is the most universal means used by governments to control birthrates? A) family planning B) universal access to healthcare C) high literacy levels D) education for women E) improved nutrition 84) In numerous cultures, a family's only wealth is represented by the number of children they have. This demonstrates how ________ can deter population control. A) financial benefits B) poor enforcement mechanisms C) biological factors D) government welfare schemes E) cultural attitudes 85) In the context of global population trends, a nation needs a fertility rate of about 2.1 children per woman to be able to A) reduce its population. B) maintain its population. C) encourage immigration. D) increase its population. E) discourage immigration. 86) Which region is most affected by aging and thus by a steadily decreasing worker-to-retiree ratio? A) Africa B) North America C) South America D) Asia E) Europe 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

87) Countries like ________ and the U.S. epitomize the problems caused by an increasing percentage of elderly people who must be supported by a declining number of skilled workers. A) Brazil B) China C) Egypt D) Chile E) Japan 88) ________ represent(s) the attempts of countries to overcome economic and social imbalances created in part by the influence of geography. A) Import tariffs B) Free Trade policies C) Trade routes D) Global migration E) Resource sharing pacts 89) What was the earliest form of a trade route? A) land routes B) the Internet C) sea routes D) underground routes E) air routes 90) What key tool is necessary for anyone participating in commerce in order to know where goods and services exist and also know where they are needed? A) sustainable development B) expropriation C) immigration D) effective communications E) political stability 91) Describe how the historical roots of Japan's culture have influenced its contemporary behavior and culture. 92) Explain what it means for historical records to be subjective and why a proper understanding of this concept is essential for a marketer. 93) In the context of the subjective nature of historical events, contrast the American and Mexican perspectives on the Monroe Doctrine. Which popular statement typifies the difference between the perspectives? 94) Briefly describe Manifest Destiny and the Monroe Doctrine as the policies that were accepted as the basis for U.S. foreign policy during the 19th and 20th centuries.

95) Discuss how these three statements found in the text reflect the need for a deeper understanding of a country when participating in international trade. (1) "History is taught one way in Mexico and another way in the United States—the United States robbed us but we are portrayed in U.S. textbooks as bandits who invaded Texas." (2) "We may not like gringos for historical reasons, but today the world is dividing into commercial blocks, and we are handcuffed to each other for better or worse." (3) "We always have been and we continue to be a colony of the United States." 96) Explain, with examples, how climate and topography of a country affect its economic profile. 97) Discuss how less-privileged nations suffer disproportionately from natural disasters such as earthquakes and floods. Provide an example of a current situation where this is evidenced. 98) In the context of social responsibility and environmental management, what is sustainable development? 99) The consequences of a population explosion set the stage for countries to implement some ethical forms of population control. Describe some of the factors that must be in place in order for these types of controls to work. 100) Explain why communication infrastructures are an integral part of international commerce.

International Marketing, 18e (Cateora) Chapter 3 History and Geography: The Foundations Of Culture 1) A country's history influences business decisions such as market entry and personnel decisions. Answer: TRUE Explanation: History influences business decisions such as foreign direct investments, market entry, and even personnel choices. Difficulty: 1 Easy Topic: Economic and Business Implications of Cultural Change Learning Objective: 03-01 The importance of history and geography in understanding international markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) Confucian philosophy, taught throughout Japan's history, emphasizes the basic virtue of loyalty to the country. Answer: TRUE Explanation: Confucian philosophy, taught throughout Japan's history, emphasizes the basic virtue of loyalty "of friend to friend, of wife to husband, of child to parent, of brother to brother, but, above all, of subject to lord," that is, to country. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Working as individuals, rather than together, for a common cause is a fundamental belief in Japanese behavior. Answer: FALSE Explanation: Loyalty to family, to country, to company, and to social groups and the strong drive to cooperate, to work together for a common cause, permeate many facets of Japanese behavior and have historical roots that date back thousands of years. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) Recording of historic events by historians belonging to different cultures gives us a subjective view of history. Answer: TRUE Explanation: Historical events always are viewed from one's own biases and self-reference criteria, and thus, what is recorded by one historian may not be what another records, especially if the historians are from different cultures. Historians traditionally try to be objective, but few can help filtering events through their own cultural biases. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Mexico's attitude toward America is accurately summed up in the statement—"Geography has made us neighbors, tradition has made us friends." Answer: FALSE Explanation: Most Americans would agree with President John F. Kennedy's proclamation during a visit to Mexico that "Geography has made us neighbors, tradition has made us friends." North Americans may be surprised to learn that most Mexicans felt it more accurate to say "Geography has made us closer, tradition has made us far apart." Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) In the context of U.S. foreign policies, the Monroe Doctrine, in its broadest interpretation, meant that the United States surrendered occupation of Cuba to the Soviet Union. Answer: FALSE Explanation: Citizens of the U.S. saw the Monroe Doctrine as protection for Latin America from European colonization and the intervention of Europe in the governments of the Western Hemisphere. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) Manifest Destiny was used to justify the U.S. annexation of Texas, Oregon, New Mexico, and California. Answer: TRUE Explanation: The idea of Manifest Destiny was used to justify the U.S. annexation of Texas, Oregon, New Mexico, and California and, later, U.S. involvement in Cuba, Alaska, Hawaii, and the Philippines. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The Monroe Doctrine dictated that there would be no further European colonization in the New World. Answer: TRUE Explanation: The Monroe Doctrine, a cornerstone of early U.S. foreign policy, was enunciated by President James Monroe in a public statement proclaiming three basic dicta: no further European colonization in the New World, abstention of the United States from European political affairs, and nonintervention by European governments in the governments of the Western Hemisphere. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) The Roosevelt Corollary played a significant role in the U.S. acquisition of the Panama Canal. Answer: TRUE Explanation: Theodore Roosevelt applied the Monroe Doctrine with an extension that became known as the Roosevelt Corollary. The corollary stated that not only would the United States prohibit non-American intervention in Latin American affairs, but it would also police the area and guarantee that Latin American nations met their international obligations. It was used in the acquisition of the Panama Canal Zone from Colombia in 1903 and the formation of a provisional government in Cuba in 1906. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) In the context of U.S. foreign policies, the Roosevelt Corollary paved the way for nonAmerican intervention in Latin American affairs. Answer: FALSE Explanation: The Roosevelt Corollary stated that not only would the United States prohibit non-American intervention in Latin American affairs, but it would also police the area and guarantee that Latin American nations met their international obligations. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) An accurate depiction of the Roosevelt Corollary is "whatever is good for the United States is justifiable." Answer: TRUE Explanation: The Roosevelt Corollary was used in the acquisition of the Panama Canal Zone from Colombia in 1903 and the formation of a provisional government in Cuba in 1906. The manner in which the United States acquired the land for the Panama Canal Zone typifies the Roosevelt Corollary—whatever is good for the United States is justifiable. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) To understand a country's attitudes, prejudices, and fears, it is necessary to look beyond the surface of current events to the inner subtleties of the country's entire past for clues. Answer: TRUE Explanation: To understand a country's attitudes, prejudices, and fears, it is necessary to look beyond the surface of current events to the inner subtleties of the country's entire past for clues. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 03-04 How long-past U.S. international policies still affect customer attitudes abroad. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) Altitude, humidity, and temperature extremes are climatic features that affect the uses and functions of products and equipment. Answer: TRUE Explanation: Altitude, humidity, and temperature extremes are climatic features that affect the uses and functions of products and equipment. Products that perform well in temperate zones may deteriorate rapidly or require special cooling or lubrication to function adequately in tropical zones. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 03-05 The effect of geographic diversity on economic profiles of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) While temperatures and rainfall affect trade because they can vary, geographical conditions such as mountains and oceans do not have an effect on trade. Answer: FALSE Explanation: Mountains, oceans, seas, jungles, and other geographical features can pose serious impediments to economic growth and trade. Difficulty: 2 Medium Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) Countries that suffer the most from major natural calamities are among the poorest in the world. Answer: TRUE Explanation: Countries that suffer the most from major calamities are among the poorest in the world. Many have neither the capital nor the technical ability to minimize the effects of natural phenomena; they are at the mercy of nature. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) In the context of social responsibility and environmental management, the United States continues to be the world's top pollution-causing nation. Answer: FALSE Explanation: China is now the world's top polluter in almost all respects. By 2020 its greenhouse-gas emissions will be more than double the closest rival, the United States. Difficulty: 1 Easy Topic: Environmental Sustainability Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) The process of controlling industrial wastes leads to the issue of disposal of hazardous waste, a by-product of pollution controls. Answer: TRUE Explanation: The very process of controlling industrial wastes leads to the critical issue of the disposal of hazardous waste, a by-product of pollution controls. Countries encountering increasing difficulty in the disposal of wastes at home are seeking countries willing to assume the burden of disposal. Difficulty: 1 Easy Topic: Environmental Sustainability Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) In the context of social responsibility and environmental management, the Basel Convention identified safe dumping zones for hazardous wastes exported by developed nations. Answer: FALSE Explanation: A treaty among members of the Basel Convention that required prior approval before dumping could occur was later revised to a total ban on the export of hazardous wastes by developed nations. Difficulty: 2 Medium Topic: Key Regulations Governing Ethics and Social Responsibility Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) The United States leads the fight against pollution with the most stringent greenhouse emission standards in the world. Answer: FALSE Explanation: The United States has one of the highest pollution rates on a per capital basis. But, in 2017 the Trump administration decided to back out of the Paris Climate Accords, ceding global climate change mitigation to Chinese and European Union leadership. Difficulty: 1 Easy Topic: Key Regulations Governing Ethics and Social Responsibility Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) In the context of social responsibility and environmental management, sustainable development is about protecting the environment at all costs. Answer: FALSE Explanation: Sustainable development is not about the environment or the economy or society on an individual basis. It is about striking a lasting balance between all of these. Difficulty: 2 Medium Topic: Key Regulations Governing Ethics and Social Responsibility Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) Sustainable development is often frowned upon in the United States because consumers are more interested in style than sustainability. Answer: TRUE Explanation: The idea of sustainable development is particularly a problem in the United States, where consumers are often more interested in style than in sustainability, public opinion polls favor growth over the environment, and high school students receive relatively little environmental education. Difficulty: 1 Easy Topic: Key Regulations Governing Ethics and Social Responsibility Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) One of the foundations of modern technology is the ability to generate energy because nations are not equal in their ability to produce energy. Answer: TRUE Explanation: The availability of minerals and the ability to generate energy are the foundations of modern technology. The locations of Earth's resources, as well as the available sources of energy, are geographic accidents. The world's nations are not equally endowed, and no nation's demand for a particular mineral or energy source necessarily coincides with domestic supply. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) In much of the underdeveloped world, human labor is the prevalent source of energy. Answer: TRUE Explanation: In much of the underdeveloped world, human labor provides the preponderance of energy. The principal supplements to human energy are animals, wood, fossil fuel, nuclear power, and, to a lesser and more experimental extent, the ocean's tides, geothermal power, and the sun. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) A major reason why China is inefficient in oil usage is because of outdated technology. Answer: TRUE Explanation: In comparison with Japan, possibly the world's most efficient user of energy, where less than 5 ounces of oil is needed to generate $1 in GNP, in China, approximately 80 ounces of oil is needed. The reasons for China's inefficient oil use are numerous, but the worst culprit is outdated technology. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) The amount of renewable energy resources such as wood and solar power has decreased sharply in the last decade. Answer: FALSE Explanation: The increases in renewable energy sources (wood, peat, dung, wind, solar, and geothermal) have increased tenfold during the last three years creating new jobs along the way. Difficulty: 1 Easy Topic: Environmental Sustainability Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) China has emerged as the most efficient user of energy worldwide. Answer: FALSE Explanation: China spends three times the world average on energy (all sources) to produce one dollar of gross national product (GNP). In comparison with Japan, possibly the world's most efficient user of energy, where less than 5 ounces of oil is needed to generate $1 in GNP, in China, approximately 80 ounces of oil is needed. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) According to some economists, economic prosperity is a factor that leads to the decline in fertility rates. Answer: TRUE Explanation: Family planning and all that it entails is by far the most universal means governments use to control birthrates, but some economists believe that a decline in the fertility rate is a function of economic prosperity and will come only with economic development. Difficulty: 2 Medium Topic: Economic and Business Implications of Cultural Change Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) Currently, the developing world has a growing population while the industrialized world's population is declining. Answer: TRUE Explanation: While the developing world faces a rapidly growing population, the industrialized world's population is in decline and rapidly aging. Not one major country has sufficient internal population growth to maintain itself, and this trend is expected to continue for the next 50 years. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) North America is the region of the world most affected by a steadily declining worker-toretiree ratio. Answer: FALSE Explanation: Europe is the region of the world most affected by aging and thus by a steadily decreasing worker-to-retiree ratio. To keep the worker-to-retiree ratio from falling, Europe will need 1.4 billion immigrants over the next 50 years, while Japan and the United States will need 600 million immigrants between now and 2050. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) Continuous improvements in electronic communications have facilitated the expansion of trade. Answer: TRUE Explanation: Continuous improvements in electronic communications have facilitated the expansion of trade. First came the telegraph, then the telephone, television, satellites, mobile phones, the computer, the Internet, and combinations of them all. Difficulty: 1 Easy Topic: How Globalization Affects New-Product Development Learning Objective: 03-08 Communication infrastructures are an integral part of international commerce. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) The Boston Tea Party is an example of how U.S. history really begins with China because A) China placed a tax on the British who in turn taxed the colonists. B) the British prohibited American traders from dealing directly with China. C) the British recognized China as a more valuable market. D) China attempted to export tea into the colonies. E) most colonists had genealogical roots in China. Answer: B Explanation: Recall the Boston Tea Party: Our complaint then was the British tax and, more important, the British prohibition against Yankee traders dealing directly with merchants in Canton, China. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) The ________ was a political protest against the British taxing system. A) Hong Kong Revolution B) Boston Tea Party C) Taiping Rebellion D) First Opium War E) Canton Uprising Answer: B Explanation: In a sense, American history really begins with China. Recall the Boston Tea Party: Our complaint then was the British tax and, more important, the British prohibition against Yankee traders dealing directly with merchants in Canton. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) Which commodity dominated the trade between Britain and China during the early 1800s? A) bamboo B) mother-of-pearl C) silk D) tea E) porcelain Answer: D Explanation: During the early 1800s, the British taste for tea was creating a huge trade deficit with China. Silver bullion was flowing fast in an easterly direction. Though other commodities were also traded, the tea-for-silver swap dominated the equation. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) What commodity did the English East India Company turn to in order to help Britain erase the tea-caused trade deficit with China during the 1800s? A) watches B) betel nuts C) diamonds D) textiles E) opium Answer: E Explanation: During the early 1800s, the British taste for tea was creating a huge trade deficit with China. Then came the English East India Company's epiphany: opium. The best opium came from British India, and once the full flow began, the tea-caused trade deficit disappeared fast. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) What was the result of the First Opium War between the British and China? A) China ceded Hong Kong to Britain. B) Hong Kong was displaced to China at a cost of $10 million pounds. C) China blockaded all British ports. D) Opium was legalized to make trading easier for both countries. E) No taxes were allowed to be levied on opium imports or exports. Answer: A Explanation: The first opium war and the subsequent signing of the Treaty of Nanjing caused the Chinese to cede Hong Kong and £21 million pounds to the British. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) The opium wars resulted in a loss of confidence in the Chinese government that led to the revolt known as the Taiping Rebellion. How many Chinese lives were lost in this rebellion? A) 2 million B) 40,000 C) 400,000 D) 20–40 million E) 2.4 million Answer: D Explanation: One consequence of the humiliation at the hands of foreigners during the two opium wars was a loss of confidence in the Chinese government. The resulting disorder came to a head in Guangxi, the southernmost province of the Empire. This led to the Taiping Rebellion, the single most horrific civil war in the history of the world. Estimates of the death toll from the Taiping Rebellion stand between 20 and 40 million people Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) Which event is one of the pivotal factors behind the wariness of the Chinese leadership toward foreign influences in general, and religious movements in particular, even today? A) the Boxer Revolution B) the Satsuma Rebellion C) the Nanjing Rebellion D) the Hong Kong Revolution E) the Taiping Rebellion Answer: E Explanation: Based on events in the mid-1800s, like the Opium Wars (core issue: foreign access to Chinese trade) and the Taiping Rebellion Wars (core issue: rebellion led by religious zealot influenced by Protestant Western missionaries), it is easy to see why the Chinese leadership has remained wary of foreign influences in general, and religious movements in particular, even today. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) What event ultimately became about foreign access to Chinese trade? A) the Boxer Revolution B) the Satsuma Rebellion C) the Vietnam War D) the Louisiana Purchase E) the Opium Wars Answer: E Explanation: Opium Wars were fought between China and Britain over the British-run opium trade in China during the middle 1800s. The British navy attacked Chinese ports in retribution for a Chinese ban on the drug, and the Treaty of Nanjing signed in 1842 allowed greater European access to Chinese ports generally, a resumption of the opium trade, and ceding of Hong Kong to British control. Ultimately the Opium War became about foreign access to Chinese trade. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) How did the British respond in 1839 after the Emperor of China ordered the destruction of opium inventories in Canton? A) The British taxed China for existing inventories. B) The British sunk ships in the Pearl River. C) The British opened all Chinese ports. D) The British joined forces with China and also destroyed its inventories. E) The British made an agreement with America for opium supplies. Answer: B Explanation: The Emperor ordered the destruction of the inventories in Canton (now known as Guangzhou). By 1839 the trade was dead. The British responded by sinking junks in the Pearl River and blockading all Chinese ports. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) Japan was an isolated country before the arrival of ________ in 1853. A) Marco Polo B) Admiral Halsey C) Commodore Perry D) Admiral Pennington E) the East India Company Answer: C Explanation: The foundation for Japan's contemporary behavior includes seven centuries under the shogun feudal system, the isolation before the arrival of Commodore Perry in 1853, the threat of domination by colonial powers, the rise of new social classes, Western influences, the humiliation of World War II, and involvement in the international community. Difficulty: 1 Easy Topic: Challenges of Leading Global Change Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) Which of the following may best explain why the Japanese have such strong loyalty toward their companies? A) Zen philosophy B) Taoism C) Confucian philosophy D) Buddhism E) Bushido philosophy Answer: C Explanation: Loyalty to family, to country, to company, and to social groups and the strong drive to cooperate, to work together for a common cause, permeate many facets of Japanese behavior and have historical roots that date back thousands of years. Confucian philosophy, taught throughout Japan's history, emphasizes the basic virtue of loyalty "of friend to friend, of wife to husband, of child to parent, of brother to brother, but, above all, of subject to lord," that is, to country. Difficulty: 2 Medium Topic: Ethical Decision Making Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) During the early 1800s, the British taste for tea was creating a huge trade deficit for Britain with what country? A) France B) Italy C) Belgium D) Finland E) China Answer: E Explanation: During the early 1800s, the British taste for tea was creating a huge trade deficit with China. Silver bullion was flowing fast in an easterly direction. Then came the English East India Company's epiphany: opium. Easy to ship, high value to volume and weight ratios, and addicting to customers—what a great product! At the time, the best opium came from British India, and once the full flow began, the tea-caused trade deficit disappeared fast. Difficulty: 1 Easy Topic: Overview of Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) According to Confucian philosophy, above all else, loyalty should be given to A) family. B) spouse. C) parents. D) company. E) country. Answer: E Explanation: Loyalty to family, to country, to company, and to social groups and the strong drive to cooperate, to work together for a common cause, permeate many facets of Japanese behavior and have historical roots that date back thousands of years. Confucian philosophy, taught throughout Japan's history, emphasizes the basic virtue of loyalty "of friend to friend, of wife to husband, of child to parent, of brother to brother, but, above all, of subject to lord," that is, to country. Difficulty: 2 Medium Topic: Ethical Decision Making Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) What event occurred during the Mexican Revolution? A) the overthrowing of dictator Ernesto Zedillo B) the youth movement against religion C) the nationalization of Mexican oil industry D) the expulsion of North American businessmen E) the support of French arms for revolutionaries Answer: D Explanation: The Mexican Revolution, which overthrew the dictator Díaz and launched the modern Mexican state, is particularly remembered for the expulsion of foreigners—most notably North American businessmen who were the most visible of the wealthy and influential entrepreneurs in Mexico. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) On September 13, the president of Mexico, the cabinet, and diplomatic corps assemble to recall "despojo territorial." What is its significance? A) U.S. troops claimed 890,000 square miles of land that became Arizona, California, New Mexico, and Texas. B) U.S. border officials allowed the peaceful crossing of Mexican citizens into the United States. C) Trade barriers were lifted between Mexico and the U.S. D) U.S. and Mexican soldiers defeated the Chinese attempt to take over this land. E) Mexico joined forces with Europe to defeat the U.S. attempt to purchase Louisiana. Answer: A Explanation: A prominent monument at the entrance of Chapultepec Park recognizes Los Niños Heroes (the boy heroes), who resisted U.S. troops, wrapped themselves in Mexican flags, and jumped to their deaths rather than surrender. Mexicans recount the heroism of Los Niños Heroes and the loss of Mexican territory to the United States every September 13, when the president of Mexico, the cabinet, and the diplomatic corps assemble at the Mexico City fortress to recall the defeat that led to the "despojo territorial" (territorial plunder). To the Mexican, the exploit to which the "halls of Montezuma" refers is remembered as U.S. troops marching all the way to the center of Mexico City and extracting as tribute 890,000 square miles that became Arizona, California, New Mexico, and Texas. Difficulty: 2 Medium Topic: North America 's Marketplace in the World Economy Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) Which event, leading to the overthrowing of the dictator Díaz, is particularly remembered for the expulsion of foreigners—most notably North American businessmen who were the most visible of the wealthy and influential entrepreneurs? A) the Madero Rebellion B) the Mexican Revolution C) the Los Niños Rebellion D) the Mexican-American War E) the San Patricios Revolution Answer: B Explanation: The Mexican Revolution, which overthrew the dictator Díaz and launched the modern Mexican state, is particularly remembered for the expulsion of foreigners—most notably North American businessmen who were the most visible of the wealthy and influential entrepreneurs in Mexico. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

47) History helps us understand why nations behave the way they do. For this reason, most historians try to present information A) anonymously. B) objectively. C) simultaneously. D) verbally. E) subjectively. Answer: B Explanation: Historical events always are viewed from one's own biases and self-reference criteria, and thus, what is recorded by one historian may not be what another records, especially if the historians are from different cultures. Historians traditionally try to be objective. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) Which statement most accurately reflects the feelings of most Mexicans toward the United States in terms of the economy? A) Mexicans trust and favor the United States above other trading partners. B) Mexicans prefer Europeans over the United States with respect to trade. C) Mexico considers the United States a protector who will help it emerge as a world power. D) Mexicans see the United States as a threat to their political, economic, and cultural independence. E) Mexicans see the United States as a land of abundant opportunity and good fortune. Answer: D Explanation: Mexicans have a love–hate relationship with the United States because Mexicans see the United States as a threat to their political, economic, and cultural sovereignty. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) Citizens of the United States felt that the Monroe Doctrine provided A) an opportunity for Latin America to become a superpower among nations. B) excessive tariffs on imported goods. C) higher priced goods in the United States. D) protection for Latin America from European colonization. E) a message to Latin America that Russia was in control. Answer: D Explanation: Citizens of the United States feel they have been good neighbors. They see the Monroe Doctrine as protection for Latin America from European colonization and the intervention of Europe in the governments of the Western Hemisphere. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) Which policy implied that Latin America was only for the United States and European countries should not attempt to control it? A) Monroe Doctrine B) Manifest Destiny C) Confucian philosophy D) Taiping Rebellion pact E) Opium war treaty Answer: A Explanation: One way to describe the Monroe Doctrine is "Europe keep your hands off—Latin America is only for the United States." The Monroe Doctrine proclaimed: no further European colonization in the New World, abstention of the United States from European political affairs, and nonintervention by European governments in the governments of the Western Hemisphere. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) According to Manifest Destiny, who gave Americans the power to create a model society? A) Roosevelt B) the people C) God D) family E) big business Answer: C Explanation: Manifest Destiny, in its broadest interpretation, meant that Americans were a chosen people ordained by God to create a model society. More specifically, it referred to the territorial expansion of the United States from the Atlantic to the Pacific. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) What was the overall end result of the Mexican War of 1846–1848? A) Mexico was forced to cede California to the U.S. B) The U.S. and Mexico signed a nonaggression pact. C) Mexico gave up California and the U.S. gave up Baja California. D) Mexico paid the U.S. $5 million for war damages. E) The U.S. signed a pledge to not invade Mexico again. Answer: A Explanation: The Mexican War (1846–1848) resulted in Mexico ceding California and a large part of the West to the United States. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) The idea of Manifest Destiny was used to justify the U.S. annexation of A) Virginia. B) Ohio. C) Pennsylvania. D) New Mexico. E) Carolina. Answer: D Explanation: The idea of Manifest Destiny was used to justify the U.S. annexation of Texas, Oregon, New Mexico, and California and, later, U.S. involvement in Cuba, Alaska, Hawaii, and the Philippines. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) Two main points of the Monroe Doctrine were that ________ was to stop colonization in the New World and not interfere in governments in the Western Hemisphere. A) Asia B) the United States C) Latin America D) Canada E) Europe Answer: E Explanation: The Monroe Doctrine, a cornerstone of early U.S. foreign policy, was enunciated by President James Monroe in a public statement proclaiming three basic dicta: no further European colonization in the New World, abstention of the United States from European political affairs, and nonintervention by European governments in the governments of the Western Hemisphere. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) Manifest Destiny and the ________ were accepted as the basis for U.S. foreign policy during much of the 19th and 20th centuries. A) Roosevelt Corollary B) North American Security Treaty C) Monroe Doctrine D) Grant Mandate E) Hays Corollary Answer: C Explanation: Manifest Destiny and the Monroe Doctrine were accepted as the basis for U.S. foreign policy during much of the 19th and 20th centuries. Manifest Destiny, in its broadest interpretation, meant that Americans were a chosen people ordained by God to create a model society. The Monroe Doctrine proclaimed: no further European colonization in the New World, abstention of the U.S. from European political affairs, and nonintervention by European governments in the governments of the Western Hemisphere. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) The Roosevelt Corollary implies that A) Latin America can control its own economy. B) whatever is good for the United States is justifiable. C) European intervention in Latin America is valid. D) the United States and Europe should work together in Latin America. E) no president should interfere in the affairs of another country. Answer: B Explanation: The corollary stated that not only would the United States prohibit non-American intervention in Latin American affairs, but it also would police the area and guarantee that Latin American nations met their international obligations. The manner in which the United States acquired the land for the Panama Canal Zone typifies the Roosevelt Corollary—whatever is good for the United States is justifiable. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) In the context of U.S. foreign policy in the 19th and the 20th centuries, ________, in its broadest interpretation, meant that Americans were a chosen people to create a model society. A) Roosevelt Corollary B) Monroe Doctrine C) Hays Corollary D) Grant Mandate E) Manifest Destiny Answer: E Explanation: Manifest Destiny, in its broadest interpretation, meant that Americans were a chosen people ordained by God to create a model society. More specifically, it referred to the territorial expansion of the United States from the Atlantic to the Pacific. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) Manifest Destiny specifically referred to the A) political clout of the United States over European countries. B) territorial expansion of the United States from the Atlantic to the Pacific. C) focus on investment and infrastructure development in Asia-Pacific. D) network of intelligence operations across the world, especially the Communist world. E) "white man's burden" to develop the underdeveloped parts of the world. Answer: B Explanation: Manifest Destiny, in its broadest interpretation, meant that Americans were a chosen people ordained by God to create a model society. More specifically, it referred to the territorial expansion of the United States from the Atlantic to the Pacific. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) Abstention of the United States from European political affairs was one of the three basic dicta of the A) Monroe Doctrine. B) North American Security Treaty. C) Hays Corollary. D) Grant Mandate. E) Roosevelt Corollary. Answer: A Explanation: The Monroe Doctrine, a cornerstone of early U.S. foreign policy, was enunciated by President James Monroe in a public statement proclaiming three basic dicta: no further European colonization in the New World, abstention of the United States from European political affairs, and nonintervention by European governments in the governments of the Western Hemisphere. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) Which of the following policies was used in the formation of a provisional government in Cuba in 1906? A) the Manifest Destiny B) the Hay Manifesto C) the Wilson Mandate D) the Roosevelt Corollary E) the Gadsden Policy Position Answer: D Explanation: Theodore Roosevelt applied the Monroe Doctrine with an extension that became known as the Roosevelt Corollary. The Roosevelt Corollary was used in the formation of a provisional government in Cuba in 1906. The Roosevelt Corollary implies whatever is good for the United States is justifiable. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) The ________, a cornerstone of early U.S. foreign policy, dictated that no further European colonization in the New World would be accepted. A) Madison Corollary B) Monroe Doctrine C) Hays Corollary D) Wilson Policy Position E) Manifest Destiny Answer: B Explanation: The Monroe Doctrine, a cornerstone of early U.S. foreign policy, was enunciated by President James Monroe in a public statement proclaiming three basic dicta: no further European colonization in the New World, abstention of the United States from European political affairs, and nonintervention of European governments in the governments of the Western Hemisphere. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) What was the response of Latin America to policies found in the Monroe Doctrine and the Roosevelt Corollary? A) They were welcomed because they created a stronger economy for all Latin American countries. B) They were used as role models for Latin American legislation. C) They were only considered important for some of the countries in Latin America. D) They were seen as a sign of hope. E) They were considered an unwelcome intrusion in Latin American affairs. Answer: E Explanation: According to U.S. history, these Latin American adventures were a justifiable part of our foreign policy; to Latin Americans, they were unwelcome intrusions in Latin American affairs. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

63) When Vicente Fox became Mexico's first opposition party president, he struggled with the drug problem and the violence it created in his country. What did he propose to alleviate this issue? A) He implemented a zero tolerance policy and first offenders were sentenced to jail. B) He decided to only legalize marijuana for medical use. C) He suggested that all drugs be legalized, including LSD, opium, meth, and more. D) He created a cabinet post that would address the issue and come up with a solution. E) He ignored the issue because it was too large for him to control. Answer: C Explanation: Vicente Fox, Mexico's first opposition party president, was elected in 2000 to a six-year term of office to change things. He proposed legalizing everything for users—cocaine, heroin, LSD, marijuana, PCP, opium, synthetic opioids, mescaline, peyote, psilocybin mushrooms, amphetamines, and meth. The law allowed for substantial quantities for personal use. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-04 How long-past U.S. international policies still affect customer attitudes abroad. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) ________ is the study of the earth's surface, climate, continents, countries, peoples, industries, and resources. A) Geophysics B) Geography C) Cartography D) Demography E) Sociology Answer: B Explanation: Geography, the study of Earth's surface, climate, continents, countries, peoples, industries, and resources, is an element of the uncontrollable environment that confronts every marketer but that receives scant attention. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 03-04 How long-past U.S. international policies still affect customer attitudes abroad. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) A country that struggles to export crops because it cannot build transportation around the large mountains that cover most of the terrain is being affected by A) sociology. B) geography. C) cartography. D) demographics. E) geomatics. Answer: B Explanation: Geography is much more than memorizing countries, capitals, and rivers. It also includes an understanding of how a society's culture and economy are affected as a nation struggles to supply its people's needs within the limits imposed by its physical makeup. Difficulty: 2 Medium Topic: Geographical Implications that Affect Trade Learning Objective: 03-04 How long-past U.S. international policies still affect customer attitudes abroad. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) Which of the following best describes the perception of geographical features such as mountains in the context of economic growth in Europe? A) They provide natural protection from potentially hostile neighbors. B) They are impediments to efficient trade and communication. C) They are natural landmarks that symbolize national treasure. D) They are fortuitous blessings that provide a wealth of natural resources. E) They are symbols of national heritage and history. Answer: B Explanation: Mountains, oceans, seas, jungles, and other geographical features can pose serious impediments to economic growth and trade. Once seen as natural protection from potentially hostile neighbors, physical barriers that exist within Europe are now seen as impediments to efficient trade in an integrated economic union. Difficulty: 2 Medium Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) In the context of social responsibility and environmental management, which of the following is a by-product of pollution controls? A) corporate environmental responsibility B) higher tariffs against developing countries C) the disposal of hazardous waste D) reduced availability of petroleum products E) the emission of greenhouse gases Answer: C Explanation: The very process of controlling industrial wastes leads to another and perhaps equally critical issue: the disposal of hazardous waste, a by-product of pollution controls. Difficulty: 2 Medium Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) Which of the following countries is the world's top polluter, at present, in almost all respects? A) Brazil B) China C) Sudan D) Afghanistan E) Zimbabwe Answer: B Explanation: China is now the world's top polluter in almost all respects. By 2020, its greenhouse-gas emissions will be more than double the closest rival, the United States. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) What effect did the Basel Convention have on world trade? A) It allowed the United States full control over the developing countries of Central America. B) It mandated a total ban on the export of hazardous waste by developed nations. C) It implemented higher tariffs on exports that created greenhouse-gas emissions. D) It required a country to remove tax barriers when importing or exporting to a contingent nation. E) It eliminated anti-dumping policies on electronic devices. Answer: B Explanation: Waste disposal is legal in some developing countries as governments seek the revenues that are generated by offering sites for waste disposal. In other cases, illegal dumping is done clandestinely. A treaty among members of the Basel Convention that required prior approval before dumping could occur was later revised to a total ban on the export of hazardous wastes by developed nations. Difficulty: 2 Medium Topic: Environmental Sustainability Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) ________ development is a joint approach among those who seek economic growth with "wise resource management, equitable distribution of benefits and reduction of negative effects on people and the environment from the process of economic growth." A) Parallel B) Global C) Sustainable D) Unrestricted E) Holistic Answer: C Explanation: Sustainable development is a joint approach among those (e.g., governments, businesses, environmentalists, and others) who seek economic growth with "wise resource management, equitable distribution of benefits and reduction of negative effects on people and the environment from the process of economic growth." Difficulty: 1 Easy Topic: Environmental Sustainability Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) Most of the energy in the underdeveloped areas of the world comes from what source? A) Nuclear power B) Human labor C) Wind energy D) Geothermal power E) Fossil fuel Answer: B Explanation: In much of the underdeveloped world, human labor provides the preponderance of energy. The principal supplements to human energy are animals, wood, fossil fuel, nuclear power, and, to a lesser and more experimental extent, the ocean's tides, geothermal power, and the sun. Difficulty: 2 Medium Topic: Renewable and Nonrenewable Energy Options Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) Which source of energy dominates the world's energy usage? A) Hydroelectric power B) Petroleum products C) Wind energy D) Geothermal power E) Nuclear power Answer: B Explanation: Of all the energy sources, oil and gas contribute over 60 percent of world energy consumption. Because of petroleum's versatility and the ease with which it is stored and transported, petroleum-related products continue to dominate energy usage. Difficulty: 1 Easy Topic: Renewable and Nonrenewable Energy Options Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) The main reasons certain products dominate energy usage around the world is because they are A) easy to store and transport. B) favored by most governments. C) the cheapest form of fuel. D) the most efficient forms of fuel. E) unlimited. Answer: A Explanation: Because of petroleum's versatility and the ease with which it is stored and transported, petroleum-related products continue to dominate energy usage. Difficulty: 2 Medium Topic: Renewable and Nonrenewable Energy Options Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) Which statement describes the consumption of petroleum products by the United States? A) America is the largest producer of petroleum products. B) America is likely to stay self-sufficient for the next several decades. C) America is the third largest consumer of petroleum products. D) America has become a major importer of petroleum products. E) Petroleum products are no longer the largest source of energy for the U.S. Answer: D Explanation: Many countries that were self-sufficient during much of their early economic growth have become net importers of petroleum during the past several decades and continue to become increasingly dependent on foreign sources. A spectacular example is the United States, which was almost completely self-sufficient until 1942, became a major importer by 1950, and between 1973 and 2011 increased its dependency from 36 percent to over 66 percent of its annual requirements. Difficulty: 1 Easy Topic: Renewable and Nonrenewable Energy Options Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) Which country is considered to be the world's most efficient user of energy? A) Canada B) Vietnam C) Japan D) India E) China Answer: C Explanation: As countries industrialize, energy sources are not always efficiently utilized. In comparison with Japan, possibly the world's most efficient user of energy, where less than 5 ounces of oil is needed to generate $1 in GNP, in China, approximately 80 ounces of oil is needed. Difficulty: 1 Easy Topic: Renewable and Nonrenewable Energy Options Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) It has been noted that China is inefficient in oil usage. What seems to be the main reason for this inefficient use of energy? A) government regulations B) consumer consumption C) outdated technology D) lack of alternatives E) preponderance of need Answer: C Explanation: As countries industrialize, energy sources are not always efficiently utilized. China, for example, spends three times the world average on energy (all sources) to produce one dollar of gross national product (GNP). In comparison with Japan, possibly the world's most efficient user of energy, where less than 5 ounces of oil is needed to generate $1 in GNP, in China, approximately 80 ounces of oil is needed. The reasons for China's inefficient oil use are numerous, but the worst culprit is outdated technology. Difficulty: 2 Medium Topic: Renewable and Nonrenewable Energy Options Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

77) Which source of energy is used most in America? A) wind B) solar C) coal D) oil and gas E) wood Answer: D Explanation: Americans' huge appetite for oil and gas is being fueled by the new domestic availability of copious fossil fuels via new exploration and enhanced recovery technologies such as fracking, and a drastic reduction of governmental restrictions and oversight of domestic exploration. Difficulty: 1 Easy Topic: Renewable and Nonrenewable Energy Options Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) When studying the dynamics of global population trends, it is important to remember that A) the demand for goods worldwide may have no effect on migration patterns. B) changes in the distribution of population among the world's countries may fail to influence demand. C) the global financial crisis has caused migration from rural to urban areas within countries. D) economic growth forecasts and assumptions about fertility rates are independent of each other. E) the existence of sheer numbers of people is significant in appraising potential consumer markets. Answer: E Explanation: Current population, rural/urban population shifts, rates of growth, age levels, and population control help determine today's demand for various categories of goods. Although not the only determinant, the existence of sheer numbers of people is significant in appraising potential consumer markets. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) Which of the following statements is true with respect to the economic effects of controlling population growth? A) Fertility rates increase proportionately to the rate of economic growth. B) A decline in fertility rate is a function of economic prosperity. C) Lower male-female ratios favor higher fertility rates. D) Developing nations tend to have lower fertility compared to developed nations. E) Higher population growth rates have resulted in increased global trade. Answer: B Explanation: Family planning and all that it entails is by far the most universal means governments use to control birthrates, but some economists believe that a decline in the fertility rate is a function of economic prosperity and will come only with economic development. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) The population of the industrialized world is most accurately described as A) increasing at an unprecedented pace. B) in decline and rapidly aging. C) mainly consisting of young adults. D) similar to the population of developing countries. E) remaining constant for a long time. Answer: B Explanation: While the developing world faces a rapidly growing population, the industrialized world's population is in decline and rapidly aging. Birthrates in western Europe and Japan have been decreasing since the early or mid-1960s; more women are choosing careers instead of children, and many working couples are electing to remain childless. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) The part of the world with the largest portion of people over 65 years is also the part of the world with the fewest number of people under age 15 years. Based on this, what might occur in this area of the world? A) a conscious effort to slow down rapid urbanization and industrialization. B) a larger focus on automation and technology in industries. C) a heavy tax burden on future workers. D) an increased focus on lower birthrates through incentives. E) an increase in migration to other nations. Answer: C Explanation: This disparity means that there will be fewer workers to support future retirees, resulting in an intolerable tax burden on future workers, more of the over-65 group remaining in the labor force, or pressure to change existing laws to allow mass migration to stabilize the worker-to-retiree ratio. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) What would help balance the explosive population expansion in less developed countries and the worker shortage in industrialized regions? A) stable worker-to-retiree ratio B) free flow of immigration C) better senior retirement programs D) prenatal sex scanning E) provisions for higher pension Answer: B Explanation: A recent report from the United Nations makes the strongest argument for change in immigration laws as a viable solution. The free flow of immigration will help ameliorate the dual problems of explosive population expansion in less developed countries and worker shortage in industrialized regions. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) What is the most universal means used by governments to control birthrates? A) family planning B) universal access to healthcare C) high literacy levels D) education for women E) improved nutrition Answer: A Explanation: Family planning and all that it entails is by far the most universal means governments use to control birthrates, but some economists believe that a decline in the fertility rate is a function of economic prosperity and will come only with economic development. Difficulty: 1 Easy Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) In numerous cultures, a family's only wealth is represented by the number of children they have. This demonstrates how ________ can deter population control. A) financial benefits B) poor enforcement mechanisms C) biological factors D) government welfare schemes E) cultural attitudes Answer: E Explanation: Perhaps the most important deterrent to population control is cultural attitudes about the importance of large families. In many cultures, the prestige of a man, whether alive or dead, depends on the number of his progeny, and a family's only wealth is its children. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) In the context of global population trends, a nation needs a fertility rate of about 2.1 children per woman to be able to A) reduce its population. B) maintain its population. C) encourage immigration. D) increase its population. E) discourage immigration. Answer: B Explanation: Just to keep the population from falling, a nation needs a fertility rate of about 2.1 children per woman. Difficulty: 1 Easy Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) Which region is most affected by aging and thus by a steadily decreasing worker-to-retiree ratio? A) Africa B) North America C) South America D) Asia E) Europe Answer: E Explanation: Europe is the region of the world most affected by aging and thus by a steadily decreasing worker-to-retiree ratio. Difficulty: 1 Easy Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) Countries like ________ and the U.S. epitomize the problems caused by an increasing percentage of elderly people who must be supported by a declining number of skilled workers. A) Brazil B) China C) Egypt D) Chile E) Japan Answer: E Explanation: Europe, Japan, and The United States epitomize the problems caused by an increasing percentage of elderly people who must be supported by a declining number of skilled workers. Difficulty: 1 Easy Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) ________ represent(s) the attempts of countries to overcome economic and social imbalances created in part by the influence of geography. A) Import tariffs B) Free Trade policies C) Trade routes D) Global migration E) Resource sharing pacts Answer: C Explanation: Trade routes bind the world together, minimizing distance, natural barriers, lack of resources, and the fundamental differences between peoples and economies. Trade routes represent the attempts of countries to overcome economic and social imbalances created in part by the influence of geography. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) What was the earliest form of a trade route? A) land routes B) the Internet C) sea routes D) underground routes E) air routes Answer: A Explanation: Early trade routes were over land; later came sea routes, air routes, and, finally, some might say, the Internet to connect countries. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) What key tool is necessary for anyone participating in commerce in order to know where goods and services exist and also know where they are needed? A) sustainable development B) expropriation C) immigration D) effective communications E) political stability Answer: D Explanation: An underpinning of all commerce is effective communications—knowledge of where goods and services exist and where they are needed and the ability to communicate instantaneously across vast distances. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 03-08 Communication infrastructures are an integral part of international commerce. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) Describe how the historical roots of Japan's culture have influenced its contemporary behavior and culture. Answer: Loyalty to family, to country, to company, and to social groups and the strong drive to cooperate, to work together for a common cause, permeate many facets of Japanese behavior and have historical roots that date back thousands of years. Historically, loyalty and service, a sense of responsibility, and respect for discipline, training, and artistry were stressed to maintain stability and order. Confucian philosophy, taught throughout Japan's history, emphasizes the basic virtue of loyalty "of friend to friend, of wife to husband, of child to parent, of brother to brother, but, above all, of subject to lord," that is, to country. A fundamental premise of Japanese ideology reflects the importance of cooperation for the collective good. Japanese achieve consensus by agreeing that all will unite against outside pressures that threaten the collective good. A historical perspective gives the foreigner in Japan a basis on which to begin developing cultural sensitivity and a better understanding of contemporary Japanese behavior. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 03-02 The effects of history on a country's culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Explain what it means for historical records to be subjective and why a proper understanding of this concept is essential for a marketer. Answer: Historical events always are viewed from one's own biases and self-reference criteria (SRC), and thus, what is recorded by one historian may not be what another records, especially if the historians are from different cultures. Historians traditionally try to be objective, but few can help filtering events through their own cultural biases. Our perspective not only influences our view of history but also subtly influences our view of many other matters. For example, maps of the world sold in the United States generally show the United States at the center, whereas maps in Britain show Britain at the center, and so on for other nations. For a marketer, a crucial element in understanding any nation's business and political culture is the subjective perception of its history. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) In the context of the subjective nature of historical events, contrast the American and Mexican perspectives on the Monroe Doctrine. Which popular statement typifies the difference between the perspectives? Answer: Citizens of the United States feel they have been good neighbors. They see the Monroe Doctrine as protection for Latin America from European colonization and the intervention of Europe in the governments of the Western Hemisphere. Latin Americans, in contrast, tend to see the Monroe Doctrine as an offensive expression of U.S. influence in Latin America. To put it another way, "Europe keep your hands off—Latin America is only for the United States," an attitude perhaps typified by former U.S. President Ulysses S. Grant, who, in a speech in Mexico in 1880, described Mexico as a "magnificent mine" that lay waiting south of the border for North American interests. The following statement typifies the difference in the perspectives. Most Americans would agree with President John F. Kennedy's proclamation during a visit to Mexico that "Geography has made us neighbors, tradition has made us friends." North Americans may be surprised to learn that most Mexicans felt it more accurate to say "Geography has made us closer, tradition has made us far apart." Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

94) Briefly describe Manifest Destiny and the Monroe Doctrine as the policies that were accepted as the basis for U.S. foreign policy during the 19th and 20th centuries. Answer: Manifest Destiny and the Monroe Doctrine were accepted as the basis for U.S. foreign policy during much of the 19th and 20th centuries. Manifest Destiny, in its broadest interpretation, meant that Americans were a chosen people ordained by God to create a model society. More specifically, it referred to the territorial expansion of the United States from the Atlantic to the Pacific. The idea of Manifest Destiny was used to justify the U.S. annexation of Texas, Oregon, New Mexico, and California and, later, U.S. involvement in Cuba, Alaska, Hawaii, and the Philippines. The Monroe Doctrine was enunciated by President James Monroe in a public statement proclaiming three basic dicta: no further European colonization in the New World, abstention of the United States from European political affairs, and nonintervention of European governments in the governments of the Western Hemisphere. After 1870, interpretation of the Monroe Doctrine became increasingly broad. In 1881, its principles were evoked in discussing the development of a canal across the Isthmus of Panama. An extension of the Monroe Doctrine known as the Roosevelt Corollary stated that not only would the United States prohibit non-American intervention in Latin American affairs, but it would also police the area and guarantee that Latin American nations met their international obligations. The corollary sanctioning American intervention was applied in 1905 when Roosevelt forced the Dominican Republic to accept the appointment of an American economic adviser, who quickly became the financial director of the small state. It was also used in the acquisition of the Panama Canal Zone from Colombia in 1903 and the formation of a provisional government in Cuba in 1906. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 95) Discuss how these three statements found in the text reflect the need for a deeper understanding of a country when participating in international trade. (1) "History is taught one way in Mexico and another way in the United States—the United States robbed us but we are portrayed in U.S. textbooks as bandits who invaded Texas." (2) "We may not like gringos for historical reasons, but today the world is dividing into commercial blocks, and we are handcuffed to each other for better or worse." (3) "We always have been and we continue to be a colony of the United States." Answer: Student answers will vary but should focus on the need for understanding a country's attitudes, prejudices, and fears related to its economic and political status. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 03-03 How culture interprets events through its own eyes. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

96) Explain, with examples, how climate and topography of a country affect its economic profile. Answer: Altitude, humidity, and temperature extremes are climatic features that affect the uses and functions of products and equipment. Products that perform well in temperate zones may deteriorate rapidly or require special cooling or lubrication to function adequately in tropical zones. For example, manufacturers have found that construction equipment used in the United States requires extensive modifications to cope with the intense heat and dust of the Sahara Desert. Within even a single national market, climate can be sufficiently diverse to require major adjustments. Different seasons between the northern and southern hemispheres also affect global strategies. Bosch-Siemens washing machines designed for European countries require spin cycles to range from a minimum spin cycle of 500 rpm to a maximum of 1,600 rpm. Because the sun does not shine regularly in Germany or in Scandinavia, washing machines must have a 1,600 rpm spin cycle because users do not have the luxury of hanging them out to dry. In Italy and Spain, however, clothes can be damp, because the abundant sunshine is sufficient to justify a spin cycle speed of 500 rpm. Mountains, oceans, seas, jungles, and other geographical features can pose serious impediments to economic growth and trade. For example, mountain ranges cover South America's west coast for 4,500 miles, with an average height of 13,000 feet and a width of 300 to 400 miles. This natural, formidable barrier has precluded the establishment of commercial routes between the Pacific and Atlantic coasts. Difficulty: 3 Hard Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) Discuss how less-privileged nations suffer disproportionately from natural disasters such as earthquakes and floods. Provide an example of a current situation where this is evidenced. Answer: Always on the slim margin between subsistence and disaster, less-privileged countries suffer disproportionately from natural and human-assisted catastrophes. The slow recoveries from the Haitian earthquake disaster of 2010 and the Puerto Rican hurricane in 2017 are perhaps the most prominent examples, particularly when juxtaposed with the progress of Japan's recovery from its 2011 earthquake/tsunami/nuclear power plant disaster. Climate and topography coupled with civil wars, poor environmental policies, and natural disasters push these countries further into economic stagnation. Without irrigation and water management, droughts, floods, and soil erosion afflict them, often leading to creeping deserts that reduce the long-term fertility of the land. Population increases, deforestation, and overgrazing intensify the impact of drought and lead to malnutrition and ill health, further undermining these countries' abilities to solve their problems. Countries that suffer the most from major calamities are among the poorest in the world. Many have neither the capital nor the technical ability to minimize the effects of natural phenomena; they are at the mercy of nature. (Specific examples will vary.) Difficulty: 3 Hard Topic: Geographical Implications that Affect Trade Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) In the context of social responsibility and environmental management, what is sustainable development? Answer: Sustainable development is a joint approach among those (e.g., governments, businesses, environmentalists, and others) who seek economic growth with "wise resource management, equitable distribution of benefits and reduction of negative effects on people and the environment from the process of economic growth." Sustainable development is not about the environment or the economy or society. It is about striking a lasting balance between all of these. More and more companies are embracing the idea of sustainable development as a "win– win" opportunity. Responsibility for protecting the environment does not rest solely with governments, businesses, or activist groups; however, each citizen has a social and moral responsibility to include environmental protection among his or her highest goals. Difficulty: 2 Medium Topic: Global Sourcing and Corporate Social Responsibility Learning Objective: 03-06 Why marketers need to be responsive to the geography of a country. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) The consequences of a population explosion set the stage for countries to implement some ethical forms of population control. Describe some of the factors that must be in place in order for these types of controls to work. Answer: The prerequisites to population control are adequate incomes, higher literacy levels, education for women, universal access to healthcare, family planning, improved nutrition, and, perhaps most important, a change in basic cultural beliefs regarding the importance of large families. Unfortunately, minimum progress in providing improved living conditions and changing beliefs has occurred. India serves as a good example of what is happening in much of the world. India's population was once stable, but with improved health conditions leading to greater longevity and lower infant mortality, its population will exceed that of China by 2050, when the two will account for about 50 percent of the world's inhabitants. The government's attempts to institute change are hampered by a variety of factors, including political ineptitude and slow changes in cultural norms. Nevertheless, the government continues to pass laws with the intended purpose of limiting the number of births. A novel example was a law that bars those with more than two children from election to the national Parliament and state assemblies. This rule would mean that many now in office could not seek reelection because of their family size. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 03-07 The economic effects of controlling population growth and aging populations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 100) Explain why communication infrastructures are an integral part of international commerce. Answer: An underpinning of all commerce is effective communications—knowledge of where goods and services exist and where they are needed and the ability to communicate instantaneously across vast distances. Continuous improvements in electronic communications have facilitated the expansion of trade. First came the telegraph, then the telephone, television, satellites, mobile phones, the computer, the Internet, and combinations of them all. Each revolution in technology has had a profound effect on human conditions, economic growth, and the manner in which commerce functions. Each new communications technology has spawned new business models; some existing businesses have reinvented their practices to adapt to the new technology, while other businesses have failed to respond and thus ceased to exist. The Internet and mobile phone revolutions will be no different; they too affect human conditions, economic growth, and the manner in which commerce operates. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 03-08 Communication infrastructures are an integral part of international commerce. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 4 Cultural Dynamics in Assessing Global Markets 1) Most markets are static and typically don't change. 2) The manner in and amount which people consume, the priority of needs and wants they attempt to satisfy, and the manner in which they satisfy them are functions of their culture. 3) Culture encompasses the sum total of knowledge, beliefs, art, morals, laws, and customs acquired by members of a society. 4) As countries move from agricultural to industrial to services economies, birthrates increase. 5) According to traditional definitions, culture is transmitted from generation to generation. 6) According to James Day Hodgson, former U.S. ambassador to Japan, culture is like a "glass ceiling" that can be seen through and easily understood and acquired. 7) Dutch management professor Geert Hofstede argues that culture provides a guide for humans on how to think and behave. 8) Acculturation refers to the process of becoming an agent of change through innovation. 9) According to Jared Diamond innovations spread faster north to south than east to west. 10) According to Philip Parker, a marketing professor, there are strong correlations between the climate of a region and the per capita GDP of countries in that region. 11) Much of American trade policy is based on cotton, which was the original source of the Virginia colony's economic survival in the 1600s. 12) Of the four approaches to governance found in the 20th century, colonialism was the only approach that survived World War II. 13) The family is an example of a social institution. 14) Marketers with little or no understanding of a religion may readily offend deeply because the influence of religion is often quite strong. 15) For most people, the first social institution outside of the home they are exposed to is a government source. 16) Religion has a significant impact on the value systems of a society and the effect of value systems on marketing. 17) According to the World Bank, no country with less than 50 percent literacy has succeeded economically. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

18) The four social institutions that most strongly influence values and culture are schools, churches, families, and the media. 19) The Uncertainty Avoidance Index (UAI), one of the four dimensions of culture identified by Geert Hofstede, focuses on assertiveness and achievement. 20) The Power Distance dimension of culture, identified by Geert Hofstede, refers to the preference for behavior that promotes one's self-interest. 21) The Power Distance Index, identified by Geert Hofstede, measures the tolerance for social inequality among members of a culture. 22) A country that demonstrates low Uncertainty Avoidance Index scores tends to be distrustful of new ideas or behaviors. 23) When a culture scores high in Individualism/Collectivism Index, individuals fail to identify with groups. 24) People from cultures with high Power Distance Index scores are more likely to have a general distrust of others. 25) Cultures with high Uncertainty Avoidance Index scores tend to have a low level of anxiety and stress. 26) A high Power Distance Index score implies that the people who hold power in a country are entitled to privileges. 27) When discussing the elements of culture, marriage ceremonies and funerals are good examples of rituals. 28) The language we use is an example of a cultural symbol. 29) Linguistic difference refers to the geographical differences among trading nations. 30) A company that decides to deliberately try and change the aspects of a culture that are in opposition to its marketing goals is practicing cultural congruence. 31) What is a characteristic of culture? A) It is radical in nature and readily accepts change. B) It is the same across all countries. C) It is the human-made part of human environment. D) It is static in nature. E) It is insignificant in assessing new markets.

32) The adjective that best defines the market behavior of any country is A) evolving. B) proactive. C) static. D) constant. E) fixed. 33) When marketers first introduced the personal digital assistant (PDA) to American consumers, they acted as ________ because the cultural impact of the product became widespread. A) gatekeepers B) conciliators C) agents of socialization D) agents of change E) arbitrators 34) How have culture-based superstitions affected the birthrate in Japan? A) The Japanese are not affected by cultural beliefs so there is no correlation with birthrates. B) Superstitions have coincided with a decline in the birthrate in certain years. C) Most Japanese women favor the idea of "one family/one child." D) While economic conditions affect birthrates in Japan, cultural beliefs do not. E) Japan is mostly an agricultural society and culture implies that many children are beneficial. 35) What action is important for marketers to take in order to be effective in a foreign market? A) learning to appreciate the intricacies of cultures different from their own B) ensuring that the promotions for the product are indifferent to social beliefs C) adhering to the prominent prejudices in one's own society D) creating product differentiation by being indifferent to the culture of the foreign market E) making the product relate to one's own religion 36) According to Dutch management professor Geert Hofstede, culture can be referred to as the A) "software of the mind." B) "defining factor of life." C) "conflict of civilization versus the masses." D) "tool of the elite." E) "art's triumph over banality." 37) In order for culture to exist it must be A) agreed upon by an entire nation. B) transmitted from one generation to the next. C) individualized and different for everyone. D) seen as the answer to all issues. E) used to create new rituals and norms.

38) James Day Hodgson, former U.S. ambassador to Japan, describes culture as a(n) ________, which according to him is tough to get through, but effort and patience could often lead to success. A) glass ceiling B) maze C) intelligence test D) thicket E) perseverance test 39) According to Edward Hall's comments on culture, which action could hurt companies and careers in foreign markets? A) adherence to the social norms of the foreign market B) being agents of change in the new market C) ignorance of cultural differences in the foreign market D) strict following of the political rules of the foreign society E) consideration of the economic system of the new market 40) The process of adjusting to a new culture is known as A) diffusion. B) culture transfer. C) acculturation. D) assimilation. E) transference. 41) Young children learn about social institutions from their families and when they go to school. This process of learning is called A) anarchy. B) socialization. C) cultural apathy. D) cognitive dissonance. E) social rebellion. 42) Most traditional definitions of ________ center around the notion that it is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation. A) economy B) sensitivity C) population D) demography E) culture

43) Juanita grew up learning a great deal about culture from her school, the church, the media, and her family. This is an example of A) acculturation. B) socialization. C) naturalization. D) emancipation. E) classification. 44) Lisette is excited about her new home in Rome. She has been given the opportunity to learn about a new culture, form new friendships, and capitalize on opportunities that were not available in her previous workplace based in Atlanta. In this scenario, Lisette is going through ________ as she adjusts to living in Rome. A) acculturation B) classification C) naturalization D) emancipation E) standardization 45) A desert nation would not rely on agricultural crops to boost its economy. This shows how ________ can affect social culture. A) geography B) religion C) history D) politics E) technology 46) What is true about Professor Jared Diamond's ideas regarding the influence of geography on history and cultural values? A) People in the plains are more likely to invade than those settled in higher altitudes. B) Historically, societies in the north have been more developed than those in the south. C) Civilizations near major rivers are more developed than those settled near major oceans. D) Historically, innovations spread faster east to west than north to south. E) Historically, invasions by warrior tribes have always happened from west to east. 47) The baby boom generation has affected consumption patterns around the world since it started and continues to do so today. This is one example of how ________ can be reflected in social institutions. A) the political economy B) history C) technology D) social institutions E) geography

48) New cola alternatives (Mecca Cola, Muslim Up, Arab Cola, and ColaTurka) sprang up after the military conflicts in the Middle East in 2003. This is an example that shows how A) Coca-Cola played an important role in easing the cultural divide among the warring nations. B) Coca-Cola catered to new markets through standardization. C) specific events in history can influence consumer behavior. D) businesses exploit cheap human labor during war times. E) technology influences marketing practices. 49) Which technological innovation has had a great impact on the gender-based determination of responsibilities and roles? A) mobile phones B) computers C) aircrafts D) optogenetics E) birth control techniques 50) How has the use of birth control pills affected social institutions? A) Educational institutions are finding it tougher to fill in seats. B) Midwifery, as a profession, is becoming extinct. C) More men and women are opposing the idea of "one-child family." D) Women and men are increasingly adhering to traditional gender roles. E) Schools are forced to address issues like abstinence and condom distribution. 51) ________ in India is a social institution that influences the roles and status positions found within Indian society. A) A country club B) The Ku Klux Klan C) The Taj Mahal D) A single-person household E) The caste system 52) One indicator of the narrowing ________ gap between the sexes is the fact that the majority of university students in the United States are women. A) emotional B) biological C) identity D) education E) language 53) In most cultures, the first social institution infants are exposed to outside the home is in the form of a A) day-care center. B) school. C) religious institution. D) shopping mall. E) government agency. 6 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

54) What is true of education and the literacy rate of a country? A) According to the World Bank, even countries with less than 50 percent literacy have been economically successful. B) Numerous studies indicate a direct link between the literacy rate of a country and its capability for rapid economic growth. C) Communicating in a literate market is much more difficult than communicating with one in which a marketer must depend on pictures and symbols. D) Increasingly, schools are seen as leading to negative cultural changes. E) Compared to governments, education has relatively little influence on culture. 55) How has the advent of women joining the workforce in growing numbers for the past 30 years affected American culture? A) an increase in the desire for large families among the American population B) an increase in the underestimation of women in the American culture C) a decrease in economic development D) a decrease in the influence of family on American culture E) a decrease in the number of single-person households in the country 56) Which social institution that has replaced family time, do many people point to as having detrimental effects on society? A) school B) literacy C) religion D) family E) media 57) Of the following countries, which requires the least number of school days in a year for elementary age students? A) China B) India C) United States D) Japan E) Germany 58) Compared with other societal forces, how does the role of government influence social culture? A) Governments influence thinking and behavior through the enforcement of a variety of laws affecting consumption and marketing behaviors. B) Compared with the early and direct influences of family, religion, school, and the media, governments hold relatively more sway. C) Americans increasingly complain about the detrimental effects of the government on American culture. D) Governments influence all aspects of the culture except for consumer behavior. E) Governments are the first social institution a person is exposed to outside his or her home in all cultures. 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

59) Which social institution introduces most innovations to society? A) corporations B) schools C) government D) family E) religion 60) What are the five elements of culture? A) systems, history, government, religion, awareness B) values, rituals, symbols, beliefs, thought processes C) institutions, associations, entities, groups, teams D) facts, opinions, beliefs, values, norms E) corporations, individuals, government, processes, outcomes 61) Additional studies based on Geert Hofstede's original study of how cultures differ identified the fifth dimension known as A) Power Distance Index. B) Uncertainty Avoidance orientation. C) Long-term Orientation. D) Masculinity/Femininity Index. E) Individualism/Collectivism orientation. 62) Which of the dimensions identified by Hofstede in his study of how cultures differ refers to the extent to which people try to control their desires and impulses? A) Long-term Orientation B) Uncertainty Avoidance Index C) Accommodation D) Self-actualization E) Indulgence 63) In the context of cultural values, the ________ Index refers to the preference for behavior that promotes one's self-interest. A) Individualism/Collectivism B) Power Distance C) Uncertainty Avoidance D) Masculinity/Femininity E) Linguistic 64) The Uncertainty Avoidance Index measures the tolerance of uncertainty and ________ among members of a society. A) inequality B) subjugation C) ambiguity D) oppression E) hierarchy 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

65) On the basis of Hofstede's four dimensions, cultures with high Power Distance Index (PDI) scores tend to A) be secular. B) be hierarchical. C) be flat in organization. D) value equality. E) cite knowledge as a source of power. 66) Mae-Jun works at an overseas branch of her organization. She needs clarification about a project and approaches a senior manager hoping to get a good explanation. However, she is told that only the team leads are allowed to approach the senior managers and sent away. In this scenario, the organization is most likely to have a ________ score. A) high Individualism/Collective Index B) high Power Distance Index C) low Individualism/Collective Index D) low Power Distance Index E) high Uncertainty Avoidance Index 67) People from which cultures are more likely to have a general distrust of others (not those in their groups) because power is seen to rest with individuals and is coercive rather than legitimate? A) cultures with a high Individualism/Collective Index score B) cultures with a high Power Distance Index score C) cultures with a low Individualism/Collective Index score D) cultures with a low Power Distance Index score E) cultures with a high Uncertainty Avoidance Index score 68) Kendall works at a refugee camp in Haiti. She witnesses high levels of anxiety and stress and knows that everyone is concerned with security and rule following. Which aspect of Hofstede's dimensions does this reflect? A) Power Distance Index B) Individualism/Collectivism Index C) Distance from English Index D) Uncertainty Avoidance Index E) Masculinity/Femininity Index 69) Cultures which are low in Uncertainty Avoidance Index are more likely to A) seek absolute truth. B) accord a high level of importance to rules as a means of avoiding risk. C) be distrustful of new ideas or behaviors. D) dogmatically stick to historically tested patterns of behavior. E) take a more empirical approach to understanding and knowledge.

70) A culture with a low ________ score is likely to have greater respect for equality. A) Power Distance Index B) Individualism/Collectivism Index C) Distance from English Index D) Uncertainty Avoidance Index E) Masculinity/Femininity Index 71) ________ pertains to societies in which people from birth onward are integrated into strong, cohesive groups. A) Power distance B) Individualism C) Uncertainty D) Collectivism E) Masculinity 72) In a culture with a high Uncertainty Avoidance Index (UAI), you are more likely to find that members A) are highly tolerant of ambiguity. B) tend to have a low level of anxiety. C) have a low level of concern with security and rule following. D) take a more empirical approach to understanding and knowledge. E) seek absolute truth. 73) Unlike investors in Japan, many investors in the United States are willing to take the risk of a stock market investment. Which cultural dimension does this reflect? A) Uncertainty Avoidance Index B) Masculinity/Femininity Index C) Power Distance Index D) Individualism/Collectivism Index E) Indulgence Index 74) In the context of cultural values, which statements is true? A) Countries that are high in individualism and low in uncertainty avoidance tend to be more innovative. B) Diffusion of innovations will be fast in countries that are low on individualism and high on uncertainty avoidance. C) Based on the experiments done with American and Chinese students, individualistic cultures tend to respond more favorably to self-focused appeals. D) Based on the experiments done with American and Chinese students, emotional appeals tend to attract people from collectivistic cultures. E) Based on the experiments done with American and Chinese students, individuals dislike the novelty in relation to their own cultures.

75) Rituals are patterns of behavior and interaction that are A) learned and repeated. B) scientifically proven. C) enforced by governments. D) the same across all cultures. E) universally accepted as proper behavior. 76) According to anthropologist Edward T. Hall, culture is A) all-encompassing. B) relatively minor in the scheme of life. C) communication. D) strongly linked to physiology. E) standard throughout the world. 77) In some parts of the world, language is itself thought of as a social institution, often with political importance. Which country best exemplifies this statement? A) Australia B) United States C) France D) Mexico E) Switzerland 78) The measure of the differences between language is known as linguistic A) origin. B) distance. C) recency. D) lining. E) rule. 79) Selena works for a U.S.-based manufacturing company that wants to build a plant in Indonesia. Selena is concerned about the language barriers because she knows more than 300 languages are spoken throughout Indonesia. What is Selena's main concern? A) ethnocentrism B) linguistic distance C) power distance. D) aesthetics E) individualism 80) The aesthetics of a culture are found in A) the arts, music, dance, and dress. B) the acceptance of power by certain individuals. C) the level of education in a country. D) the agreement between those in power and those who serve. E) the language specific to that culture.

81) Feng shui is a Chinese ________, considered to be the process that links humans and the universe to ch'i, the energy that sustains life and flows through our bodies and surroundings, in and around our homes and workplaces. A) folklore B) fairytale C) belief D) fable E) myth 82) Based on the metaphor for Richard Nisbett's views involving Confucius's worthy picture, what is his analysis regarding the thought process or perceptual process of Westerners? A) Westerners can provide great details about central figures but see relatively little in the background. B) Westerners observe things sequentially, thus fail to comprehend the larger picture. C) Westerners are good at observing details but fail to comprehend the central message. D) Westerners prefer larger than life figures to convey messages. E) Westerners can report details about the background and foreground. 83) ________ refers to being attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated, and appreciated. A) Cultural shock B) Cultural apathy C) Counter culture D) Cultural sensitivity E) Culture transfer 84) ________ is best defined as a responsible effort to learn from others' cultural ways in the quest for better solutions to a society's particular problems. A) Cultural apathy B) Cultural borrowing C) Cultural sensitivity D) Cultural aestheticism E) Cultural assimilation 85) Jason is a marketing manager for a large breakfast cereal company. He knows that most people in China eat breakfast like everyone else in the world, but he also understands that they may not want the sugar-laden cereals his company is known for and he should consider promoting healthier cereal options instead. Jason is revealing cultural ________ as he makes his decision. A) insensitivity B) ethnocentrism C) apathy D) empathy E) indifference

86) Jessica is new to international marketing and assumes that if a country speaks a similar language as another country then both of those countries will also be interested in the same types of products and services. Jessica appears to be suffering from A) ethnocentrism. B) cognitive dissonance. C) an illusion of similarity. D) cultural sensitivity. E) cultural borrowing. 87) Innovations that are most readily accepted are those that A) cater to the values of the predominant religion of the society. B) propagate faith in a set of beliefs different from the existing beliefs. C) are apathetic to the existing cultural beliefs. D) hold the greatest interest within the society and those that are least disruptive. E) offer some insight into the aesthetics of the existing culture. 88) Modern medicine has thrived in the United States together with the use of herbal remedies from South America. This is an example of A) cultural ombudsmanship. B) cultural shock. C) cultural hegemony. D) cultural sensitivity. E) cultural borrowing. 89) ________ refers to a strategy that involves marketing products similar to ones already on the market, thereby minimizing resistance. A) Planned change B) Cultural congruence C) Guerilla marketing D) Lateral marketing E) Culture equalization 90) The strategy of ________ deliberately sets out to alter those aspects of the culture offering resistance to predetermined marketing goals. A) planned change B) top-down change C) guerilla marketing D) differentiated marketing E) cultural congruence

91) Nathan decided it would be best for his company to introduce a low-calorie drink product into the South American market that is similar to other products already in place in the country. He felt this would lead to less resistance on the part of the South American consumer and the products would sell well. What type of strategy is Nathan using? A) linguistic distance B) cultural intolerance C) planned change D) unplanned obsolescence E) cultural congruence 92) The first step in bringing about planned change in a society is to A) determine which cultural factors conflict with an innovation. B) create a resistance to the cultural factor hindering acceptance. C) wait for eventual cultural changes that prove the value of the innovation to the culture. D) market products similar to ones already on the market. E) introduce a product or service and simply hope for the best. 93) Morrison Foods has decided to introduce a new line of turkey products to the American consumer. Turkey steaks resemble beefsteak in taste and are leaner and healthier for a variety of reasons. However, the company is concerned that the product will not be accepted in America. If Morrison Foods follows a strategy of ________, they are more likely to have a successful introduction of the new product. A) cultural shock B) cultural adiaphora C) cultural syncopation D) cultural congruence E) reverse culture shock 94) Next Energy is advocating the use of solar power to replace all petroleum-based energy sources. The company holds demonstrations to show how solar power could be used in all major petroleum-based products—automobiles, power sources, and heating and cooling. Next Energy is most likely employing a strategy of ________ change, a deliberate attempt to change the way we do things with respect to energy sources. A) unplanned B) planned C) parallel D) syncopated E) synergistic 95) The introduction of a Westernized diet has caused many Japanese to become overweight. To counter this trend, the Japanese are buying low-calorie, low-fat foods to help shed excess weight and are flocking to health clubs. This scenario best exemplifies ________ change. A) top-down B) planned C) central D) unplanned E) bottom-up 14 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

96) Describe how culture affects how consumers make choices and spend money. Provide an example of a culture-based purchasing decision in one country that might not be typical in another country. 97) Describe the various ways individuals learn about culture. 98) List and describe the four dimensions of cultural values as identified by Hofstede 99) Explain the concept of Power Distance and discuss how it affects culture. 100) Explain how linguistic distance is a necessary consideration for international marketers. 101) Illustrate the differences in "Asian and Western" thought as discussed by Richard Nisbett. 102) Explain how cultural sensitivity can lead to successful foreign marketing. 103) Describe how an awareness of aesthetic values plays a role in international marketing. 104) In the context of planned and unplanned cultural change, discuss the methods used by marketers to overcome resistance to change in an international marketing scenario.

International Marketing, 18e (Cateora) Chapter 4 Cultural Dynamics in Assessing Global Markets 1) Most markets are static and typically don't change. Answer: FALSE Explanation: Markets constantly change; they are not static but evolve, expand, and contract in response to marketing effort, economic conditions, and other cultural influences. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) The manner in and amount which people consume, the priority of needs and wants they attempt to satisfy, and the manner in which they satisfy them are functions of their culture. Answer: TRUE Explanation: The manner in and amount which people consume, the priority of needs and wants they attempt to satisfy, and the manner in which they satisfy them are functions of their culture that temper, mold, and dictate their style of living. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 3) Culture encompasses the sum total of knowledge, beliefs, art, morals, laws, and customs acquired by members of a society. Answer: TRUE Explanation: Culture is the human-made part of human environment—the sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by humans as members of society. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

4) As countries move from agricultural to industrial to services economies, birthrates increase. Answer: FALSE Explanation: As countries move from agricultural to industrial to services economies, birthrates decline. Immediate causes may be government policies and birth control technologies, but a global change in values is also occurring. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) According to traditional definitions, culture is transmitted from generation to generation. Answer: TRUE Explanation: Most traditional definitions of culture center around the notion that culture is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned and shared by a group of people, then transmitted from generation to generation. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 6) According to James Day Hodgson, former U.S. ambassador to Japan, culture is like a "glass ceiling" that can be seen through and easily understood and acquired. Answer: FALSE Explanation: James Day Hodgson, former U.S. ambassador to Japan, describes culture as a "thicket." This last metaphor holds hope for struggling international marketers. According to the ambassador, thickets are tough to get through, but effort and patience often lead to successes. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

7) Dutch management professor Geert Hofstede argues that culture provides a guide for humans on how to think and behave. Answer: TRUE Explanation: Dutch management professor Geert Hofstede refers to culture as the "software of the mind" and argues that it provides a guide for humans on how to think and behave; it is a problem-solving tool. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 8) Acculturation refers to the process of becoming an agent of change through innovation. Answer: FALSE Explanation: Humans make adaptations to changing environments through innovation. Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Difficulty: 2 Medium Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 9) According to Jared Diamond innovations spread faster north to south than east to west. Answer: FALSE Explanation: Jared Diamond tells us that historically, innovations spread faster east to west than north to south. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) According to Philip Parker, a marketing professor, there are strong correlations between the climate of a region and the per capita GDP of countries in that region. Answer: TRUE Explanation: Philip Parker, a marketing professor, argues for geography's deep influence on history, economics, and consumer behavior. For example, he reports strong correlations between the latitude (climate) and the per capita GDP of countries. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Much of American trade policy is based on cotton, which was the original source of the Virginia colony's economic survival in the 1600s. Answer: FALSE Explanation: Much of American trade policy has depended on the happenstance of tobacco (i.e., the technology of a new cash crop) being the original source of the Virginia colony's economic survival in the 1600s. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) Of the four approaches to governance found in the 20th century, colonialism was the only approach that survived World War II. Answer: FALSE Explanation: For most of the 20th century, four approaches to governance competed for world dominance: colonialism, fascism, communism, and democracy/free enterprise. Fascism fell in 1945. Colonialism was also a casualty of World War II. Difficulty: 1 Easy Topic: Different Forms of Government Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) The family is an example of a social institution. Answer: TRUE Explanation: Social institutions including family, religion, school, the media, government, and corporations all affect the ways in which people relate to one another, organize their activities to live in harmony with one another, teach acceptable behavior to succeeding generations, and govern themselves. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 14) Marketers with little or no understanding of a religion may readily offend deeply because the influence of religion is often quite strong. Answer: TRUE Explanation: The influence of religion is often quite strong. One's own religion is often not a reliable guide to another's beliefs. Most people do not understand religions other than their own, and/or what is "known" about other religions is often incorrect. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 15) For most people, the first social institution outside of the home they are exposed to is a government source. Answer: FALSE Explanation: In most cultures, the first social institution infants are exposed to outside the home takes the form of a church, mosque, shrine, or synagogue. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

16) Religion has a significant impact on the value systems of a society and the effect of value systems on marketing. Answer: TRUE Explanation: The impact of religion on the value systems of a society and the effect of value systems on marketing must not be underestimated. Religion clearly affects people's habits, their outlook on life, the products they buy, the way they buy them, and even the newspapers they read. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 17) According to the World Bank, no country with less than 50 percent literacy has succeeded economically. Answer: TRUE Explanation: According to the World Bank, no country has been successful economically with less than 50 percent literacy, but when countries have invested in education, the economic rewards have been substantial. Literacy has a profound effect on marketing. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) The four social institutions that most strongly influence values and culture are schools, churches, families, and the media. Answer: TRUE Explanation: The four social institutions that most strongly influence values and culture are schools, churches, families, and the media. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

19) The Uncertainty Avoidance Index (UAI), one of the four dimensions of culture identified by Geert Hofstede, focuses on assertiveness and achievement. Answer: FALSE Explanation: The Uncertainty Avoidance Index (UAI) focuses on risk orientation and the Masculinity/Femininity Index (MAS) focuses on assertiveness and achievement. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 20) The Power Distance dimension of culture, identified by Geert Hofstede, refers to the preference for behavior that promotes one's self-interest. Answer: FALSE Explanation: The Power Distance Index measures the tolerance of social inequality; that is, power inequality between superiors and subordinates within a social system. The Individualism/Collective Index refers to the preference for behavior that promotes one's selfinterest. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 21) The Power Distance Index, identified by Geert Hofstede, measures the tolerance for social inequality among members of a culture. Answer: TRUE Explanation: The Power Distance Index measures the tolerance of social inequality, that is, power inequality between superiors and subordinates within a social system. Difficulty: 2 Medium Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

22) A country that demonstrates low Uncertainty Avoidance Index scores tends to be distrustful of new ideas or behaviors. Answer: FALSE Explanation: Cultures with high Uncertainty Avoidance Index scores are highly intolerant of ambiguity and as a result tend to be distrustful of new ideas or behaviors. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 23) When a culture scores high in Individualism/Collectivism Index, individuals fail to identify with groups. Answer: FALSE Explanation: Cultures that score high in Individualism/Collectivism Index (IDV) reflect an "I" mentality and tend to reward and accept individual initiative, whereas those low in individualism reflect a "we" mentality and generally subjugate the individual to the group. This distinction does not mean that individuals fail to identify with groups when a culture scores high on IDV but rather that personal initiative and independence are accepted and endorsed. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 24) People from cultures with high Power Distance Index scores are more likely to have a general distrust of others. Answer: TRUE Explanation: People from cultures with high PDI (Power Distance Index) scores are more likely to have a general distrust of others (not those in their groups) because power is seen to rest with individuals and is coercive rather than legitimate. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

25) Cultures with high Uncertainty Avoidance Index scores tend to have a low level of anxiety and stress. Answer: FALSE Explanation: Cultures with high Uncertainty Avoidance Index scores are highly intolerant of ambiguity and as a result tend to be distrustful of new ideas or behaviors. They tend to have a high level of anxiety and stress and a concern with security and rule following. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 26) A high Power Distance Index score implies that the people who hold power in a country are entitled to privileges. Answer: TRUE Explanation: High Power Distance Index scores tend to indicate a perception of differences between superior and subordinate and a belief that those who hold power are entitled to privileges. A low Power Distance Index score reflects more egalitarian views. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 27) When discussing the elements of culture, marriage ceremonies and funerals are good examples of rituals. Answer: TRUE Explanation: Life is filled with rituals, that is, patterns of behavior and interaction that are learned and repeated. The most obvious ones are associated with major events in life. Marriage ceremonies and funerals are good examples. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

28) The language we use is an example of a cultural symbol. Answer: TRUE Explanation: For some around the world, language is itself thought of as a social institution, often with political importance. Language is the most obvious symbolic system and the part that most often involves conscious communication Difficulty: 2 Medium Topic: How Language Affects Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 29) Linguistic difference refers to the geographical differences among trading nations. Answer: FALSE Explanation: Linguistic difference is the measure of difference between languages; an important factor in determining the amount of trade between nations. Difficulty: 2 Medium Topic: How Language Affects Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 30) A company that decides to deliberately try and change the aspects of a culture that are in opposition to its marketing goals is practicing cultural congruence. Answer: FALSE Explanation: The strategy of cultural congruence involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance. A company may employ a strategy of planned change—that is, deliberately set out to change those aspects of the culture offering resistance to predetermined marketing goals Difficulty: 2 Medium Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

31) What is a characteristic of culture? A) It is radical in nature and readily accepts change. B) It is the same across all countries. C) It is the human-made part of human environment. D) It is static in nature. E) It is insignificant in assessing new markets. Answer: C Explanation: Culture is the human-made part of human environment—the sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by humans as members of society. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 32) The adjective that best defines the market behavior of any country is A) evolving. B) proactive. C) static. D) constant. E) fixed. Answer: A Explanation: Markets constantly change; they are not static but evolve, expand, and contract in response to marketing effort, economic conditions, and other cultural influences. Markets and market behavior are part of a country's culture. Difficulty: 2 Medium Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

33) When marketers first introduced the personal digital assistant (PDA) to American consumers, they acted as ________ because the cultural impact of the product became widespread. A) gatekeepers B) conciliators C) agents of socialization D) agents of change E) arbitrators Answer: D Explanation: In this case, marketers performed the role of agents of change. Marketers are constantly adjusting their efforts to cultural demands of the market, but they also are acting as agents of change whenever the product or idea being marketed is innovative. Difficulty: 3 Hard Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 34) How have culture-based superstitions affected the birthrate in Japan? A) The Japanese are not affected by cultural beliefs so there is no correlation with birthrates. B) Superstitions have coincided with a decline in the birthrate in certain years. C) Most Japanese women favor the idea of "one family/one child." D) While economic conditions affect birthrates in Japan, cultural beliefs do not. E) Japan is mostly an agricultural society and culture implies that many children are beneficial. Answer: B Explanation: Culture-based superstitions have an even stronger influence on the birthrates in Japan. A one-year 20 percent drop in Japanese fertility rates in 1966 was caused by a belief that women born in the Year of the Fire Horse, which occurs every 60 years, will lead unhappy lives and perhaps murder their husbands Difficulty: 2 Medium Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

35) What action is important for marketers to take in order to be effective in a foreign market? A) learning to appreciate the intricacies of cultures different from their own B) ensuring that the promotions for the product are indifferent to social beliefs C) adhering to the prominent prejudices in one's own society D) creating product differentiation by being indifferent to the culture of the foreign market E) making the product relate to one's own religion Answer: A Explanation: The point is that culture matters. It is imperative for foreign marketers to learn to appreciate the intricacies of cultures different from their own if they are to be effective in foreign markets. Difficulty: 2 Medium Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 36) According to Dutch management professor Geert Hofstede, culture can be referred to as the A) "software of the mind." B) "defining factor of life." C) "conflict of civilization versus the masses." D) "tool of the elite." E) "art's triumph over banality." Answer: A Explanation: Dutch management professor Geert Hofstede refers to culture as the "software of the mind" and argues that it provides a guide for humans on how to think and behave. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

37) In order for culture to exist it must be A) agreed upon by an entire nation. B) transmitted from one generation to the next. C) individualized and different for everyone. D) seen as the answer to all issues. E) used to create new rituals and norms. Answer: B Explanation: Culture is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned and shared by a group of people, then transmitted from generation to generation. Difficulty: 2 Medium Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 38) James Day Hodgson, former U.S. ambassador to Japan, describes culture as a(n) ________, which according to him is tough to get through, but effort and patience could often lead to success. A) glass ceiling B) maze C) intelligence test D) thicket E) perseverance test Answer: D Explanation: James Day Hodgson, former U.S. ambassador to Japan, describes culture as a "thicket." This metaphor holds hope for struggling international marketers. According to the ambassador, thickets are tough to get through, but effort and patience often lead to successes. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

39) According to Edward Hall's comments on culture, which action could hurt companies and careers in foreign markets? A) adherence to the social norms of the foreign market B) being agents of change in the new market C) ignorance of cultural differences in the foreign market D) strict following of the political rules of the foreign society E) consideration of the economic system of the new market Answer: C Explanation: The salient points in Hall's comments are that cultural differences are often invisible and that marketers who ignore them often hurt both their companies and careers. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 40) The process of adjusting to a new culture is known as A) diffusion. B) culture transfer. C) acculturation. D) assimilation. E) transference. Answer: C Explanation: Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

41) Young children learn about social institutions from their families and when they go to school. This process of learning is called A) anarchy. B) socialization. C) cultural apathy. D) cognitive dissonance. E) social rebellion. Answer: B Explanation: Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Individuals also absorb culture through role modeling, or imitation of their peers. People make decisions about consumption and production through application of their cultural-based knowledge. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 42) Most traditional definitions of ________ center around the notion that it is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation. A) economy B) sensitivity C) population D) demography E) culture Answer: E Explanation: Most traditional definitions of culture center around the notion that culture is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned and shared by a group of people then transmitted from generation to generation. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

43) Juanita grew up learning a great deal about culture from her school, the church, the media, and her family. This is an example of A) acculturation. B) socialization. C) naturalization. D) emancipation. E) classification. Answer: B Explanation: Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Individuals also absorb culture through role modeling, or imitation of their peers. Difficulty: 2 Medium Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 44) Lisette is excited about her new home in Rome. She has been given the opportunity to learn about a new culture, form new friendships, and capitalize on opportunities that were not available in her previous workplace based in Atlanta. In this scenario, Lisette is going through ________ as she adjusts to living in Rome. A) acculturation B) classification C) naturalization D) emancipation E) standardization Answer: A Explanation: Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Individuals also absorb culture through role modeling, or imitation of their peers. Difficulty: 3 Hard Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

45) A desert nation would not rely on agricultural crops to boost its economy. This shows how ________ can affect social culture. A) geography B) religion C) history D) politics E) technology Answer: A Explanation: Indeed, geography (broadly defined here to include climate, topography, flora, fauna, and microbiology) has influenced history, technology, economics, what is farmed and eaten, our social institutions, perhaps even the boy-to-girl birth ratio, and, yes, our ways of thinking. Difficulty: 2 Medium Topic: Geographical Implications that Affect Trade Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 46) What is true about Professor Jared Diamond's ideas regarding the influence of geography on history and cultural values? A) People in the plains are more likely to invade than those settled in higher altitudes. B) Historically, societies in the north have been more developed than those in the south. C) Civilizations near major rivers are more developed than those settled near major oceans. D) Historically, innovations spread faster east to west than north to south. E) Historically, invasions by warrior tribes have always happened from west to east. Answer: D Explanation: Jared Diamond tells us that historically, innovations spread faster east to west than north to south. Before the advent of transoceanic shipping, ideas flowed over the Silk Road but not across the Sahara or the Isthmus of Panama. Difficulty: 2 Medium Topic: Geographical Implications that Affect Trade Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

47) The baby boom generation has affected consumption patterns around the world since it started and continues to do so today. This is one example of how ________ can be reflected in social institutions. A) the political economy B) history C) technology D) social institutions E) geography Answer: B Explanation: The impact of specific events in history can be seen reflected in technology, social institutions, cultural values, and even consumer behavior. The post-War baby boom still affects consumption patterns around the world. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 48) New cola alternatives (Mecca Cola, Muslim Up, Arab Cola, and ColaTurka) sprang up after the military conflicts in the Middle East in 2003. This is an example that shows how A) Coca-Cola played an important role in easing the cultural divide among the warring nations. B) Coca-Cola catered to new markets through standardization. C) specific events in history can influence consumer behavior. D) businesses exploit cheap human labor during war times. E) technology influences marketing practices. Answer: C Explanation: The impact of specific events in history can be seen reflected in technology, social institutions, cultural values, and even consumer behavior. For example, the military conflicts in the Middle East in 2003 bred new cola brands as alternatives to Coca-Cola—Mecca Cola, Muslim Up, Arab Cola, and ColaTurka. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

49) Which technological innovation has had a great impact on the gender-based determination of responsibilities and roles? A) mobile phones B) computers C) aircrafts D) optogenetics E) birth control techniques Answer: E Explanation: Birth control pills, or more broadly birth control techniques, have had a huge effect on everyday life for most Americans and people around the world. Before the advent of the pill, men's and women's roles were proscribed by reproductive responsibilities and roles. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation 50) How has the use of birth control pills affected social institutions? A) Educational institutions are finding it tougher to fill in seats. B) Midwifery, as a profession, is becoming extinct. C) More men and women are opposing the idea of "one-child family." D) Women and men are increasingly adhering to traditional gender roles. E) Schools are forced to address issues like abstinence and condom distribution. Answer: E Explanation: Not everyone is happy with the new "freedoms" offered by birth control techniques. But the technology of birth control undeniably has deeply affected social institutions and cultural values. Families are smaller, and government and schools are forced to address issues such as abstinence and condom distribution. Difficulty: 2 Medium Topic: The Effects of Population on International Business Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation

51) ________ in India is a social institution that influences the roles and status positions found within Indian society. A) A country club B) The Ku Klux Klan C) The Taj Mahal D) A single-person household E) The caste system Answer: E Explanation: The roles and status positions found within a society are influenced by the dictates of social institutions. The caste system in India is one such institution. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 52) One indicator of the narrowing ________ gap between the sexes is the fact that the majority of university students in the United States are women. A) emotional B) biological C) identity D) education E) language Answer: D Explanation: The education gap between men and women is narrowing in many places around the world—for example, the majority of university students in the United States are now women. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

53) In most cultures, the first social institution infants are exposed to outside the home is in the form of a A) day-care center. B) school. C) religious institution. D) shopping mall. E) government agency. Answer: C Explanation: In most cultures, the first social institution infants are exposed to outside the home takes the form of a church, mosque, shrine, or synagogue. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 54) What is true of education and the literacy rate of a country? A) According to the World Bank, even countries with less than 50 percent literacy have been economically successful. B) Numerous studies indicate a direct link between the literacy rate of a country and its capability for rapid economic growth. C) Communicating in a literate market is much more difficult than communicating with one in which a marketer must depend on pictures and symbols. D) Increasingly, schools are seen as leading to negative cultural changes. E) Compared to governments, education has relatively little influence on culture. Answer: B Explanation: Numerous studies indicate a direct link between the literacy rate of a country and its capability for rapid economic growth. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

55) How has the advent of women joining the workforce in growing numbers for the past 30 years affected American culture? A) an increase in the desire for large families among the American population B) an increase in the underestimation of women in the American culture C) a decrease in economic development D) a decrease in the influence of family on American culture E) a decrease in the number of single-person households in the country Answer: D Explanation: In the United States during the past 30 years, women have joined the workforce in growing numbers, substantially reducing the influence of family on American culture. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 56) Which social institution that has replaced family time, do many people point to as having detrimental effects on society? A) school B) literacy C) religion D) family E) media Answer: E Explanation: Americans more and more complain about the detrimental effects of too much media. Many decry the declining American educational system as it produces a lower percentage of college graduates than 12 other countries, including Russia, Japan, and France. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

57) Of the following countries, which requires the least number of school days in a year for elementary age students? A) China B) India C) United States D) Japan E) Germany Answer: C Explanation: American kids spend only 180 days per year in school. Contrast that with around 260 days per year in China, 243 in Japan, and 240 in Germany, the top three in number of school days globally. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 58) Compared with other societal forces, how does the role of government influence social culture? A) Governments influence thinking and behavior through the enforcement of a variety of laws affecting consumption and marketing behaviors. B) Compared with the early and direct influences of family, religion, school, and the media, governments hold relatively more sway. C) Americans increasingly complain about the detrimental effects of the government on American culture. D) Governments influence all aspects of the culture except for consumer behavior. E) Governments are the first social institution a person is exposed to outside his or her home in all cultures. Answer: A Explanation: Governments influence thinking and behavior through the passage, promulgation, promotion, and enforcement of a variety of laws affecting consumption and marketing behaviors. Compared with the early (during childhood) and direct influences of family, religion, school, and the media, governments hold relatively little sway. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

59) Which social institution introduces most innovations to society? A) corporations B) schools C) government D) family E) religion Answer: A Explanation: Most innovations are introduced to societies by companies, many times multinational companies. Through the efficient distribution of new products and services based on these new ideas, cultures are changed, and new ways of thinking are stimulated. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-02 The origins of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 60) What are the five elements of culture? A) systems, history, government, religion, awareness B) values, rituals, symbols, beliefs, thought processes C) institutions, associations, entities, groups, teams D) facts, opinions, beliefs, values, norms E) corporations, individuals, government, processes, outcomes Answer: B Explanation: Culture is defined in this text by listing its five elements: values, rituals, symbols, beliefs, and thought processes. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) Additional studies based on Geert Hofstede's original study of how cultures differ identified the fifth dimension known as A) Power Distance Index. B) Uncertainty Avoidance orientation. C) Long-term Orientation. D) Masculinity/Femininity Index. E) Individualism/Collectivism orientation. Answer: C Explanation: Studying more than 90,000 people in 66 countries, he found that the cultures of the nations studied differed along four primary dimensions as follows: the Individualism/Collective Index (IDV), which focuses on self-orientation; the Power Distance Index (PDI), which focuses on authority orientation; the Uncertainty Avoidance Index (UAI), which focuses on risk orientation; and the Masculinity/Femininity Index (MAS), which focuses on assertiveness and achievement. Subsequent studies identified a fifth dimension, Long-term Orientation. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 62) Which of the dimensions identified by Hofstede in his study of how cultures differ refers to the extent to which people try to control their desires and impulses? A) Long-term Orientation B) Uncertainty Avoidance Index C) Accommodation D) Self-actualization E) Indulgence Answer: E Explanation: Hofstede studied more than 90,000 people in 66 countries, he found that the cultures of the nations studied differed along four primary dimensions. Later, Indulgence was also identified as a sixth dimension—the extent to which people try to control their desires and impulses. Difficulty: 2 Medium Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

63) In the context of cultural values, the ________ Index refers to the preference for behavior that promotes one's self-interest. A) Individualism/Collectivism B) Power Distance C) Uncertainty Avoidance D) Masculinity/Femininity E) Linguistic Answer: A Explanation: The Individualism/Collective Index refers to the preference for behavior that promotes one's self-interest. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 64) The Uncertainty Avoidance Index measures the tolerance of uncertainty and ________ among members of a society. A) inequality B) subjugation C) ambiguity D) oppression E) hierarchy Answer: C Explanation: The Uncertainty Avoidance Index (UAI) measures the tolerance of uncertainty and ambiguity among members of a society. Cultures with high UAI scores are highly intolerant of ambiguity and as a result tend to be distrustful of new ideas or behaviors. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

65) On the basis of Hofstede's four dimensions, cultures with high Power Distance Index (PDI) scores tend to A) be secular. B) be hierarchical. C) be flat in organization. D) value equality. E) cite knowledge as a source of power. Answer: B Explanation: Cultures with high PDI scores tend to be hierarchical, with members citing social roles, manipulation, and inheritance as sources of power and social status. Those with low scores, in contrast, tend to value equality and cite knowledge and respect as sources of power. Difficulty: 2 Medium Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 66) Mae-Jun works at an overseas branch of her organization. She needs clarification about a project and approaches a senior manager hoping to get a good explanation. However, she is told that only the team leads are allowed to approach the senior managers and sent away. In this scenario, the organization is most likely to have a ________ score. A) high Individualism/Collective Index B) high Power Distance Index C) low Individualism/Collective Index D) low Power Distance Index E) high Uncertainty Avoidance Index Answer: B Explanation: In this scenario, the organization is most likely to have a high Power Distance Index score. Cultures with high Power Distance Index scores tend to be hierarchical, with members citing social roles, manipulation, and inheritance as sources of power and social status. Difficulty: 3 Hard Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

67) People from which cultures are more likely to have a general distrust of others (not those in their groups) because power is seen to rest with individuals and is coercive rather than legitimate? A) cultures with a high Individualism/Collective Index score B) cultures with a high Power Distance Index score C) cultures with a low Individualism/Collective Index score D) cultures with a low Power Distance Index score E) cultures with a high Uncertainty Avoidance Index score Answer: B Explanation: People from cultures with high Power Distance Index scores are more likely to have a general distrust of others (not those in their groups) because power is seen to rest with individuals and is coercive rather than legitimate. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 68) Kendall works at a refugee camp in Haiti. She witnesses high levels of anxiety and stress and knows that everyone is concerned with security and rule following. Which aspect of Hofstede's dimensions does this reflect? A) Power Distance Index B) Individualism/Collectivism Index C) Distance from English Index D) Uncertainty Avoidance Index E) Masculinity/Femininity Index Answer: D Explanation: Cultures with high Uncertainty Avoidance Index scores are highly intolerant of ambiguity and as a result tend to be distrustful of new ideas or behaviors. They tend to have a high level of anxiety and stress and a concern with security and rule following. Difficulty: 3 Hard Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Apply AACSB: Diversity Accessibility: Keyboard Navigation

69) Cultures which are low in Uncertainty Avoidance Index are more likely to A) seek absolute truth. B) accord a high level of importance to rules as a means of avoiding risk. C) be distrustful of new ideas or behaviors. D) dogmatically stick to historically tested patterns of behavior. E) take a more empirical approach to understanding and knowledge. Answer: E Explanation: Those cultures low in Uncertainty Avoidance Index (UAI) take a more empirical approach to understanding and knowledge, whereas those high in UAI seek absolute truth. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 70) A culture with a low ________ score is likely to have greater respect for equality. A) Power Distance Index B) Individualism/Collectivism Index C) Distance from English Index D) Uncertainty Avoidance Index E) Masculinity/Femininity Index Answer: A Explanation: High Power Distance Index scores tend to indicate a perception of differences between superior and subordinate and a belief that those who hold power are entitled to privileges. A low score reflects more egalitarian views. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

71) ________ pertains to societies in which people from birth onward are integrated into strong, cohesive groups. A) Power distance B) Individualism C) Uncertainty D) Collectivism E) Masculinity Answer: D Explanation: Collectivism pertains to societies in which people from birth onward are integrated into strong, cohesive groups, which throughout people's lifetimes continue to protect them in exchange for unquestioning loyalty. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 72) In a culture with a high Uncertainty Avoidance Index (UAI), you are more likely to find that members A) are highly tolerant of ambiguity. B) tend to have a low level of anxiety. C) have a low level of concern with security and rule following. D) take a more empirical approach to understanding and knowledge. E) seek absolute truth. Answer: E Explanation: Cultures with a high UAI seek absolute truth, whereas those cultures low in UAI take a more empirical approach to understanding and knowledge. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

73) Unlike investors in Japan, many investors in the United States are willing to take the risk of a stock market investment. Which cultural dimension does this reflect? A) Uncertainty Avoidance Index B) Masculinity/Femininity Index C) Power Distance Index D) Individualism/Collectivism Index E) Indulgence Index Answer: A Explanation: Cultures scoring low in uncertainty avoidance are associated with a low level of anxiety and stress, a tolerance of deviance and dissent, and a willingness to take risks. Japan scores quite high on Hofstede's Uncertainty Avoidance Index (92) and America scores low (46). Difficulty: 3 Hard Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Apply AACSB: Diversity Accessibility: Keyboard Navigation 74) In the context of cultural values, which statements is true? A) Countries that are high in individualism and low in uncertainty avoidance tend to be more innovative. B) Diffusion of innovations will be fast in countries that are low on individualism and high on uncertainty avoidance. C) Based on the experiments done with American and Chinese students, individualistic cultures tend to respond more favorably to self-focused appeals. D) Based on the experiments done with American and Chinese students, emotional appeals tend to attract people from collectivistic cultures. E) Based on the experiments done with American and Chinese students, individuals dislike the novelty in relation to their own cultures. Answer: A Explanation: Hofstede's data on cultural values suggest that the diffusion of innovations will be slower in Japan and France than in the United States. Such predictions are consistent with research findings that cultures scoring higher on individualism and lower on uncertainty avoidance tend to be more innovative. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

75) Rituals are patterns of behavior and interaction that are A) learned and repeated. B) scientifically proven. C) enforced by governments. D) the same across all cultures. E) universally accepted as proper behavior. Answer: A Explanation: Life is filled with rituals, that is, patterns of behavior and interaction that are learned and repeated. The most obvious ones are associated with major events in life. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 76) According to anthropologist Edward T. Hall, culture is A) all-encompassing. B) relatively minor in the scheme of life. C) communication. D) strongly linked to physiology. E) standard throughout the world. Answer: C Explanation: Anthropologist Edward T. Hall tells us that culture is communication. In his seminal article about cultural differences in business settings, he talks about the "languages" of time, space, things, friendships, and agreements. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

77) In some parts of the world, language is itself thought of as a social institution, often with political importance. Which country best exemplifies this statement? A) Australia B) United States C) France D) Mexico E) Switzerland Answer: C Explanation: For some around the world, language is itself thought of as a social institution, often with political importance. Certainly, the French go to extreme lengths and expense to preserve the purity of their français. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 78) The measure of the differences between language is known as linguistic A) origin. B) distance. C) recency. D) lining. E) rule. Answer: B Explanation: Linguistic distance refers to the measure of difference between languages and it is an important factor in trade between nations. Difficulty: 2 Medium Topic: How Language Affects Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

79) Selena works for a U.S.-based manufacturing company that wants to build a plant in Indonesia. Selena is concerned about the language barriers because she knows more than 300 languages are spoken throughout Indonesia. What is Selena's main concern? A) ethnocentrism B) linguistic distance C) power distance. D) aesthetics E) individualism Answer: B Explanation: Linguistic distance has been shown to be an important factor in determining differences in values across countries and the amount of trade between countries. The idea is that crossing wider language differences increases transaction costs. Difficulty: 2 Medium Topic: How Language Affects Culture Learning Objective: 04-03 The elements of culture. Bloom's: Apply AACSB: Diversity Accessibility: Keyboard Navigation 80) The aesthetics of a culture are found in A) the arts, music, dance, and dress. B) the acceptance of power by certain individuals. C) the level of education in a country. D) the agreement between those in power and those who serve. E) the language specific to that culture. Answer: A Explanation: The aesthetics of a culture refer to the symbols that represent that culture, such as the arts, folklore, music, drama, dance, dress, and cosmetics. Difficulty: 2 Medium Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

81) Feng shui is a Chinese ________, considered to be the process that links humans and the universe to ch'i, the energy that sustains life and flows through our bodies and surroundings, in and around our homes and workplaces. A) folklore B) fairytale C) belief D) fable E) myth Answer: C Explanation: Called art, science, philosophy, or superstition—depending on who is talking— the Chinese practice of feng shui is an important ancient belief held by Chinese, among others. Feng shui is the process that links humans and the universe to ch'i, the energy that sustains life and flows through our bodies and surroundings, in and around our homes and workplaces. Difficulty: 1 Easy Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 82) Based on the metaphor for Richard Nisbett's views involving Confucius's worthy picture, what is his analysis regarding the thought process or perceptual process of Westerners? A) Westerners can provide great details about central figures but see relatively little in the background. B) Westerners observe things sequentially, thus fail to comprehend the larger picture. C) Westerners are good at observing details but fail to comprehend the central message. D) Westerners prefer larger than life figures to convey messages. E) Westerners can report details about the background and foreground. Answer: A Explanation: A good metaphor for Richard Nisbett's views involves going back to Confucius's worthy picture. Asians tend to see the whole picture and can report details about the background and foreground. Westerners alternatively focus on the foreground and can provide great detail about central figures but see relatively little in the background. Difficulty: 2 Medium Topic: What is Culture? Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

83) ________ refers to being attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated, and appreciated. A) Cultural shock B) Cultural apathy C) Counter culture D) Cultural sensitivity E) Culture transfer Answer: D Explanation: Successful foreign marketing begins with cultural sensitivity—being attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated, and appreciated. Cultural sensitivity, or cultural empathy, must be carefully cultivated. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 04-03 The elements of culture. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 84) ________ is best defined as a responsible effort to learn from others' cultural ways in the quest for better solutions to a society's particular problems. A) Cultural apathy B) Cultural borrowing C) Cultural sensitivity D) Cultural aestheticism E) Cultural assimilation Answer: B Explanation: Cultural borrowing is a responsible effort to learn from others' cultural ways in the quest for better solutions to a society's particular problems. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 04-04 The impact of cultural borrowing. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

85) Jason is a marketing manager for a large breakfast cereal company. He knows that most people in China eat breakfast like everyone else in the world, but he also understands that they may not want the sugar-laden cereals his company is known for and he should consider promoting healthier cereal options instead. Jason is revealing cultural ________ as he makes his decision. A) insensitivity B) ethnocentrism C) apathy D) empathy E) indifference Answer: D Explanation: Though many behaviors are borrowed from other cultures, they are combined in a unique manner that becomes typical for a particular society. To a foreign marketer, this similarbut-different feature of cultures has important meaning in gaining cultural empathy. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 04-04 The impact of cultural borrowing. Bloom's: Apply AACSB: Diversity Accessibility: Keyboard Navigation 86) Jessica is new to international marketing and assumes that if a country speaks a similar language as another country then both of those countries will also be interested in the same types of products and services. Jessica appears to be suffering from A) ethnocentrism. B) cognitive dissonance. C) an illusion of similarity. D) cultural sensitivity. E) cultural borrowing. Answer: C Explanation: For the inexperienced marketer, the similar-but-different aspect of culture creates illusions of similarity that usually do not exist. Several nationalities can speak the same language or have similar race and heritage, but it does not follow that similarities exist in other respects— that a product acceptable to one culture will be readily acceptable to the other, or that a promotional message that succeeds in one country will succeed in the other. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-04 The impact of cultural borrowing. Bloom's: Apply AACSB: Diversity Accessibility: Keyboard Navigation

87) Innovations that are most readily accepted are those that A) cater to the values of the predominant religion of the society. B) propagate faith in a set of beliefs different from the existing beliefs. C) are apathetic to the existing cultural beliefs. D) hold the greatest interest within the society and those that are least disruptive. E) offer some insight into the aesthetics of the existing culture. Answer: D Explanation: Observations indicate that those innovations most readily accepted are those holding the greatest interest within the society and those least disruptive. Difficulty: 1 Easy Topic: Challenges of Leading Global Change Learning Objective: 04-04 The impact of cultural borrowing. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 88) Modern medicine has thrived in the United States together with the use of herbal remedies from South America. This is an example of A) cultural ombudsmanship. B) cultural shock. C) cultural hegemony. D) cultural sensitivity. E) cultural borrowing. Answer: E Explanation: Cultural borrowing is a responsible effort to learn from others' cultural ways in the quest for better solutions to a society's particular problems. When an American borrows from another culture, each of the borrowed cultural facets will be adapted to fit his or her needs, molded into uniquely American habits, foods, and customs. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-04 The impact of cultural borrowing. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

89) ________ refers to a strategy that involves marketing products similar to ones already on the market, thereby minimizing resistance. A) Planned change B) Cultural congruence C) Guerilla marketing D) Lateral marketing E) Culture equalization Answer: B Explanation: Much successful and highly competitive marketing is accomplished by a strategy of cultural congruence. Essentially this strategy involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 90) The strategy of ________ deliberately sets out to alter those aspects of the culture offering resistance to predetermined marketing goals. A) planned change B) top-down change C) guerilla marketing D) differentiated marketing E) cultural congruence Answer: A Explanation: A company may employ a strategy of planned change—that is, deliberately set out to change those aspects of the culture offering resistance to predetermined marketing goals. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

91) Nathan decided it would be best for his company to introduce a low-calorie drink product into the South American market that is similar to other products already in place in the country. He felt this would lead to less resistance on the part of the South American consumer and the products would sell well. What type of strategy is Nathan using? A) linguistic distance B) cultural intolerance C) planned change D) unplanned obsolescence E) cultural congruence Answer: E Explanation: The cultural congruence strategy involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance. Difficulty: 3 Hard Topic: Choosing An International Business Strategy Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Apply AACSB: Diversity Accessibility: Keyboard Navigation 92) The first step in bringing about planned change in a society is to A) determine which cultural factors conflict with an innovation. B) create a resistance to the cultural factor hindering acceptance. C) wait for eventual cultural changes that prove the value of the innovation to the culture. D) market products similar to ones already on the market. E) introduce a product or service and simply hope for the best. Answer: A Explanation: The first step in bringing about planned change in a society is to determine which cultural factors conflict with an innovation, thus creating resistance to its acceptance. Difficulty: 2 Medium Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

93) Morrison Foods has decided to introduce a new line of turkey products to the American consumer. Turkey steaks resemble beefsteak in taste and are leaner and healthier for a variety of reasons. However, the company is concerned that the product will not be accepted in America. If Morrison Foods follows a strategy of ________, they are more likely to have a successful introduction of the new product. A) cultural shock B) cultural adiaphora C) cultural syncopation D) cultural congruence E) reverse culture shock Answer: D Explanation: If Morrison Foods follows a strategy of cultural congruence, they are more likely to have a successful introduction of the new product. The strategy of cultural congruence involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance. Difficulty: 3 Hard Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 94) Next Energy is advocating the use of solar power to replace all petroleum-based energy sources. The company holds demonstrations to show how solar power could be used in all major petroleum-based products—automobiles, power sources, and heating and cooling. Next Energy is most likely employing a strategy of ________ change, a deliberate attempt to change the way we do things with respect to energy sources. A) unplanned B) planned C) parallel D) syncopated E) synergistic Answer: B Explanation: A company may employ a strategy of planned change—that is, deliberately set out to change those aspects of the culture offering resistance to predetermined marketing goals. Difficulty: 3 Hard Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

95) The introduction of a Westernized diet has caused many Japanese to become overweight. To counter this trend, the Japanese are buying low-calorie, low-fat foods to help shed excess weight and are flocking to health clubs. This scenario best exemplifies ________ change. A) top-down B) planned C) central D) unplanned E) bottom-up Answer: D Explanation: A company may employ a strategy of planned change—that is, deliberately set out to change those aspects of the culture offering resistance to predetermined marketing goals. As an example of unplanned cultural change, consider how the Japanese diet has changed since the introduction of milk and bread soon after World War II. Difficulty: 3 Hard Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 96) Describe how culture affects how consumers make choices and spend money. Provide an example of a culture-based purchasing decision in one country that might not be typical in another country. Answer: Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture). Individuals also absorb culture through role modeling, or imitation of their peers. Finally, people make decisions about consumption and production through application of their cultural-based knowledge. While consumers in the United States might purchase breakfast products that have a high sugar content, consumers in other parts of the world might prefer more savory breakfast items. These choices are the result of socialization processes that indicate what is "preferred" for breakfast in various parts of the world. Examples will vary. Difficulty: 3 Hard Topic: Economic and Business Implications of Cultural Change Learning Objective: 04-01 The importance of culture to an international marketer. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

97) Describe the various ways individuals learn about culture. Answer: Individuals learn culture from social institutions through socialization (growing up) and acculturation (adjusting to a new culture, for example, how immigrants and indigenous people react to one another). Individuals also absorb culture through role modeling, or imitation of their peers. Finally, people make decisions about consumption and production through application of their cultural-based knowledge. Difficulty: 3 Hard Topic: What is Culture? Learning Objective: 04-02 The origins of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 98) List and describe the four dimensions of cultural values as identified by Hofstede Answer: Cultural values refer to the importance of things and ideas in a particular culture. The most useful information on how cultural values influence various types of business and market behavior comes from seminal work of Geert Hofstede. Studying more than 90,000 people in 66 countries, he found that the cultures of the nations studied differed along four primary dimensions. The four dimensions are as follows: the Individualism/Collective Index (IDV), which focuses on self-orientation; the Power Distance Index (PDI), which focuses on authority orientation; the Uncertainty Avoidance Index (UAI), which focuses on risk orientation; and the Masculinity/Femininity Index (MAS), which focuses on assertiveness and achievement. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

99) Explain the concept of Power Distance and discuss how it affects culture. Answer: The Power Distance Index measures the tolerance of social inequality, that is, power inequality between superiors and subordinates within a social system. Cultures with high PDI scores tend to be hierarchical, with members citing social roles, manipulation, and inheritance as sources of power and social status. Those with low scores, in contrast, tend to value equality and cite knowledge and achievement as sources of power. Thus, people from cultures with high PDI scores are more likely to have a general distrust of others (not those in their groups) because power is seen to rest with individuals and is coercive rather than legitimate. High PDI scores tend to indicate a perception of differences between superior and subordinate and a belief that those who hold power are entitled to privileges. A low PDI score reflects more egalitarian views. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 100) Explain how linguistic distance is a necessary consideration for international marketers. Answer: Linguistic distance is proving useful to marketing researchers in market segmentation and strategic entry decisions. It has been shown to be an important factor in determining differences in values across countries and the amount of trade between countries. The idea is that crossing "wider" language differences increases transaction costs. Over the years, linguistics researchers have determined that languages around the world conform to family trees based on the similarity of their forms and development. For example, Spanish, Italian, French, and Portuguese are all classified as Romance languages because of their common roots in Latin. Distances can be measured on these linguistic trees. If we assume English to be the starting point, German is one branch away, Danish two, Spanish three, Japanese four, Hebrew five, Chinese six, and Thai seven. Other work in the area is demonstrating a direct influence of language on cultural values, expectations, and even conceptions of time. For example, as linguistic distance from English increases, individualism decreases. These studies are among the first in this genre, and much more work needs to be done. However, the notion of linguistic distance appears to hold promise for better understanding and predicting cultural differences in both consumer and management values, expectations, and behaviors. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

101) Illustrate the differences in "Asian and Western" thought as discussed by Richard Nisbett. Answer: Richard Nisbett, in his book "The Geography of Thought," broadly discusses differences in "Asian and Western" thinking. He starts with Confucius and Aristotle and develops his arguments through consideration of historical and philosophical writings and findings from more recent behavioral science research, including his own social-psychological experiments. Although he acknowledges the dangers surrounding generalizations about Japanese, Chinese, and Korean cultures, on the one hand, and European and American cultures, on the other, many of his conclusions are consistent with our own work related to international negotiations, cultural values, and linguistic distance. A good metaphor for his views involves going back to Confucius's worthy picture. Asians tend to see the whole picture and can report details about the background and foreground. Westerners alternatively focus on the foreground and can provide great detail about central figures but see relatively little in the background. This difference in perception—focus versus big picture—is associated with a wide variety of differences in values, preferences, and expectations about future events. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 102) Explain how cultural sensitivity can lead to successful foreign marketing. Answer: Successful foreign marketing begins with cultural sensitivity—being attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated, and appreciated. Cultural sensitivity, or cultural empathy, must be carefully cultivated. That is, for every amusing, annoying, peculiar, or repulsive cultural trait we find in a country, others see a similarly amusing, annoying, or repulsive trait in our culture. For example, we bathe, perfume, and deodorize our bodies in a daily ritual that is seen in many cultures as compulsive, while we often become annoyed with those cultures less concerned with natural body odor. Just because a culture is different does not make it wrong. Marketers must understand how their own cultures influence their assumptions about another culture. The more exotic the situation, the more sensitive, tolerant, and flexible one needs to be. Being culturally sensitive will reduce conflict and improve communications and thereby increase success in collaborative relationships. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

103) Describe how an awareness of aesthetic values plays a role in international marketing. Answer: As we acquire our culture, we learn the meaning of this wonderful symbolic system represented in its aesthetics, that is, its arts, folklore, music, drama, dance, dress, and cosmetics. Customers everywhere respond to images, myths, and metaphors that help them define their personal and national identities and relationships within a context of culture and product benefits. The uniqueness of a culture can be spotted quickly in symbols having distinct meanings. Without culturally consistent interpretations and presentations of countries' aesthetic values, a host of marketing problems can arise. Product styling must be aesthetically pleasing to be successful, as must advertisements and package designs. Insensitivity to aesthetic values can offend, create a negative impression, and, in general, render marketing efforts ineffective or even damaging. Strong symbolic meanings may be overlooked if one is not familiar with a culture's aesthetic values. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-03 The elements of culture. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 104) In the context of planned and unplanned cultural change, discuss the methods used by marketers to overcome resistance to change in an international marketing scenario. Answer: Marketers have two options when introducing an innovation to a culture: They can wait for changes to occur, or they can spur change. The former requires hopeful waiting for eventual cultural changes that prove their innovations of value to the culture; the latter involves introducing an idea or product and deliberately setting about to overcome resistance and to cause change that accelerates the rate of acceptance. In fact, much successful and highly competitive marketing is accomplished by a strategy of cultural congruence. Essentially this strategy involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance. However, when marketing programs depend on cultural change to be successful, a company may decide to leave acceptance to a strategy of unplanned change—that is, introduce a product and hope for the best. Or a company may employ a strategy of planned change—that is, deliberately set out to change those aspects of the culture offering resistance to predetermined marketing goals. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 04-05 The strategy of planned change and its consequences Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 5 Culture, Management Style, and Business Systems 1) Adaptation requires business executives to forsake their ways and change to local customs. 2) Kyle recently transferred to Norway and is working with Britt on a marketing idea, but their different approaches have created a quandary. If Kyle doesn't understand Britt's customs, he is more likely to evaluate Britt's behavior by relying on what is familiar to her. 3) Electives are business customs to which adaptation is helpful but not necessary. 4) In order to be successful, a business should recognize and accommodate any cultural imperatives associated with a foreign entity. 5) The majority of business customs fit into the cultural elective category. 6) The "master of destiny" philosophy is based on the idea that individuals are not in control of their own futures but are at the mercy of decisions made by business and government. 7) The acceptance of the independent enterprise as an instrument of social action is a fundamental concept of U.S. corporations. 8) The notion that competition is crucial for efficiency, improvement, and regeneration is fundamental to Western management practices. 9) High Power Distance Index countries are more egalitarian than low Power Distance Index countries. 10) The three typical decision-making patterns are top-level management decisions, decentralized decisions, and committee or group decisions. 11) Family-run businesses are more likely to follow the pattern of top-level management decision making. 12) In the committee decision setup, every committee member must be convinced of the merits of the proposition or product in question. 13) Workers in countries higher in individualism and lower in power distance show more commitment to their companies than workers in countries with lower individualism and higher power distance. 14) High-context cultures place great importance on the verbal aspects of communication. 15) Businesspeople in low-context cultures use e-mail more often than those in high-context cultures. 16) Most North Americans operate on monochronic time. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) Polychronic time is characterized by "a great involvement with people." 18) Being direct and wanting to get to the point are characteristics of a business person who operates in polychronic time. 19) Currently in most international businesses, women represent a small percentage of the employees who are chosen for an international assignment. 20) The business community's defense against payoffs was that they were a way of life throughout the world. 21) The distinction between bribery and extortion depends on whether the activity resulted from an offer or from a demand for payment. 22) Subornation payments accompany requests for a person to do a job more rapidly or more efficiently. 23) The form of bribery known as lubrication is common in some countries and involves giving a small sum of cash or a gift to a low-ranking public official. 24) Utilitarian ethics is the ethical principle that focuses on the optimization of the "common good." 25) When comparing performance of American, German, and Japanese firms, in less individualistic cultures, labor and management generally do not get along. 26) A distinguishing characteristic of the type of capitalism common in Chinese culture is the emphasis on guanxi as the coordinating principle among firms. 27) Chinese cultures are high on Power Distance Index and low on Individualism/Collective Index. 28) High-context cultures score high on power distance and low on individualism. 29) The most managerially useful aspect of the synthesis of cultural differences is that it allows us to make predictions about unfamiliar cultures. 30) Japan is considered a relationship-oriented culture because it achieves efficiency through competition and is linguistically direct.

31) What is a criterion for adaptation when dealing with individuals, firms, or authorities in foreign countries? A) ability to resist varying tempos B) zero tolerance C) hypersensitivity D) flexibility E) lack of curiosity 32) Marilee understands that if she wants her U.S.-based company to flourish in Italy, she must be tolerant of Italian customs and norms that might differ from what she deals with in the United States and also be humble and not assume that her current way of doing business is the only way to do business. What characteristic is Marilee demonstrating? A) adaptation B) dissonance C) distancing D) concession E) empathy 33) What are the three categories of business customs? A) rigid, flexible, and negotiables B) internals, externals, and consensual customs C) imperatives, electives, and exclusives D) national, foreign, and international E) unilateral, bilateral, and multilateral 34) Reggie owns a small stationery company in Tennessee and plans to enter the French market to sell his line of fine linen papers. He realizes that there are many business customs he will need to understand and conform to in order to succeed in France. What type of business custom is Reggie concerned with? A) cultural exclusives B) business truism C) global protocols D) business axioms E) cultural imperatives 35) Business customs that must be recognized and accommodated are called A) imperatives. B) electives. C) exclusives. D) exceptional. E) constraints.

36) Jenna does not drink alcohol and when she meets clients for dinner she knows that while the client might enjoy a glass of wine with the meal, she is not required to. What type of business custom does this illustrate? A) imperatives B) electives C) exclusives D) individualistic axioms E) standardized axioms 37) Business customs in which an outsider must not participate are called A) imperatives. B) electives. C) exclusives. D) absolutes. E) statutes. 38) ________ would most likely be characterized as being an imperative business custom in many cultures. A) Establishing friendships B) Knowing to speak and write the native language C) Adhering to local food habits D) Conforming to the native religions E) Having knowledge of the local sport 39) Manuel Tores, a senior manager at Crawford Export Logistics, goes to France to negotiate a deal with the company's French partners. He dresses casually in a t-shirt and jeans. His French counterparts call off the meeting and accuse him of taking a casual attitude toward negotiations. In this scenario, dressing formally during business meetings is probably a cultural ________ for the French. A) imperative B) elective C) exclusive D) oddity E) rarity 40) Nina McRidder became an embarrassment to her company when she joked about the ruling monarchy in England in front of a group of visiting English businesspeople. She should have known that political ridicule by a foreigner is rarely accepted. Ms. McRidder has violated what is known as a cultural A) imperative. B) elective. C) exclusive. D) intelligence. E) standard.

41) While bowing to another person is a ritual among the Japanese, it is not expected for a Westerner to bow or to understand this ritual. In other words, bowing would be considered a cultural A) elective. B) stereotype. C) imperative. D) rest. E) exclusive. 42) The management team selected Sarah to attend the meeting with the new foreign-based company because she demonstrates tolerance, can easily adjust to changes in work tempos, and always promotes justice and fairness. Sarah has the qualities necessary for A) dissonance. B) ethnocentrism. C) dominance. D) adaptation. E) stereotyping. 43) Which philosophical view of U.S. management recognizes that people influence the future to a large extent and that they control their own fates? A) independent enterprise as the instrument of social action B) wide sharing in decision making C) "master of destiny" viewpoint D) natural selection theory E) competition producing efficiency 44) According to the "master of destiny" viewpoint, what is one thing that determines a person's destiny? A) luck B) society C) hard work D) family background E) a higher order, such as God 45) Which of the following is consistent with the American view of the independent enterprise? A) A corporation should fall under the control of the state government. B) A corporation is an entity that has rules and continuity of existence. C) The largest proportion of a corporation's profits must go to the personal funds of the stakeholders. D) A corporation's employees must be selected on the basis of seniority and not merit. E) Personal relationships are more important in daily life than work and the company.

46) In many companies in the United States, people feel that individuals control their own destinies and because of this companies should select and reward employees based on A) merit. B) efficiency. C) payment. D) nepotism. E) family background. 47) Adam Smith in his The Wealth of Nations stated, "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intended to promote it." What behavior does this notion attempt to justify? A) collectivism B) loyalty C) welfare mentality D) competitiveness E) cooperation 48) The notion that ________ is crucial for efficiency, improvement, and regeneration is fundamental to Western management practices. A) insolvency B) procrastination C) liquidation D) competition E) complacency 49) The Jensen family has owned Jensen's Country Furnishings since 1987 and Delores and Frank Jensen, grandparents and founders, make all of the business decisions. What type of decision-making pattern does this reflect? A) committee B) diffused management C) decentralized management D) nonhierarchical E) top-level management 50) As businesses grow and professional management develops, there is a shift toward what form of decision making? A) authoritarian decision making B) decentralized management decision making C) hit-or-miss decision making D) tentative decision making E) experimental decision making

51) A characteristic of committee decision making is that A) it is only found in small businesses. B) the committees always operate on a decentralized basis. C) it is based on rank and hierarchy. D) it is rarely employed in Asian countries. E) it is by group or consensus. 52) Which form of business decision making is predominant in most Asian countries? A) independent decision making B) contractual decision making C) authoritarian decision making D) group decision making E) dictatorial decision making 53) In ________ decision making, title or position generally takes precedence over the individual holding the job. A) committee B) decentralized C) top-level management D) integrated E) dictatorial 54) Companies in the more hierarchical countries of France and Italy tend to have strong paternalistic orientations, which means that A) it is assumed a person will work for one company during their lifetime. B) all employees are family members or close family friends. C) decisions are made from the top-down. D) they are monopolies without any competition. E) they are more heavily influenced by the government. 55) In his study on the personal lives of professionals, David McClelland found that in ancient Greece work was considered A) more important than family and home. B) a necessary component to having a happy personal life. C) equal to and just as important as having a fulfilling personal life. D) an undesirable factor that got in the way of a good personal life. E) the ultimate reward. 56) Research has shown that commitment of workers to their companies tended to be higher in countries A) higher in individualism and lower in power distance. B) higher in collectivism and lower in individualism. C) lower in individualism and higher in power distance. D) higher in power distance and higher in individualism. E) higher in collectivism and higher in power distance. 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

57) According to Max Weber, at least part of the standard of living in the United States today can be attributed to the A) hard-working Protestant ethic. B) creators of the Constitution. C) Pearl harbor bombing. D) African American population. E) slave labor that formed the basis for early industry. 58) Which form of communication is more important in a low-context culture? A) explicit B) nonverbal C) contextual D) face-to-face E) gesture-based 59) According to the high-context/low-context continuum identified by Edward T. Hall, communication in a low-context culture depends on A) the context. B) who says it. C) when it is said. D) how it is said. E) the verbal expression. 60) Fredrick Keeble, an American manager, took his Swiss client out for a traditional American dinner. The client did not seem to eat much. After dinner, he asked his client if he had enjoyed the dinner. Which of the following responses would indicate that the client comes from a lowcontext culture? A) No, I did not like the food. B) Yes, but it was a little too oily. C) No, dinner was good but I have an upset tummy. D) Yes, it was lovely, thanks. E) Yes, unfortunately I was not very hungry. 61) It is estimated that 78 percent of today's website content is written in English, yet not every person in the world can read or understand English. What solution does the text suggest to make website content more universal? A) using minimal to no language on websites instead of using graphics and diagrams to convey messages B) using language translation software to translate communication in all languages C) having country-specific websites so that everyone can communicate in their own language D) using foreign language blocking software to screen international communications E) training employees to virally communicate in all languages used by foreign customers

62) France is higher on Hofstede's Power Distance Index (PDI) than the United States and formality is evident in French businesses. Which of the following American business practices would be most unacceptable to the French? A) slipping in colloquial French words during business meetings B) trying to emulate the French way of business thinking C) showing enthusiasm at business negotiations D) using first names in business encounters E) exhibiting stubbornness while negotiating 63) ________ is probably the most common mistake of North Americans attempting to trade in the Middle East. A) Accepting drinks when offered B) Interacting informally C) Acting hastily D) Attempting to speak the local language E) Dressing casually 64) A ________ time system typifies Western cultures like most North Americans, Swiss, Germans, and Scandinavians and causes them to concentrate on one thing at a time. A) polychronic B) bimodal C) dual D) monochronic E) collectivistic 65) ________ time is more dominant in high-context cultures and provides time for relationships to build. A) Polychronic B) Exponential C) Polynomial D) Monochronic E) Sequence 66) What is a characteristic of a polychronic time schedule? A) looser standards of being on time B) get straight to the point C) more strict scheduling D) concentrate on one thing at a time E) promptness at all times

67) People in Brazil describe themselves as late arrivers, allow greater flexibility in defining early and late, are less concerned about being late, and are more likely to blame external factors for their delay. Which system of time do the Brazilian people most likely operate on? A) polychronic B) monochromatic C) monotheismic D) monochronic E) sequence 68) When compared to people operating on P-time, people operating on M-time A) follow looser time schedules. B) are more deeply involved with individuals. C) are not bound by deadlines and time schedules. D) are more likely to blame external factors for their lateness. E) tend to concentrate on one thing at a time. 69) The marketing orientation at KB Komponents is based on the belief that consumers and businesses alike will not buy enough without some prodding on the part of the company. Which marketing orientation does this demonstrate? A) distribution B) buying C) production D) time E) selling 70) At Norton Manufacturing Corporation, it is believed that consumers want products that provide the best quality and have innovative features. Which marketing orientation does this company use? A) direct orientation B) product orientation C) logistics orientation D) production orientation E) selling orientation 71) When considering the role of time in business, which of the following is true of P-time and M-time? A) The American desire to get down to business is a manifestation of a P-time culture as contrary to Japan's M-time approach. B) The M-time system gives rise to looser time schedules, unlike P-time. C) M-time is characterized by the simultaneous occurrence of many things, unlike P-time. D) As global markets expand, more businesspeople from P-time cultures are adapting to M-time. E) Contrary to P-time businesspeople, interruptions are routine for M-time businesspeople.

72) Which of the following best explains the low percentage of women chosen for international assignments in the United States? A) The role of women as homemakers and caregivers does not allow for international assignments. B) Men are generally more interested to take up international assignments than women. C) Prejudice faced by American women executives in foreign, male-dominated societies is exaggerated. D) There is a widespread belief that traditional roles of women in male-dominated societies preclude women from being successful in these societies. E) Expenses involved in sending an unmarried women executive abroad are far higher than the expenses incurred in sending a married man with family. 73) While most European countries are comparable to the United States in terms of the number of women in managerial positions, ________ stands out as the country that is drastically different with only 13 percent of management jobs held by women. A) Italy B) France C) Germany D) Britain E) Switzerland 74) Kenneth is a bank executive and when one of his customers offers him box seats to a Chicago Cubs game he knows he cannot accept them because it is not appropriate to do so. However, in some countries of the world this gift would be perfectly acceptable. This reflects a difference in A) intellectual property laws. B) grants-in-aid. C) tariff restrictions. D) business ethics. E) ethnocentrism. 75) Which organization conducts an international survey of businesspeople, political analysts, and the general public on corruption and compiles the Corruption Perception Index (CPI)? A) Organization of American States (OAS). B) Amnesty International. C) Oxfam International. D) Transparency International (TI). E) CARE International. 76) What is true of the findings of Transparency International's Corruption Perception Index (CPI)? A) lower levels of bribery have been found in nations with a communist past. B) higher levels of bribery have been found in low-power distance nations. C) higher levels of bribery have been found in low-income nations. D) lower levels of bribery have been found in collectivistic cultures. E) lower levels of bribery have been found in poor nations. 11 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

77) Marcus is the director of a small company in Boston. He is trying to obtain parts from a manufacturer in Taiwan but that company is unwilling to send them because of government regulations limiting exports on small orders. Marcus calls the head of the manufacturing company and says he will pay him an extra $5,000 if he ships them anyway. What practice is Marcus using to obtain the parts? A) extortion B) slander C) barter D) libel E) bribery 78) Academic studies of the causes and consequences of bribery, conducted by Transparency International (TI), indicate corruption is greater in A) high income nations. B) democratic rather than communist nations. C) countries with high individualism. D) countries with low Power Distance Index. E) collectivistic nations. 79) Which aspect of Japanese culture, predicted by many to favor bribery, makes Japan's success in reducing corruption more remarkable? A) relationship-orientation B) mechanistic inclination C) patriarchal nature D) information-orientation E) task orientation 80) ________ occurs when payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to. A) Extortion B) Subordination C) Lubrication D) Perjury E) Bribery 81) ________ involves a relatively small sum of cash, a gift, or a service that is intended to facilitate or expedite the normal, lawful performance of a duty by an official. A) Extortion B) Ransom C) Lubrication D) Shakedown E) Exaction

82) The finance minister of a developing country demands a heavy payment for the approval of a multimillion dollar contract with a foreign company. This demand for the lump sum payment is called A) extortion. B) subornation. C) lubrication. D) larceny. E) malfeasance. 83) ________ generally involves giving large sums of money—frequently not properly accounted for—designed to entice an official to commit an illegal act on behalf of the one offering the bribe. A) Agent charges B) Lubrication C) Extortion D) Subornation E) Ransom 84) Kim is the director of operations at her company and hires an agent to obtain a license to build a warehouse in an industrial district. The agent gets caught offering a bribe to a government official for issue of the license. Which of the following describes Kim's liabilities? A) The manager is not liable since the use of an agent absolves her of any responsibility. B) The manager is liable since the agent used part of her fees for bribery, although the manager was unaware of the agent's intentions. C) The manager is not liable if the agent can prove that extortion, rather than bribery, took place. D) The manager is liable if she was aware of the fact that part of the agent's fee will be used as a bribe. E) The manager is liable only if the act of building the warehouse at the given location is illegal. 85) Which ethical principle tries to optimize the "common good" or benefits of all constituencies? A) secularism and philanthropy B) rights of the parties C) justice or fairness D) utilitarian ethics E) self-reference frame 86) Many companies are now practicing strategic philanthropy which means that they A) make efforts to minimize harmful waste emissions. B) hire returning veterans. C) use their expertise or products to sponsor projects in the community. D) only work with foreign corporations that meet EPA standards. E) promote products that are made with only natural ingredients.

87) According to Lester Thurow, in the British–American "individualistic" kind of capitalism, relationships among government, management, and labor in business systems are A) cooperative. B) commensalistic. C) synergistic. D) adversarial. E) conciliatory. 88) A culture that is low context, individualistic, has a low power distance, and uses monochronic time is A) information-oriented. B) relationship-oriented. C) hierarchy-oriented. D) an authoritarian culture. E) a dictatorial culture. 89) A culture that is high context, has collectivism, has a high power distance, and uses polychronic time is A) information-oriented. B) relationship-oriented. C) self-oriented. D) power-oriented. E) kinship-oriented. 90) Why is adaptation a necessary element when working with cultural differences? What are the basic criteria to deal with foreign firms? 91) Describe the three types of business customs that an international marketer must be aware of and provide examples of each. 92) Describe the "master of destiny" and "independent enterprise" philosophies and their role in U.S. management. 93) Discuss the three patterns of decision making that are typical in international business. 94) Distinguish between the two time systems in the world, as defined by Edward T. Hall. 95) Discuss how the self-reference criteria plays a role when negotiating with a foreign entity. 96) Why do U.S. multinational companies hesitate to offer women international assignments? Is this prejudice justified? 97) Discuss the difference between bribery and extortion and provide examples. 98) Compare an information-oriented culture like America with a relationship-oriented culture like Japan. 14 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

International Marketing, 18e (Cateora) Chapter 5 Culture, Management Style, and Business Systems 1) Adaptation requires business executives to forsake their ways and change to local customs. Answer: FALSE Explanation: Adaptation does not require business executives to forsake their ways and change to local customs; rather, executives must be aware of local customs and be willing to accommodate those differences that can cause misunderstandings. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) Kyle recently transferred to Norway and is working with Britt on a marketing idea, but their different approaches have created a quandary. If Kyle doesn't understand Britt's customs, he is more likely to evaluate Britt's behavior by relying on what is familiar to her. Answer: FALSE Explanation: The self-reference criterion (SRC) is especially operative in business customs. If we do not understand our foreign counterpart's customs, we are more likely to evaluate that person's behavior in terms of what is familiar to us. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Electives are business customs to which adaptation is helpful but not necessary. Answer: TRUE Explanation: Business customs can be grouped into imperatives, customs that must be recognized and accommodated; electives, customs to which adaptation is helpful but not necessary; and exclusives, customs in which an outsider must not participate. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) In order to be successful, a business should recognize and accommodate any cultural imperatives associated with a foreign entity. Answer: TRUE Explanation: Imperatives are business customs that must be recognized and accommodated. Apart from imperatives, business customs can be grouped into electives, customs to which adaptation is helpful but not necessary; and exclusives, customs in which an outsider must not participate. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) The majority of business customs fit into the cultural elective category. Answer: TRUE Explanation: Cultural electives relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required. The majority of customs fit into this category. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) The "master of destiny" philosophy is based on the idea that individuals are not in control of their own futures but are at the mercy of decisions made by business and government. Answer: FALSE Explanation: The "master of destiny" philosophy is fundamental to U.S. management thought. Simply stated, people can substantially influence the future; they are in control of their own destinies. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) The acceptance of the independent enterprise as an instrument of social action is a fundamental concept of U.S. corporations. Answer: TRUE Explanation: The acceptance of the idea that independent enterprise is an instrument for social action is the fundamental concept of U.S. corporations. A corporation is recognized as an entity that has rules and continuity of existence and is a separate and vital social institution. This recognition can result in strong feelings of obligation to serve the company. Indeed, the company may take precedence over family, friends, or activities that might detract from what is best for the company. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The notion that competition is crucial for efficiency, improvement, and regeneration is fundamental to Western management practices. Answer: TRUE Explanation: Perhaps most fundamental to Western management practices is the notion that competition is crucial for efficiency, improvement, and regeneration. Adam Smith in his The Wealth of Nations wrote one of the most important sentences in the English language: "By pursuing his own interests he frequently promotes that of the society more effectually than when he really intended to promote it." Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) High Power Distance Index countries are more egalitarian than low Power Distance Index countries. Answer: FALSE Explanation: In high Power Distance Index (PDI) countries such as Mexico and Malaysia, understanding the rank and status of clients and business partners is much more important than in more egalitarian (low PDI) societies such as Denmark and Israel. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

10) The three typical decision-making patterns are top-level management decisions, decentralized decisions, and committee or group decisions. Answer: TRUE Explanation: Although the international businessperson is confronted with a variety of authority patterns that can complicate decision making in the global environment, most are a variation of three typical patterns: top-level management decisions, decentralized decisions, and committee or group decisions. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Family-run businesses are more likely to follow the pattern of top-level management decision making. Answer: TRUE Explanation: Top-level management decision making is generally found in situations in which family or close ownership gives absolute control to owners and businesses are small enough to allow such centralized decision making. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) In the committee decision setup, every committee member must be convinced of the merits of the proposition or product in question. Answer: TRUE Explanation: Committee decision making is by group or consensus. In the committee decision setup, every committee member must be convinced of the merits of the proposition or product in question. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) Workers in countries higher in individualism and lower in power distance show more commitment to their companies than workers in countries with lower individualism and higher power distance. Answer: FALSE Explanation: Research has shown that commitment of workers to their companies tended to be lower in countries higher in individualism (IDV) and lower in power distance. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) High-context cultures place great importance on the verbal aspects of communication. Answer: FALSE Explanation: Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication, whereas the lowcontext culture depends more on explicit, verbally expressed communications. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) Businesspeople in low-context cultures use e-mail more often than those in high-context cultures. Answer: TRUE Explanation: E-mail use and usage rates by managers are also affected by culture. That is, businesspeople in high-context cultures do not use the medium to the same extent as those in low-context cultures. Much of the contextual information so important in high-context cultures simply cannot be signaled via the computer. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) Most North Americans operate on monochronic time. Answer: TRUE Explanation: M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and Scandinavians. These Western cultures tend to concentrate on one thing at a time. They divide time into small units and are concerned with promptness. M-time is used in a linear way, and it is experienced as almost tangible, in that one saves time, wastes time, bides time, spends time, and loses time. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) Polychronic time is characterized by "a great involvement with people." Answer: TRUE Explanation: P-time, or polychronic time, is more dominant in high-context cultures, where the completion of a human transaction is emphasized more than holding to schedules. P-time is characterized by the simultaneous occurrence of many things and by "a great involvement with people." P-time allows for relationships to build and context to be absorbed as parts of highcontext cultures. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) Being direct and wanting to get to the point are characteristics of a business person who operates in polychronic time. Answer: FALSE Explanation: The American desire to get straight to the point and get down to business is a manifestation of an M-time culture, as are other indications of directness. The P-time system gives rise to looser time schedules, deeper involvement with individuals, and a wait-and-seewhat-develops attitude. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) Currently in most international businesses, women represent a small percentage of the employees who are chosen for an international assignment. Answer: TRUE Explanation: Although women now constitute 57 percent of the professional and technical U.S. workforce, they represent relatively small percentages of the employees who are chosen for international assignments—less than 20 percent. Difficulty: 1 Easy Topic: Ethical Decision Making Learning Objective: 05-03 The extent and implications of gender bias in other countries. Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation 20) The business community's defense against payoffs was that they were a way of life throughout the world. Answer: TRUE Explanation: The issue took on proportions greater than that of nondisclosure because it focused national attention on the basic question of ethics. The business community's defense was that payoffs were a way of life throughout the world: If you didn't pay bribes, you didn't do business. Difficulty: 1 Easy Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation 21) The distinction between bribery and extortion depends on whether the activity resulted from an offer or from a demand for payment. Answer: TRUE Explanation: The distinction between bribery and extortion depends on whether the activity resulted from an offer or from a demand for payment. Voluntarily offered payment by someone seeking unlawful advantage is bribery. It is extortion if payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to. Difficulty: 1 Easy Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation

22) Subornation payments accompany requests for a person to do a job more rapidly or more efficiently. Answer: FALSE Explanation: Lubrication payments accompany requests for a person to do a job more rapidly or more efficiently; subornation is a request for officials to turn their heads, to not do their jobs, or to break the law. Difficulty: 2 Medium Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation 23) The form of bribery known as lubrication is common in some countries and involves giving a small sum of cash or a gift to a low-ranking public official. Answer: TRUE Explanation: Lubrication payments accompany requests for a person to do a job more rapidly or more efficiently. Lubrication involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law. Difficulty: 2 Medium Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation 24) Utilitarian ethics is the ethical principle that focuses on the optimization of the "common good." Answer: TRUE Explanation: Three ethical principles also provide a framework to help the marketer distinguish between right and wrong, determine what ought to be done, and properly justify his or her actions. They are as follows: Utilitarian ethics: Does the action optimize the "common good" or benefits of all constituencies? And who are the pertinent constituencies? Rights of the parties: Does the action respect the rights of the individuals involved? Justice or fairness: Does the action respect the canons of justice or fairness to all parties involved? Difficulty: 2 Medium Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation

25) When comparing performance of American, German, and Japanese firms, in less individualistic cultures, labor and management generally do not get along. Answer: FALSE Explanation: In the less individualistic cultures, labor and management cooperate—in Germany labor is represented on corporate boards, and in Japan, management takes responsibility for the welfare of the labor force. The individualistic American approach to labor–management relations is adversarial—each side takes care of itself. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation 26) A distinguishing characteristic of the type of capitalism common in Chinese culture is the emphasis on guanxi as the coordinating principle among firms. Answer: TRUE Explanation: A fourth kind of capitalism is common in Chinese cultures. Its distinguishing characteristics are a more entrepreneurial approach and an emphasis on guanxi (one's network of personal connections) as the coordinating principle among firms. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation 27) Chinese cultures are high on Power Distance Index and low on Individualism/Collective Index. Answer: TRUE Explanation: Chinese cultures are high on Power Distance Index (PDI) and low on Individualism/Collective Index (IDV), and the strong reciprocity implied by the notion of guanxi fits the available data well. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation

28) High-context cultures score high on power distance and low on individualism. Answer: TRUE Explanation: Low-context American culture scores relatively low on power distance and high on individualism, whereas high-context Arab cultures score high on power distance and low on individualism. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-05 The differences between relationship-oriented and informationoriented cultures. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) The most managerially useful aspect of the synthesis of cultural differences is that it allows us to make predictions about unfamiliar cultures. Answer: TRUE Explanation: The most managerially useful aspect of this synthesis of cultural differences is that it allows us to make predictions about unfamiliar cultures. Managers who can do so—and manage uncertainty well—have been shown to be much more effective in cross-cultural situations. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-05 The differences between relationship-oriented and informationoriented cultures. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) Japan is considered a relationship-oriented culture because it achieves efficiency through competition and is linguistically direct. Answer: FALSE Explanation: Japan is considered a relationship-oriented culture because it is linguistically indirect and background focused. Japanese culture is high context, collectivistic, high power distance, far from English, polychronic (in part), linguistically indirect, and background focused, and it achieves efficiency through reduction of transaction costs. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-05 The differences between relationship-oriented and informationoriented cultures. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) What is a criterion for adaptation when dealing with individuals, firms, or authorities in foreign countries? A) ability to resist varying tempos B) zero tolerance C) hypersensitivity D) flexibility E) lack of curiosity Answer: D Explanation: As a guide to adaptation, all who wish to deal with individuals, firms, or authorities in foreign countries should be able to meet 10 basic criteria: (1) open tolerance, (2) flexibility, (3) humility, (4) justice/fairness, (5) ability to adjust to varying tempos, (6) curiosity/ interest, (7) knowledge of the country, (8) liking for others, (9) ability to command respect, and (10) ability to integrate oneself into the environment. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) Marilee understands that if she wants her U.S.-based company to flourish in Italy, she must be tolerant of Italian customs and norms that might differ from what she deals with in the United States and also be humble and not assume that her current way of doing business is the only way to do business. What characteristic is Marilee demonstrating? A) adaptation B) dissonance C) distancing D) concession E) empathy Answer: A Explanation: Adaptation is a key concept in international marketing, and willingness to adapt is a crucial attitude. Marilee is demonstrating adaptability by being tolerant and humble. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) What are the three categories of business customs? A) rigid, flexible, and negotiables B) internals, externals, and consensual customs C) imperatives, electives, and exclusives D) national, foreign, and international E) unilateral, bilateral, and multilateral Answer: C Explanation: Business customs can be grouped into imperatives, customs that must be recognized and accommodated; electives, customs to which adaptation is helpful but not necessary; and exclusives, customs in which an outsider must not participate. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) Reggie owns a small stationery company in Tennessee and plans to enter the French market to sell his line of fine linen papers. He realizes that there are many business customs he will need to understand and conform to in order to succeed in France. What type of business custom is Reggie concerned with? A) cultural exclusives B) business truism C) global protocols D) business axioms E) cultural imperatives Answer: E Explanation: Cultural imperatives are the business customs and expectations that must be met and conformed to or avoided if relationships are to be successful. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) Business customs that must be recognized and accommodated are called A) imperatives. B) electives. C) exclusives. D) exceptional. E) constraints. Answer: A Explanation: Business customs can be grouped into imperatives, customs that must be recognized and accommodated; electives, customs to which adaptation is helpful but not necessary; and exclusives, customs in which an outsider must not participate. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) Jenna does not drink alcohol and when she meets clients for dinner she knows that while the client might enjoy a glass of wine with the meal, she is not required to. What type of business custom does this illustrate? A) imperatives B) electives C) exclusives D) individualistic axioms E) standardized axioms Answer: B Explanation: Business customs can be grouped into imperatives, customs that must be recognized and accommodated; electives, customs to which adaptation is helpful but not necessary; and exclusives, customs in which an outsider must not participate. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) Business customs in which an outsider must not participate are called A) imperatives. B) electives. C) exclusives. D) absolutes. E) statutes. Answer: C Explanation: Business customs can be grouped into imperatives, customs that must be recognized and accommodated; electives, customs to which adaptation is helpful but not necessary; and exclusives, customs in which an outsider must not participate. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) ________ would most likely be characterized as being an imperative business custom in many cultures. A) Establishing friendships B) Knowing to speak and write the native language C) Adhering to local food habits D) Conforming to the native religions E) Having knowledge of the local sport Answer: A Explanation: Establishing friendship is an imperative in many cultures. If friendship is not established, the marketer risks not earning trust and acceptance, the basic cultural prerequisites for developing and retaining effective business relationships. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) Manuel Tores, a senior manager at Crawford Export Logistics, goes to France to negotiate a deal with the company's French partners. He dresses casually in a t-shirt and jeans. His French counterparts call off the meeting and accuse him of taking a casual attitude toward negotiations. In this scenario, dressing formally during business meetings is probably a cultural ________ for the French. A) imperative B) elective C) exclusive D) oddity E) rarity Answer: A Explanation: Manuel Tores has to dress more formally for the negotiation meeting because it is a cultural imperative for his French counterparts. Cultural imperatives are the business customs and expectations that must be met and conformed to or avoided if relationships are to be successful. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 40) Nina McRidder became an embarrassment to her company when she joked about the ruling monarchy in England in front of a group of visiting English businesspeople. She should have known that political ridicule by a foreigner is rarely accepted. Ms. McRidder has violated what is known as a cultural A) imperative. B) elective. C) exclusive. D) intelligence. E) standard. Answer: C Explanation: By joking about the ruling monarchy in England in front of a group of visiting English businesspeople, Nina McRidder has violated the cultural exclusive reserved only for the British people. Cultural exclusives are those customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred. Difficulty: 3 Hard Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation

41) While bowing to another person is a ritual among the Japanese, it is not expected for a Westerner to bow or to understand this ritual. In other words, bowing would be considered a cultural A) elective. B) stereotype. C) imperative. D) rest. E) exclusive. Answer: A Explanation: Japanese do not expect a Westerner to bow and to understand the ritual of bowing among Japanese, yet a symbolic bow indicates interest and some sensitivity to Japanese culture that is acknowledged as a gesture of goodwill. Bowing is a cultural elective because it is not required of someone who is alien to the culture. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) The management team selected Sarah to attend the meeting with the new foreign-based company because she demonstrates tolerance, can easily adjust to changes in work tempos, and always promotes justice and fairness. Sarah has the qualities necessary for A) dissonance. B) ethnocentrism. C) dominance. D) adaptation. E) stereotyping. Answer: D Explanation: As a guide to adaptation, all who wish to deal with individuals, firms, or authorities in foreign countries should be able to meet 10 basic criteria: (1) open tolerance, (2) flexibility, (3) humility, (4) justice/fairness, (5) ability to adjust to varying tempos, (6) curiosity/interest, (7) knowledge of the country, (8) liking for others, (9) ability to command respect, and (10) ability to integrate oneself into the environment. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) Which philosophical view of U.S. management recognizes that people influence the future to a large extent and that they control their own fates? A) independent enterprise as the instrument of social action B) wide sharing in decision making C) "master of destiny" viewpoint D) natural selection theory E) competition producing efficiency Answer: C Explanation: The "master of destiny" philosophy is fundamental to U.S. management thought. Simply stated, people can substantially influence the future; they are in control of their own destinies. This viewpoint also reflects the attitude that though luck may influence an individual's future, on balance, persistence, hard work, a commitment to fulfill expectations, and effective use of time give people control of their destinies. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) According to the "master of destiny" viewpoint, what is one thing that determines a person's destiny? A) luck B) society C) hard work D) family background E) a higher order, such as God Answer: C Explanation: The "master of destiny" philosophy is fundamental to U.S. management thought. Simply stated, people can substantially influence the future; they are in control of their own destinies. This viewpoint also reflects the attitude that though luck may influence an individual's future, on balance, persistence, hard work, a commitment to fulfill expectations, and effective use of time give people control of their destinies. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) Which of the following is consistent with the American view of the independent enterprise? A) A corporation should fall under the control of the state government. B) A corporation is an entity that has rules and continuity of existence. C) The largest proportion of a corporation's profits must go to the personal funds of the stakeholders. D) A corporation's employees must be selected on the basis of seniority and not merit. E) Personal relationships are more important in daily life than work and the company. Answer: B Explanation: The acceptance of the idea that independent enterprise is an instrument for social action is the fundamental concept of U.S. corporations. A corporation is recognized as an entity that has rules and continuity of existence and is a separate and vital social institution. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) In many companies in the United States, people feel that individuals control their own destinies and because of this companies should select and reward employees based on A) merit. B) efficiency. C) payment. D) nepotism. E) family background. Answer: A Explanation: Consistent with the view that individuals control their own destinies is the belief that personnel selection and reward must be made on merit. The selection, promotion, motivation, or dismissal of personnel by U.S. managers emphasizes the need to select the bestqualified persons for jobs, retaining them as long as their performance meets standards of expectations and continuing the opportunity for upward mobility as long as those standards are met. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) Adam Smith in his The Wealth of Nations stated, "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intended to promote it." What behavior does this notion attempt to justify? A) collectivism B) loyalty C) welfare mentality D) competitiveness E) cooperation Answer: D Explanation: Adam Smith in his The Wealth of Nations wrote one of the most important sentences in the English language: "By pursuing his own interests he frequently promotes that of the society more effectually than when he really intended to promote it." This "invisible hand" notion justifies competitive behavior because it improves society and its organizations. Difficulty: 2 Medium Topic: How Resources and Capabilities Influence Competitive Dynamics Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) The notion that ________ is crucial for efficiency, improvement, and regeneration is fundamental to Western management practices. A) insolvency B) procrastination C) liquidation D) competition E) complacency Answer: D Explanation: Fundamental to Western management practices is the notion that competition is crucial for efficiency, improvement, and regeneration. Difficulty: 1 Easy Topic: How Resources and Capabilities Influence Competitive Dynamics Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) The Jensen family has owned Jensen's Country Furnishings since 1987 and Delores and Frank Jensen, grandparents and founders, make all of the business decisions. What type of decision-making pattern does this reflect? A) committee B) diffused management C) decentralized management D) nonhierarchical E) top-level management Answer: E Explanation: Top-level management decision making is generally found in situations in which family or close ownership gives absolute control to owners and businesses are small enough to allow such centralized decision making. Decision-making participation by middle management tends to be deemphasized; dominant family members make decisions that tend to please the family members more than to increase productivity. Difficulty: 2 Medium Topic: Training and Management Development Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) As businesses grow and professional management develops, there is a shift toward what form of decision making? A) authoritarian decision making B) decentralized management decision making C) hit-or-miss decision making D) tentative decision making E) experimental decision making Answer: B Explanation: As businesses grow and professional management develops, there is a shift toward decentralized management decision making. Decentralized decision making allows executives at different levels of management to exercise authority over their own functions. Difficulty: 2 Medium Topic: Training and Management Development Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) A characteristic of committee decision making is that A) it is only found in small businesses. B) the committees always operate on a decentralized basis. C) it is based on rank and hierarchy. D) it is rarely employed in Asian countries. E) it is by group or consensus. Answer: E Explanation: Committee decision making is by group or consensus. Committees may operate on a centralized or decentralized basis, but the concept of committee management implies something quite different from the individualized functioning of the top management and decentralized decision-making arrangements. Difficulty: 2 Medium Topic: Training and Management Development Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) Which form of business decision making is predominant in most Asian countries? A) independent decision making B) contractual decision making C) authoritarian decision making D) group decision making E) dictatorial decision making Answer: D Explanation: Because Asian cultures and religions tend to emphasize harmony and collectivism, group decision making predominates there. Despite the emphasis on rank and hierarchy in Japanese social structure, business emphasizes group participation, group harmony, and group decision making—but at the top management level. Difficulty: 1 Easy Topic: Training and Management Development Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) In ________ decision making, title or position generally takes precedence over the individual holding the job. A) committee B) decentralized C) top-level management D) integrated E) dictatorial Answer: B Explanation: Decentralized decision making allows executives at different levels of management to exercise authority over their own functions, and title or position generally takes precedence over the individual holding the job. Difficulty: 1 Easy Topic: Training and Management Development Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) Companies in the more hierarchical countries of France and Italy tend to have strong paternalistic orientations, which means that A) it is assumed a person will work for one company during their lifetime. B) all employees are family members or close family friends. C) decisions are made from the top-down. D) they are monopolies without any competition. E) they are more heavily influenced by the government. Answer: A Explanation: European companies, particularly in the more hierarchical (Power Distance Index) countries, such as France and Italy, have a strong paternalistic orientation, and it is assumed that individuals will work for one company for the majority of their lives. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) In his study on the personal lives of professionals, David McClelland found that in ancient Greece work was considered A) more important than family and home. B) a necessary component to having a happy personal life. C) equal to and just as important as having a fulfilling personal life. D) an undesirable factor that got in the way of a good personal life. E) the ultimate reward. Answer: D Explanation: In his seminal worldwide study of individual aspirations, David McClelland discovered that the culture of some countries stressed the virtue of a good personal life as far more important than profit or achievement. The hedonistic outlook of ancient Greece explicitly included work as an undesirable factor that got in the way of the search for pleasure or a good personal life. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) Research has shown that commitment of workers to their companies tended to be higher in countries A) higher in individualism and lower in power distance. B) higher in collectivism and lower in individualism. C) lower in individualism and higher in power distance. D) higher in power distance and higher in individualism. E) higher in collectivism and higher in power distance. Answer: C Explanation: Research has shown such differences to be general—commitment of workers to their companies tended to be higher in countries lower in individualism (IDV) and higher in power distance (PDI). Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) According to Max Weber, at least part of the standard of living in the United States today can be attributed to the A) hard-working Protestant ethic. B) creators of the Constitution. C) Pearl harbor bombing. D) African American population. E) slave labor that formed the basis for early industry. Answer: A Explanation: According to Max Weber, at least part of the standard of living that we enjoy in the United States today can be attributed to the hard-working Protestant ethic from which we derive much of our business heritage. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) Which form of communication is more important in a low-context culture? A) explicit B) nonverbal C) contextual D) face-to-face E) gesture-based Answer: A Explanation: Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication, whereas the lowcontext culture depends more on explicit, verbally expressed communications. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

59) According to the high-context/low-context continuum identified by Edward T. Hall, communication in a low-context culture depends on A) the context. B) who says it. C) when it is said. D) how it is said. E) the verbal expression. Answer: E Explanation: Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication, whereas the lowcontext culture depends more on explicit, verbally expressed communications. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 60) Fredrick Keeble, an American manager, took his Swiss client out for a traditional American dinner. The client did not seem to eat much. After dinner, he asked his client if he had enjoyed the dinner. Which of the following responses would indicate that the client comes from a lowcontext culture? A) No, I did not like the food. B) Yes, but it was a little too oily. C) No, dinner was good but I have an upset tummy. D) Yes, it was lovely, thanks. E) Yes, unfortunately I was not very hungry. Answer: A Explanation: By replying "No, I did not like the food," the client exhibits his low-context culture of being linguistically direct. People from low-context cultures deliver their opinion without much social padding. Difficulty: 3 Hard Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Apply AACSB: Communication Accessibility: Keyboard Navigation

61) It is estimated that 78 percent of today's website content is written in English, yet not every person in the world can read or understand English. What solution does the text suggest to make website content more universal? A) using minimal to no language on websites instead of using graphics and diagrams to convey messages B) using language translation software to translate communication in all languages C) having country-specific websites so that everyone can communicate in their own language D) using foreign language blocking software to screen international communications E) training employees to virally communicate in all languages used by foreign customers Answer: C Explanation: Estimates are that 78 percent of today's website content is written in English, but an English e-mail message cannot be understood by 35 percent of all Internet users. The solution to the problem is to have country-specific websites, like those of IBM and Marriott. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 62) France is higher on Hofstede's Power Distance Index (PDI) than the United States and formality is evident in French businesses. Which of the following American business practices would be most unacceptable to the French? A) slipping in colloquial French words during business meetings B) trying to emulate the French way of business thinking C) showing enthusiasm at business negotiations D) using first names in business encounters E) exhibiting stubbornness while negotiating Answer: D Explanation: While using first names in business encounters is regarded as an American vice in many countries, nowhere is it found more offensive than in France. France is higher on Hofstede's Power Distance Index (PDI) than the United States, and such differences can lead to cultural misunderstandings. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

63) ________ is probably the most common mistake of North Americans attempting to trade in the Middle East. A) Accepting drinks when offered B) Interacting informally C) Acting hastily D) Attempting to speak the local language E) Dressing casually Answer: C Explanation: Haste and impatience are probably the most common mistakes of North Americans attempting to trade in the Middle East. Most Arabs do not like to embark on serious business discussions until after two or three opportunities to meet the individual they are dealing with: negotiations are likely to be prolonged. Arabs may make rapid decisions once they are prepared to do so, but they do not like to be rushed, and they do not like deadlines. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 64) A ________ time system typifies Western cultures like most North Americans, Swiss, Germans, and Scandinavians and causes them to concentrate on one thing at a time. A) polychronic B) bimodal C) dual D) monochronic E) collectivistic Answer: D Explanation: M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and Scandinavians. These Western cultures tend to concentrate on one thing at a time. They divide time into small units and are concerned with promptness. M-time is used in a linear way, and it is experienced as almost tangible, in that one saves time, wastes time, bides time, spends time, and loses time. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) ________ time is more dominant in high-context cultures and provides time for relationships to build. A) Polychronic B) Exponential C) Polynomial D) Monochronic E) Sequence Answer: A Explanation: Most low-context cultures operate on M-time. P-time, or polychronic time, is more dominant in high-context cultures, where the completion of a human transaction is emphasized more than holding to schedules. P-time is characterized by the simultaneous occurrence of many things and by "a great involvement with people." Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) What is a characteristic of a polychronic time schedule? A) looser standards of being on time B) get straight to the point C) more strict scheduling D) concentrate on one thing at a time E) promptness at all times Answer: A Explanation: The American desire to get straight to the point and get down to business is a manifestation of an M-time culture, as are other indications of directness. The P-time system gives rise to looser time schedules, deeper involvement with individuals, and a wait-and-seewhat-develops attitude. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

67) People in Brazil describe themselves as late arrivers, allow greater flexibility in defining early and late, are less concerned about being late, and are more likely to blame external factors for their delay. Which system of time do the Brazilian people most likely operate on? A) polychronic B) monochromatic C) monotheismic D) monochronic E) sequence Answer: A Explanation: The P-time system gives rise to looser time schedules, simultaneous occurrence of many things, deeper involvement with individuals, and a wait-and-see-what-develops attitude. Ptime allows for relationships to build and context to be absorbed as parts of high-context cultures. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) When compared to people operating on P-time, people operating on M-time A) follow looser time schedules. B) are more deeply involved with individuals. C) are not bound by deadlines and time schedules. D) are more likely to blame external factors for their lateness. E) tend to concentrate on one thing at a time. Answer: E Explanation: M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and Scandinavians. These Western cultures tend to concentrate on one thing at a time. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) The marketing orientation at KB Komponents is based on the belief that consumers and businesses alike will not buy enough without some prodding on the part of the company. Which marketing orientation does this demonstrate? A) distribution B) buying C) production D) time E) selling Answer: E Explanation: A firm whose marketing orientation is based on the belief that consumers and businesses alike will not buy enough without prodding is selling oriented. Difficulty: 3 Hard Topic: Differences Between Domestic and International Marketing Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) At Norton Manufacturing Corporation, it is believed that consumers want products that provide the best quality and have innovative features. Which marketing orientation does this company use? A) direct orientation B) product orientation C) logistics orientation D) production orientation E) selling orientation Answer: B Explanation: The extent of a company's marketing orientation has been shown to relate positively to profits. Although American companies are increasingly embracing this notion (and marketing in general), firms in other countries have not been so fast to change from the more traditional production (consumers prefer products that are widely available), product (consumers favor products that offer the best quality, performance, or innovative features), and selling (consumers and businesses alike will not buy enough without prodding) orientations. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) When considering the role of time in business, which of the following is true of P-time and M-time? A) The American desire to get down to business is a manifestation of a P-time culture as contrary to Japan's M-time approach. B) The M-time system gives rise to looser time schedules, unlike P-time. C) M-time is characterized by the simultaneous occurrence of many things, unlike P-time. D) As global markets expand, more businesspeople from P-time cultures are adapting to M-time. E) Contrary to P-time businesspeople, interruptions are routine for M-time businesspeople. Answer: D Explanation: The important thing for the U.S. manager to learn is adjustment to P-time in order to avoid the anxiety and frustration that comes from being out of synchronization with local time. As global markets expand, however, more businesspeople from P-time cultures are adapting to M-time. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) Which of the following best explains the low percentage of women chosen for international assignments in the United States? A) The role of women as homemakers and caregivers does not allow for international assignments. B) Men are generally more interested to take up international assignments than women. C) Prejudice faced by American women executives in foreign, male-dominated societies is exaggerated. D) There is a widespread belief that traditional roles of women in male-dominated societies preclude women from being successful in these societies. E) Expenses involved in sending an unmarried women executive abroad are far higher than the expenses incurred in sending a married man with family. Answer: D Explanation: The gender bias against female managers that exists in some countries, coupled with myths harbored by male managers, creates hesitancy among U.S. multinational companies to offer women international assignments. The most frequently cited reason is the inability for women to succeed abroad. Unfortunately, such attitudes are shared by many and probably stem from the belief that the traditional roles of women in male-dominated societies preclude women from establishing successful relationships with host-country associates. Difficulty: 2 Medium Topic: Social Culture Learning Objective: 05-03 The extent and implications of gender bias in other countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 31 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

73) While most European countries are comparable to the United States in terms of the number of women in managerial positions, ________ stands out as the country that is drastically different with only 13 percent of management jobs held by women. A) Italy B) France C) Germany D) Britain E) Switzerland Answer: C Explanation: The number of women in managerial positions (all levels) in most European countries, except Germany, is comparable to the United States. In Germany, the picture is different. According to one business news source, German female executives hold just 13 percent of management jobs (in companies over 500 employees) and meet stiff resistance from their male counterparts when they vie for upper-level positions. Difficulty: 1 Easy Topic: Social Culture Learning Objective: 05-03 The extent and implications of gender bias in other countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) Kenneth is a bank executive and when one of his customers offers him box seats to a Chicago Cubs game he knows he cannot accept them because it is not appropriate to do so. However, in some countries of the world this gift would be perfectly acceptable. This reflects a difference in A) intellectual property laws. B) grants-in-aid. C) tariff restrictions. D) business ethics. E) ethnocentrism. Answer: D Explanation: That which is commonly accepted as right in one country's business practices may be completely unacceptable in another. Business ethics provide the guidelines for this difference. Difficulty: 2 Medium Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation

75) Which organization conducts an international survey of businesspeople, political analysts, and the general public on corruption and compiles the Corruption Perception Index (CPI)? A) Organization of American States (OAS). B) Amnesty International. C) Oxfam International. D) Transparency International (TI). E) CARE International. Answer: D Explanation: Among its various activities, TI conducts an international survey of businesspeople, political analysts, and the general public to determine their perceptions of corruption in 182 countries in the Corruption Perception Index (CPI). Difficulty: 1 Easy Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation 76) What is true of the findings of Transparency International's Corruption Perception Index (CPI)? A) lower levels of bribery have been found in nations with a communist past. B) higher levels of bribery have been found in low-power distance nations. C) higher levels of bribery have been found in low-income nations. D) lower levels of bribery have been found in collectivistic cultures. E) lower levels of bribery have been found in poor nations. Answer: C Explanation: Transparency International's CPI is also proving useful in academic studies of the causes and consequences of bribery. Higher levels of bribery have been found in low-income nations and nations with a communist past, both aspects of the political economy. Difficulty: 2 Medium Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation

77) Marcus is the director of a small company in Boston. He is trying to obtain parts from a manufacturer in Taiwan but that company is unwilling to send them because of government regulations limiting exports on small orders. Marcus calls the head of the manufacturing company and says he will pay him an extra $5,000 if he ships them anyway. What practice is Marcus using to obtain the parts? A) extortion B) slander C) barter D) libel E) bribery Answer: E Explanation: Voluntarily offered payment by someone seeking unlawful advantage is bribery. The decision to pay a bribe creates a major conflict between what is ethical and proper and what appears to be profitable and sometimes necessary for business. Many global competitors perceive payoffs as a necessary means to accomplish business goals. Difficulty: 2 Medium Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Apply AACSB: Ethics Accessibility: Keyboard Navigation 78) Academic studies of the causes and consequences of bribery, conducted by Transparency International (TI), indicate corruption is greater in A) high income nations. B) democratic rather than communist nations. C) countries with high individualism. D) countries with low Power Distance Index. E) collectivistic nations. Answer: E Explanation: According to studies conducted by Transparency International, higher levels of bribery have been found in low-income nations and nations with a communist past, both aspects of the political economy. Additionally, higher levels of bribery have been found in collectivistic (IDV) and high power distance (PDI) countries. Difficulty: 1 Easy Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) Which aspect of Japanese culture, predicted by many to favor bribery, makes Japan's success in reducing corruption more remarkable? A) relationship-orientation B) mechanistic inclination C) patriarchal nature D) information-orientation E) task orientation Answer: A Explanation: Japan's successes in reducing corruption in its business system are all the more remarkable because of its relationship-oriented culture, which would be predicted by many to favor bribery. Difficulty: 2 Medium Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation 80) ________ occurs when payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to. A) Extortion B) Subordination C) Lubrication D) Perjury E) Bribery Answer: A Explanation: Extortion occurs when payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to. Difficulty: 1 Easy Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation

81) ________ involves a relatively small sum of cash, a gift, or a service that is intended to facilitate or expedite the normal, lawful performance of a duty by an official. A) Extortion B) Ransom C) Lubrication D) Shakedown E) Exaction Answer: C Explanation: Lubrication involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law. The purpose of such a gift is to facilitate or expedite the normal, lawful performance of a duty by that official. Difficulty: 1 Easy Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation 82) The finance minister of a developing country demands a heavy payment for the approval of a multimillion dollar contract with a foreign company. This demand for the lump sum payment is called A) extortion. B) subornation. C) lubrication. D) larceny. E) malfeasance. Answer: A Explanation: The distinction between bribery and extortion depends on whether the activity resulted from an offer or from a demand for payment. It is extortion if payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to. Difficulty: 2 Medium Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation

83) ________ generally involves giving large sums of money—frequently not properly accounted for—designed to entice an official to commit an illegal act on behalf of the one offering the bribe. A) Agent charges B) Lubrication C) Extortion D) Subornation E) Ransom Answer: D Explanation: Subornation generally involves giving large sums of money—frequently not properly accounted for—designed to entice an official to commit an illegal act on behalf of the one offering the bribe. Whereas, lubrication payments accompany requests for a person to do a job more rapidly or more efficiently. Difficulty: 1 Easy Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation 84) Kim is the director of operations at her company and hires an agent to obtain a license to build a warehouse in an industrial district. The agent gets caught offering a bribe to a government official for issue of the license. Which of the following describes Kim's liabilities? A) The manager is not liable since the use of an agent absolves her of any responsibility. B) The manager is liable since the agent used part of her fees for bribery, although the manager was unaware of the agent's intentions. C) The manager is not liable if the agent can prove that extortion, rather than bribery, took place. D) The manager is liable if she was aware of the fact that part of the agent's fee will be used as a bribe. E) The manager is liable only if the act of building the warehouse at the given location is illegal. Answer: D Explanation: The Foreign Corrupt Practices Act (FCPA) prohibits U.S. businesses from paying bribes openly or using intermediaries as conduits for a bribe when the U.S. manager knows that part of the intermediary's payment will be used as a bribe. Difficulty: 2 Medium Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Apply AACSB: Ethics Accessibility: Keyboard Navigation

85) Which ethical principle tries to optimize the "common good" or benefits of all constituencies? A) secularism and philanthropy B) rights of the parties C) justice or fairness D) utilitarian ethics E) self-reference frame Answer: D Explanation: Three ethical principles provide a framework to help the marketer distinguish between right and wrong, determine what ought to be done, and properly justify his or her actions. Simply stated, they are as follows: (1) Utilitarian ethics: Does the action optimize the "common good" or benefits of all constituencies? And who are the pertinent constituencies? (2) Rights of the parties: Does the action respect the rights of the individuals involved? (3) Justice or fairness: Does the action respect the canons of justice or fairness to all parties involved? Difficulty: 1 Easy Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation 86) Many companies are now practicing strategic philanthropy which means that they A) make efforts to minimize harmful waste emissions. B) hire returning veterans. C) use their expertise or products to sponsor projects in the community. D) only work with foreign corporations that meet EPA standards. E) promote products that are made with only natural ingredients. Answer: C Explanation: Social responsibility is climbing ever higher on many corporate agendas these days. But whereas in the past, companies may have given cash donations to nongovernmental organizations (NGOs), a new trend is now emerging. Known generally as strategic philanthropy, it usually involves companies applying their expertise or products to sponsorship projects, targeted at local communities or specific segments of the population. Difficulty: 2 Medium Topic: Ethical Issues in International Business Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation

87) According to Lester Thurow, in the British–American "individualistic" kind of capitalism, relationships among government, management, and labor in business systems are A) cooperative. B) commensalistic. C) synergistic. D) adversarial. E) conciliatory. Answer: D Explanation: Thurow distinguished between the British–American "individualistic" kind of capitalism and the "communitarian" form of capitalism in Japan and Germany. The business systems in the latter two countries are typified by cooperation among government, management, and labor, particularly in Japan. Contrarily, adversarial relationships among labor, management, and government are more the norm in the United Kingdom, and particularly in the United States. Difficulty: 1 Easy Topic: Factors Influencing Strategic Choice Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) A culture that is low context, individualistic, has a low power distance, and uses monochronic time is A) information-oriented. B) relationship-oriented. C) hierarchy-oriented. D) an authoritarian culture. E) a dictatorial culture. Answer: A Explanation: American culture is low context, individualistic (IDV), low power distance (PDI), obviously close to English, monochronic time–oriented, linguistically direct, and foreground focused, and it achieves efficiency through competition; therefore, it is categorized as an information-oriented culture. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-05 The differences between relationship-oriented and informationoriented cultures. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) A culture that is high context, has collectivism, has a high power distance, and uses polychronic time is A) information-oriented. B) relationship-oriented. C) self-oriented. D) power-oriented. E) kinship-oriented. Answer: B Explanation: Japanese culture is high context, collectivistic, high power distance, far from English, polychronic (in part), linguistically indirect, and background focused, and it achieves efficiency through reduction of transaction costs; therefore, it is properly categorized as a relationship-oriented culture. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 05-05 The differences between relationship-oriented and informationoriented cultures. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

90) Why is adaptation a necessary element when working with cultural differences? What are the basic criteria to deal with foreign firms? Answer: Adaptation is a key concept in international marketing, and willingness to adapt is a crucial attitude. Adaptation, or at least accommodation, is required on small matters as well as large ones. In fact, small, seemingly insignificant situations are often the most crucial. More than tolerance of an alien culture is required. Affirmative acceptance, that is, open tolerance may be needed as well. Through such affirmative acceptance, adaptation becomes easier because empathy for another's point of view naturally leads to ideas for meeting cultural differences. As a guide to adaptation, all who wish to deal with individuals, firms, or authorities in foreign countries should be able to meet ten basic criteria: (1) open tolerance, (2) flexibility, (3) humility, (4) justice/fairness, (5) ability to adjust to varying tempos, (6) curiosity/interest, (7) knowledge of the country, (8) liking for others, (9) ability to command respect, and (10) ability to integrate oneself into the environment. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) Describe the three types of business customs that an international marketer must be aware of and provide examples of each. Answer: Business customs can be grouped into cultural imperatives, cultural electives, and cultural exclusives. (1) Cultural imperatives are the business customs and expectations that must be met and conformed to or avoided if relationships are to be successful. A complicating factor in cultural awareness is that what may be an imperative to avoid in one culture is an imperative to do in another. (2) Cultural electives relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required. In other words, following the custom in question is not particularly important but is permissible. The majority of customs fit into this category. A cultural elective in one county may be an imperative in another. Cultural electives are the most visibly different customs and thus more obvious. Often, it is compliance with the less obvious imperatives and exclusives that is more critical. (3) Cultural exclusives are those customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred. Foreign managers need to be perceptive enough to know when they are dealing with an imperative, an elective, or an exclusive and have the adaptability to respond to each. There are not many imperatives or exclusives, but most offensive behaviors result from not recognizing them. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

92) Describe the "master of destiny" and "independent enterprise" philosophies and their role in U.S. management. Answer: The "master of destiny" philosophy is fundamental to U.S. management thought. Simply stated, people can substantially influence the future; they are in control of their own destinies. This viewpoint also reflects the attitude that though luck may influence an individual's future, on balance, persistence, hard work, a commitment to fulfill expectations, and effective use of time give people control of their destinies. In the United States, approaches to planning, control, supervision, commitment, motivation, scheduling, and deadlines are all influenced by the concept that individuals can control their future. The acceptance of the idea that independent enterprise is an instrument for social action is the fundamental concept of U.S. corporations. A corporation is recognized as an entity that has rules and continuity of existence and is a separate and vital social institution. This recognition can result in strong feelings of obligation to serve the company. Indeed, the company may take precedence over family, friends, or activities that might detract from what is best for the company. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-01 The necessity for adapting to cultural differences. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) Discuss the three patterns of decision making that are typical in international business. Answer: The international businessperson is confronted with three typical patterns of decision making: top-level management decisions, decentralized decisions, and committee or group decisions. Top-level management decision making is generally found in situations in which family or close ownership gives absolute control to owners and businesses are small enough to allow such centralized decision making. As businesses grow and professional management develops, there is a shift toward decentralized management decision making. Decentralized decision making allows executives at different levels of management to exercise authority over their own functions. This approach is typical of large-scale businesses with highly developed management systems, such as those found in the United States. A trader in the United States is likely to be dealing with middle management, and title or position generally takes precedence over the individual holding the job. Committee decision making is by group or consensus. Committees may operate on a centralized or decentralized basis, but the concept of committee management implies something quite different from the individualized functioning of the top management and decentralized decisionmaking arrangements just discussed. Because Asian cultures and religions tend to emphasize harmony and collectivism, it is not surprising that group decision making predominates there. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) Distinguish between the two time systems in the world, as defined by Edward T. Hall. Answer: Edward Hall defines two time systems in the world: monochronic and polychronic time. M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and Scandinavians. These Western cultures tend to concentrate on one thing at a time. They divide time into small units and are concerned with promptness. M-time is used in a linear way, and it is experienced as almost tangible, in that one saves time, wastes time, bides time, spends time, and loses time. Most low-context cultures operate on M-time. P-time, or polychronic time, is more dominant in high-context cultures, where the completion of a human transaction is emphasized more than holding to schedules. P-time is characterized by the simultaneous occurrence of many things and by "a great involvement with people." P-time allows for relationships to build and context to be absorbed as parts of high-context cultures. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) Discuss how the self-reference criteria plays a role when negotiating with a foreign entity. Answer: The basic elements of business negotiations are the same in any country: They relate to the product, its price and terms, services associated with the product, and, finally, friendship between vendors and customers. But it is important to remember that the negotiating process is complicated, and the risk of misunderstanding increases when negotiating with someone from another culture. The possibility of offending one another or misinterpreting others' motives is especially high when one's self-reference criteria (SRC) is the basis for assessing a situation. One standard rule in negotiating is "know thyself" first and "know your counterpart" second. The SRC of both parties can come into play here if care is not taken. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 05-02 How and why management styles vary around the world. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) Why do U.S. multinational companies hesitate to offer women international assignments? Is this prejudice justified? Answer: The gender bias against female managers that exists in some countries, coupled with myths harbored by male managers, creates hesitancy among U.S. multinational companies to offer women international assignments. Despite the substantial prejudices toward women in foreign countries, evidence suggests that prejudice toward foreign women executives may be exaggerated and that the treatment local women receive in their own cultures is not necessarily an indicator of how a foreign businesswoman is treated. A key to success for both men and women in international business often hinges on the strength of a firm's backing. When a female manager receives training and the strong backing of her firm, she usually receives the respect commensurate with the position she holds and the firm she represents. For success, a woman needs a title that gives immediate credibility in the culture in which she is working and a support structure and reporting relationship that will help her get the job done. In short, with the power of the corporate organization behind her, resistance to her as a woman either does not materialize or is less troublesome than anticipated. Once business negotiations begin, the willingness of a business host to engage in business transactions and the respect shown to a foreign businessperson grow or diminish depending on the business skills he or she demonstrates, regardless of gender. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-03 The extent and implications of gender bias in other countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) Discuss the difference between bribery and extortion and provide examples. Answer: The distinction between bribery and extortion depends on whether the activity resulted from an offer or from a demand for payment. Voluntarily offered payment by someone seeking unlawful advantage is bribery. For example, it is bribery if an executive of a company offers a government official payment in exchange for the official incorrectly classifying imported goods so the shipment will be taxed at a lower rate than the correct classification would require. However, it is extortion if payments are extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to. An example of extortion would be a finance minister of a country demanding heavy payments under the threat that a contract for millions of dollars would be voided. Difficulty: 2 Medium Topic: Ethical Decision Making Learning Objective: 05-04 The importance of cultural differences in business ethics. Bloom's: Understand AACSB: Ethics Accessibility: Keyboard Navigation 98) Compare an information-oriented culture like America with a relationship-oriented culture like Japan. Answer: American culture is low context, individualistic (IDV), low power distance (PDI), obviously close to English, monochronic time–oriented, linguistically direct, and foreground focused, and it achieves efficiency through competition; therefore, it is categorized as an information-oriented culture. Alternatively, Japanese culture is high context, collectivistic, high power distance, far from English, polychronic (in part), linguistically indirect, and background focused, and it achieves efficiency through reduction of transaction costs; therefore, it is properly categorized as a relationship-oriented culture. All these traits are so even though both the United States and Japan are high-income democracies. Both cultures do achieve efficiency but through different emphases. The American business system uses competition, whereas the Japanese depend more on reducing transaction costs. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 05-05 The differences between relationship-oriented and informationoriented cultures. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 6 The Political Environment: A Critical Concern 1) Sovereignty is exclusive to the supreme powers exercised by a nation over its own members. 2) Sovereignty may be threatened by foreign investment. 3) Adherence to the World Trade Organization (WTO) does not result in the loss of national sovereignty. 4) Foreign businesses no longer need to be concerned about the stability or instability of prevailing government policies. 5) Pressure from nationalist and self-interest groups affect the stability of a government. 6) Saudi Arabia began permitting women to vote in 2015. 7) Nationalism supports foreign business because it improves local economies. 8) Nationalistic feelings in general bear no relation to the domestic economy. 9) Property may legally be seized by the government with or without compensation. 10) The most severe political risk of global business is the government action of domestication. 11) The ultimate goal of domestication is to require companies to produce more products to export than was the case before domestication. 12) Through expropriation and nationalization, nationalized businesses have become more efficient, technologically strong, and competitive in world markets. 13) Barring Latin America, the risks of confiscation and expropriation have decreased over the last two decades. 14) Many countries have domestication as a condition for investment. 15) Price controls are only targeted at nonessential products. 16) Political sanctions are usually an unsuccessful means of achieving the goal of forcing a country to accept the demands of the boycotting country. 17) Political and social activists generally have no impact on the normal flow of trade. 18) Nongovernmental organizations can affect the policy decisions made by governments through lobbying. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

19) Risk of violence does not tend to be a consideration in assessing the political vulnerability of a multinational company's activities. 20) International warfare is fast gaining popularity among nations. 21) Due to advancements in technology, it is relatively easy to determine whether a cyber attack has been launched by a rogue state, a terrorist, or a hacker as a prank. 22) As cultural and political scenarios vary so widely across nations, there is no way to generalize the tendency for a particular product to be politically sensitive. 23) Products that have or are perceived to have an effect on the environment are more likely to be politically sensitive. 24) It is common for a single company to directly control or alter the political environment of the country within which it operates. 25) Relations between governments and MNCs are generally negative, particularly if the investment made by the MNCs increases exports or reduces imports. 26) Licensing is not effective in situations where the technology is unique and the risk is high. 27) Planned domestication involves taking over an industry in a foreign country. 28) It is illegal for U.S. citizens to pay a bribe unless it is a common practice in the host country. 29) The principal agency that supports U.S. business abroad is the Global Chamber of Commerce (GCC). 30) The Agency for International Development underwrites trade and investments for U.S. firms. 31) In the context of international law, a ________ governs its own territory and may enter into agreements with other nations. A) bounded B) sovereign C) legal D) liberal E) neutral 32) A sovereign state is one that A) is obligated to be a member of the World Trade Organization. B) has its political and economic systems determined by the United Nations Development Program. C) enjoys full legal equality with other states. D) has its territory governed by the United Nations. E) is bounded by external control. 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

33) ________ refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. A) Sovereignty B) Self-governance C) Federalism D) Autocracy E) Nationalism 34) In April 2009, the G20 nations agreed to cede some sovereignty and A) include all G20 nations in the Security Council. B) raise oil prices. C) increase infrastructure funding. D) reject protectionism. E) increase aid to South Africa. 35) Adherence to the WTO inevitably means A) a definite increase in import tariffs worldwide. B) the loss of national security to a large extent. C) reduction in world trade of at least 70 percent. D) the loss of some degree of national sovereignty. E) complete stoppage of foreign direct investments. 36) For a multinational firm, the ideal political climate is a A) country where international laws do not apply. B) country where favors can be purchased easily. C) country with a stable and friendly government. D) government with absolute power. E) government that radically shifts its philosophy. 37) What is the top political issue concerning foreign businesses? A) demographic profile of political leaders B) government policies on infrastructure C) economic awareness of political leaders D) stability of prevailing government policies E) membership of governments in trade treaties 38) What is one of the main political causes of instability in international markets? A) varied taxing conventions B) differences in economic philosophies C) global focus D) environmental awareness E) trade disputes

39) Monarchy, like ________, is a form of government ruled by one. A) aristocracy B) dictatorship C) democracy D) monopoly E) oligarchy 40) The ancient Greeks conceived three fundamental forms of government. Which term refers to a government ruled by one? A) aristocracy B) monarchy C) democracy D) monopoly E) oligarchy 41) Which government form can be most accurately described as rule by few? A) aristocracy B) dictatorship C) democracy D) monopoly E) monarchy 42) According to ancient Greeks, what fundamental government form represents rule by many? A) aristocracy B) dictatorship C) democracy D) monopoly E) monarchy 43) What is a common term for a form of government in use today? A) protectionism B) duopoly C) oligopoly D) capitalism E) oligarchy 44) What country recently allowed women the right to vote for the first time? A) Croatia B) Iran C) Bolivia D) Saudi Arabia E) Venezuela

45) What event caused a drop in "economic freedom" in the United States, according to the Heritage Foundation? A) Hurricane Katrina B) the war in Iran C) Obamacare D) the bombing of the World Trade Towers E) the economic stimulus of 2008–2009 46) ________ is an intense feeling of state pride and unity, an awakening of a country's people to pride in their country. A) Nepotism B) Absolutism C) Fascism D) Nationalism E) Polarism 47) Which action is most likely a manifestation of nationalism? A) membership in bilateral trade treaties B) a call to buy a global counterpart's products C) restrictions on imports D) removal of tariffs and quotas E) a focus on global security 48) With which term would the phrase "Buy American" be most closely associated? A) socialism B) communism C) nationalism D) abstractionism E) polarism 49) What is true of nationalism? A) The more a country feels threatened by some outside force the less nationalistic the country becomes. B) A call to "buy our country's products only" is one form of manifestation of national feelings. C) Nationalist feelings lead to loss of control over foreign investment. D) The more a country's domestic economy declines, the less nationalistic it becomes. E) Nationalistic feelings are not prevalent in economically prosperous countries. 50) With respect to the political risk that can be faced by a company seeking to invest abroad, which action is most severe? A) confiscation B) expropriation C) domestication D) exchange controls E) local-content laws 5 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

51) The seizing of a company's assets without payment is called A) confiscation. B) expropriation. C) domestication. D) exchange controls. E) local-content laws. 52) When a government seizes an investment of a foreign investor but some reimbursement for the assets is made, the government follows a process called A) confiscation. B) expropriation. C) domestication. D) exchange controls. E) local-content laws. 53) When an expropriated investment becomes a government-run entity, it is A) democratized. B) domesticated. C) nationalized. D) prioritized. E) socialized. 54) ________ occurs when host countries gradually cause the transfer of foreign investment to national control and ownership through a series of government decrees. A) Confiscation B) Expropriation C) Domestication D) Democratization E) Socialization 55) The government in Chile recently informed Mario's company that his retail grocery chain in Chile would have to be gradually turned over to the people of Chile by the year 2050 as it is a foreign company in Chile. Additionally, starting the following year, 50 percent of the board of directors of the Chilean operation of the company must be Chileans. What political risk action is Mario's company facing in Chile? A) confiscation B) expropriation C) domestication D) patronization E) nationalization

56) Which statement about domestication is correct? A) The ultimate goal of domestication is to force domestic investors to share more of the profits with the government. B) The risk of domestication appears to have decreased over the last two decades. C) Domestication has always led to more technologically advanced and competitive businesses. D) Countries often require companies to become domesticated as a condition for investment. E) Domestication refers to the seizing of a company's assets without payment. 57) Marziland found that a large amount of capital was leaving the country due to foreign corporate ownership, so it instituted controls over all movements of capital to conserve the supply of foreign exchange. These are called ________ controls. A) exchange B) local-content C) price D) tax E) production 58) If there is a substantial amount of capital leaving a country, what is a country most likely to implement to control the situation? A) exchange controls B) local-content laws C) import restrictions D) tax controls E) price controls 59) In Thailand, it is required that any milk product sold in the country by a foreign company must use the milk that is at least 50 percent produced by Thai dairy farmers. What economic risk is faced by the international producers of milk products in this situation? A) exchange controls B) local-content laws C) export restrictions D) tax controls E) price controls 60) The United States requires that 50 percent of all parts used to construct an automobile in the United States be manufactured in the United States. As a result of this, when Toyota Motor Company builds automobile manufacturing plants in Tennessee and Ohio, it faces economic risks associated with A) exchange controls. B) local-content laws. C) export restrictions. D) tax controls. E) price controls.

61) Taxes must be classified as a(n) ________ risk when used as a means of controlling foreign investments. A) political B) social C) ignorable D) environmental E) harmless 62) The government of Namibia is strapped for cash, and it has decided to tax all foreign investments (such as food packaged in the country) by up to 40 percent of the appraised value. The Namibian government has found that this is the handiest and quickest means of finding operating funds. The economic risk in discussion here is A) exchange controls. B) local-content laws. C) tax restrictions. D) tax controls. E) price controls. 63) Price controls applied during inflationary periods may have the effect of A) controlling the cost of living. B) restricting exports to foreign countries. C) negotiating trade contracts favoring the host country. D) encouraging imports. E) collecting taxes on foreign investments. 64) In North Korea, foreign investors or producers are required to sell products at prices stated by the North Korean government rather than letting market value and demand determine the prices. This implies that there is application of A) exchange controls. B) local-content laws. C) import restrictions. D) tax controls. E) price controls. 65) Which of these items is most likely to be subjected to price control? A) leather garments B) mobile phone accessories C) aspirin and antacids D) camcorders and lenses E) ceramic tiles 66) Stopping or refusing to trade with another nation for political reasons is called A) monopolizing. B) boycotting. C) confiscation. D) democratization. E) expropriation. 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

67) What is true of political sanctions? A) Political sanctions normally control and rectify situations within a nation. B) Political sanctions are generally unsuccessful. C) Political sanctions are illegal. D) The United Nations encourages boycotts as a means of settling political disputes. E) The use of political sanctions is the most effective way to increase world trade. 68) What are effective tools that political and social activists (PSAs) use to spread word about their causes? A) political sanctions B) monetary barriers and trade embargoes C) the Internet and cellphones D) local-content laws and questionnaires E) export controls 69) Which of these organizations is an NGO (nongovernmental organization)? A) Central Intelligence Agency B) Peace Corps C) Millennium Challenge Corporation D) Oxfam E) FedEx 70) Why do terrorism experts predict multinational businesses will be targeted by terrorists more frequently? A) They impose export controls on the underdeveloped nations. B) They are the major cause for political sanctions against Arab nations. C) They are less well defended than government targets. D) They destroy and pollute the environment. E) They are subterfuge for espionage agents. 71) Which form of terrorism is most likely to use the Internet to inflict damage? A) Germterrorism B) Bioterrorism C) Cyberterrorism D) Ecoterrorism E) Narcoterrorism 72) As the FBI investigates security breaches, the analyses are more often pointing to ________ as the most serious threat. A) Russian government supported hackers B) religious extremists C) white supremacists D) American rogue hackers E) the Chinese government 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

73) Bao is attempting to forecast political instability and help his company's management identify and evaluate political events and their potential influence on current and future international business decisions. Bao is engaged in A) political risk assessment. B) political confiscation. C) democratization. D) arbitration. E) risk expropriation. 74) In terms of political risk, what poses the greatest threat to international marketers? A) newer environmental regulations approved by global trade bodies B) change of economic policies C) exchange rate fluctuations affecting margins D) the possibility of the government actually failing E) membership or withdrawal of membership of the government in trade blocs 75) Relations between governments and MNCs are generally positive if the investment A) increases the volume of imports. B) uses globally produced resources. C) transfers capital, technology, and skills. D) brings in a higher number of foreign nationals. E) decreases the volume of exports. 76) Meteora Inc. is planning to enter the Kenyan market by establishing a mobile phone manufacturing operation in Kenya. Meteora is most likely to have a positive relationship with Kenyan government through its investment if it A) uses locally produced resources. B) imports phone components from China. C) establishes an R&D center in California and has all its technology patented there. D) ensures that its middle and upper management are expatriates. E) bargains for a tax holiday for the next five financial years. 77) Juliet is concerned with the potential for political harassment when her company enters a new international market. To reduce the risk of political harassment, she is most likely to consider using ________ to enter the market. A) externally produced products B) a smaller investment base C) foreign technology D) a joint venture E) the threat of sanctions

78) What strategy is used by multinational corporations to minimize political vulnerability and risk? A) expropriation B) sanctions C) buyouts D) confiscation E) licensing 79) Which strategy can be effective in forestalling or minimizing the effect of a total takeover of a multinational corporation's holdings by a foreign government? A) confiscation B) sole proprietorship C) expanding the investment base D) advertising E) leasing 80) Which strategy to minimize political vulnerability and risk has the advantage of engaging the power of several investors and banks in the host country whenever any kind of government takeover or harassment is threatened? A) joint ventures B) licensing C) expanding the investment base D) sole proprietorship E) political bargaining 81) Which strategy is most effective in minimizing political risks for a multinational corporation in situations in which the technology is unique and the risk is high? A) trade embargo B) licensing C) expanding the investment base D) planned confiscation E) expropriation 82) The most effective long-range solution to a situation where a foreign government is demanding local participation in a multinational corporation's business activities in the host country is A) joint ventures. B) licensing. C) expanding the investment base. D) planned domestication. E) political payoffs.

83) While expanding the investment base of a company, what can be used as a powerful ally in dealing with threats of government takeovers or harassment? A) banks that have lent money to the host government B) the World Trade Organization C) the International Labor Organization D) regional trade blocs E) opposing political parties 84) An attempt to lessen political risks by paying those in power to intervene on behalf of the multinational company is referred to as a A) subornation. B) protectionism. C) political payoff. D) buyout. E) rake-off. 85) What is the U.S. government's policy toward multinational corporations that are confronted with situations where bribery is an issue? A) A bribe may be paid as long as it is not a domestic situation. B) Bribery is justified if it is a documented traditional practice in a country. C) A bribe can be paid in a foreign country if it is tied to national security. D) It is illegal for a U.S. citizen to pay a bribe. E) The issue revolves around the customs of the country and each issue is decided separately. 86) What principle U.S. agency supports U.S. businesses abroad? A) State Department of Entrepreneurship B) Better Business Bureau C) Department of Commerce D) Department of Foreign Relations E) Department of Defense 87) Within the same country, some foreign businesses may fall prey to politically induced harassment, while others may be placed under a government umbrella of protection and preferential treatment. What factor explains this difference? A) the level of domestication achieved B) the differences in level of technology between the two countries C) the cultural differences between the host nation and the business's home country D) the import tariffs set by the host country E) the evaluation of a company's contribution to the nation's interest 88) What is the most important reason for a country to encourage foreign investment? A) to improve the global image of a country B) to accelerate the development of an economy C) to evade political tensions between countries D) to minimize negative political fallouts within the domestic economy E) to improve ties between the investing country and the host country 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

89) Which agency underwrites trade and investments for U.S. firms? A) Export-Import Bank B) the Federal Trade Commission C) the Agency for International Development D) Social Security Advisory Board E) the Overseas Private Investment Corporation 90) Waldo's company was expanding into some underdeveloped countries, and needed to acquire risk insurance to cover potential fallout from political unrest that was occurring in those countries. What organization might be able to provide this for Waldo? A) Commodity Futures Trading Commission (CFTC) B) the Federal Trade Commission (FTC) C) the Small Business Administration (SBA) D) the United States International Trade Commission (USITC) E) the Overseas Private Investment Corporation 91) You live in a nation that is considered to be a sovereign state. What does this mean? 92) Discuss stability of governments and list the main political causes of instability in international markets. 93) Describe the concept of nationalism and list some of the ways it manifests, particularly in today's political environment. 94) Discuss the terms confiscation, expropriation, and domestication. Choose one of these concepts and describe a situation in which it might occur. 95) List and briefly discuss the various economic risks that international companies must face when they seek to market abroad. 96) Briefly discuss the role of PSAs and NGOs. 97) Discuss the threats posed by cyberterrorism or cyberattacks. Give an example of a recent occurrence of these. 98) What are the conditions under which relations between governments and MNCs are generally positive? 99) Ranzan Inc. has invested in a country showing signs that it will use domestication in the near future to force foreign investors to share more of the profits with the government. Cite and describe a strategy to deal with this potential of domestication that Ranzan could follow to ensure that its business remains profitable. 100) Compare and contrast the government agencies that are involved in promoting foreign investment and international business. 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

International Marketing, 18e (Cateora) Chapter 6 The Political Environment: A Critical Concern 1) Sovereignty is exclusive to the supreme powers exercised by a nation over its own members. Answer: FALSE Explanation: Sovereignty refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) Sovereignty may be threatened by foreign investment. Answer: TRUE Explanation: Foreign investment can be perceived as a threat to sovereignty and thus become a rallying cry by opposing factions. Difficulty: 1 Easy Topic: Benefits and Challenges of Foreign Direct Investment Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Adherence to the World Trade Organization (WTO) does not result in the loss of national sovereignty. Answer: FALSE Explanation: Adherence to the WTO inevitably means the loss of some degree of national sovereignty because the member nations have pledged to abide by international covenants and arbitration procedures that can override national laws and have far-reaching ramifications for citizens. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) Foreign businesses no longer need to be concerned about the stability or instability of prevailing government policies. Answer: FALSE Explanation: The stability or instability of prevailing government policies is at the top of the list of political issues concerning foreign businesses. Governments might change or new political parties might be elected, but the concern of the multinational corporation is the continuity of the set of rules or codes of behavior and the continuation of the rule of law—regardless of which government is in power. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Pressure from nationalist and self-interest groups affect the stability of a government. Answer: TRUE Explanation: Radical shifts in government philosophy when an opposing political party ascends to power, pressure from nationalist and self-interest groups, weakened economic conditions, bias against foreign investment, or conflicts among governments are all issues that can affect the stability of a government. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) Saudi Arabia began permitting women to vote in 2015. Answer: TRUE Explanation: Saudi Arabia precluded women from voting until the King permitted it in 2015. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) Nationalism supports foreign business because it improves local economies. Answer: FALSE Explanation: Nationalism can best be described as an intense feeling of national pride and unity, an awakening of a nation's people to pride in their country. This pride can take an antiforeign business bias, where minor harassment and controls of foreign investment are supported, if not applauded. Difficulty: 1 Easy Topic: The Debate Concerning Global and Regional Economic Integration Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) Nationalistic feelings in general bear no relation to the domestic economy. Answer: FALSE Explanation: Generally, the more a country feels threatened by some outside force or the domestic economy declines, the more nationalistic it becomes in protecting itself against intrusions. Difficulty: 1 Easy Topic: The Debate Concerning Global and Regional Economic Integration Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) Property may legally be seized by the government with or without compensation. Answer: TRUE Explanation: Confiscation is the seizing of a company's assets without payment. Confiscation was most prevalent in the 1950s and 1960s when many underdeveloped countries saw confiscation, albeit ineffective, as a means of economic growth Difficulty: 1 Easy Topic: Different Forms of Government Learning Objective: 06-03 The political risks of global business and the factors that affect stability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) The most severe political risk of global business is the government action of domestication. Answer: FALSE Explanation: The most severe political risk is confiscation, that is, the seizing of a company's assets without payment. Domestication is the process by which a host country gradually transfers foreign investments to national control and ownership. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) The ultimate goal of domestication is to require companies to produce more products to export than was the case before domestication. Answer: FALSE Explanation: The ultimate goal of domestication is to force foreign investors to share more of the ownership, management, and profits with nationals than was the case before domestication. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) Through expropriation and nationalization, nationalized businesses have become more efficient, technologically strong, and competitive in world markets. Answer: FALSE Explanation: Expropriation and nationalization have often led to nationalized businesses that were inefficient, technologically weak, and noncompetitive in world markets. Difficulty: 1 Easy Topic: Nationalization and Privatization of Business Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) Barring Latin America, the risks of confiscation and expropriation have decreased over the last two decades. Answer: TRUE Explanation: Risks of confiscation and expropriation appear to have lessened over the last two decades (with exceptions in Latin America, particularly Venezuela) because experience has shown that few of the desired benefits materialize after government takeover. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Many countries have domestication as a condition for investment. Answer: TRUE Explanation: Today, countries often require prospective investors to agree to share ownership, use local content, enter into labor and management agreements, and share participation in export sales as a condition of entry; in effect, the company has to become domesticated as a condition for investment. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) Price controls are only targeted at nonessential products. Answer: FALSE Explanation: Essential products that command considerable public interest, such as pharmaceuticals, food, gasoline, and cars, are often subjected to price controls. Such controls applied during inflationary periods can be used to control the cost of living. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) Political sanctions are usually an unsuccessful means of achieving the goal of forcing a country to accept the demands of the boycotting country. Answer: TRUE Explanation: History indicates that sanctions are almost always unsuccessful in reaching desired goals, particularly when other major nations' traders ignore them Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) Political and social activists generally have no impact on the normal flow of trade. Answer: FALSE Explanation: Although not usually officially sanctioned by the government, the impact of political and social activists (PSAs) can interrupt the normal flow of trade. PSAs can range from those who seek to bring about peaceful change to those who resort to violence and terrorism to effect change. When well organized, the actions of PSAs can succeed. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) Nongovernmental organizations can affect the policy decisions made by governments through lobbying. Answer: TRUE Explanation: Often associated with political activism, nongovernmental organizations (NGOs) are increasingly affecting policy decisions made by governments. Many are involved in peaceful protests, lobbying, and even collaborations with governmental organizations. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) Risk of violence does not tend to be a consideration in assessing the political vulnerability of a multinational company's activities. Answer: FALSE Explanation: Although not usually government initiated, violence is another related risk for multinational companies to consider in assessing the political vulnerability of their activities. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) International warfare is fast gaining popularity among nations. Answer: FALSE Explanation: International warfare is fast becoming obsolete. The number of wars has steadily declined since the end of the Cold War, with some exceptions. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) Due to advancements in technology, it is relatively easy to determine whether a cyber attack has been launched by a rogue state, a terrorist, or a hacker as a prank. Answer: FALSE Explanation: One problem in tracing cyber terrorists and criminals is that it is hard to determine who has launched a cyber attack. Difficulty: 1 Easy Topic: Terrorism, Terrorist Activities, and Countermeasures Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) As cultural and political scenarios vary so widely across nations, there is no way to generalize the tendency for a particular product to be politically sensitive. Answer: FALSE Explanation: Although there are no specific formulas to determine a product's vulnerability at any point, there are some generalizations that help identify the tendency for products to be politically sensitive. Products that have or are perceived to have an effect on the environment, exchange rates, national and economic security, and the welfare of people or that are publicly visible, subject to public debate, or associated with their country of origin are more likely to be politically sensitive. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) Products that have or are perceived to have an effect on the environment are more likely to be politically sensitive. Answer: TRUE Explanation: Products that have or are perceived to have an effect on the environment, exchange rates, national and economic security, and the welfare of people or that are publicly visible, subject to public debate, or associated with their country of origin are more likely to be politically sensitive. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) It is common for a single company to directly control or alter the political environment of the country within which it operates. Answer: FALSE Explanation: Although a single company cannot directly control or alter the political environment of the country within which it operates, a specific business venture can take measures to lessen its degree of susceptibility to politically induced risks. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) Relations between governments and MNCs are generally negative, particularly if the investment made by the MNCs increases exports or reduces imports. Answer: FALSE Explanation: Relations between governments and MNCs are generally positive if the investment made by the MNCs (1) improves the balance of payments by increasing exports or reducing imports through import substitution; (2) uses locally produced resources; (3) transfers capital, technology, and/or skills; (4) creates jobs; and/or (5) makes tax contributions. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) Licensing is not effective in situations where the technology is unique and the risk is high. Answer: FALSE Explanation: Licensing can be effective in situations in which the technology is unique and the risk is high. Of course, there is some risk assumed, because the licensee can refuse to pay the required fees while continuing to use the technology. Difficulty: 1 Easy Topic: Basic Issues in International Licensing Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) Planned domestication involves taking over an industry in a foreign country. Answer: FALSE Explanation: Planned domestication involves gradually involving local participation until there is participation with nationals in all phases of company operations. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) It is illegal for U.S. citizens to pay a bribe unless it is a common practice in the host country. Answer: FALSE Explanation: Bribery poses problems for the marketer at home and abroad, because it is illegal for U.S. citizens to pay a bribe even if it is a common practice in the host country. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) The principal agency that supports U.S. business abroad is the Global Chamber of Commerce (GCC). Answer: FALSE Explanation: The Department of Commerce (DOC) is the principal agency that supports U.S. business abroad. The International Trade Administration (ITA) a bureau of the DOC, is dedicated to helping U.S. business compete in the global marketplace. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 06-07 How and why governments encourage foreign investment. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) The Agency for International Development underwrites trade and investments for U.S. firms. Answer: FALSE Explanation: The Export-Import Bank (Ex-Im Bank) underwrites trade and investments for U.S. firms. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 06-07 How and why governments encourage foreign investment. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) In the context of international law, a ________ governs its own territory and may enter into agreements with other nations. A) bounded B) sovereign C) legal D) liberal E) neutral Answer: B Explanation: In the context of international law, a sovereign state is independent and free from all external control; enjoys full legal equality with other states; governs its own territory; selects its own political, economic, and social systems; and has the power to enter into agreements with other nations. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) A sovereign state is one that A) is obligated to be a member of the World Trade Organization. B) has its political and economic systems determined by the United Nations Development Program. C) enjoys full legal equality with other states. D) has its territory governed by the United Nations. E) is bounded by external control. Answer: C Explanation: In the context of international law, a sovereign state is independent and free from all external control; enjoys full legal equality with other states; governs its own territory; selects its own political, economic, and social systems; and has the power to enter into agreements with other nations. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) ________ refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. A) Sovereignty B) Self-governance C) Federalism D) Autocracy E) Nationalism Answer: A Explanation: Sovereignty includes both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. A state sets requirements for citizenship, defines geographical boundaries, and controls trade and the movement of people and goods across its borders. Additionally, a citizen is subject to the state's laws even when beyond national borders. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) In April 2009, the G20 nations agreed to cede some sovereignty and A) include all G20 nations in the Security Council. B) raise oil prices. C) increase infrastructure funding. D) reject protectionism. E) increase aid to South Africa. Answer: D Explanation: The leaders of the G20 nations ceded some sovereignty in their hugely important April 2009 agreement to "reject protectionism" at the nadir of the 2009 crash, when world trade had declined more than 12 percent. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) Adherence to the WTO inevitably means A) a definite increase in import tariffs worldwide. B) the loss of national security to a large extent. C) reduction in world trade of at least 70 percent. D) the loss of some degree of national sovereignty. E) complete stoppage of foreign direct investments. Answer: D Explanation: Adherence to the WTO inevitably means the loss of some degree of national sovereignty, because the member nations have pledged to abide by international covenants and arbitration procedures that can override national laws and have far-reaching ramifications for citizens. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) For a multinational firm, the ideal political climate is a A) country where international laws do not apply. B) country where favors can be purchased easily. C) country with a stable and friendly government. D) government with absolute power. E) government that radically shifts its philosophy. Answer: C Explanation: The ideal political climate for a multinational firm is a stable, friendly government. Because foreign businesses are judged by standards as variable as there are nations, the stability and friendliness of the government in each country must be assessed as an ongoing business practice. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) What is the top political issue concerning foreign businesses? A) demographic profile of political leaders B) government policies on infrastructure C) economic awareness of political leaders D) stability of prevailing government policies E) membership of governments in trade treaties Answer: D Explanation: At the top of the list of political issues concerning foreign businesses is the stability or instability of prevailing government policies. Governments might change or new political parties might be elected, but the concern of the multinational corporation is the continuity of the set of rules or codes of behavior and the continuation of the rule of law— regardless of which government is in power. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) What is one of the main political causes of instability in international markets? A) varied taxing conventions B) differences in economic philosophies C) global focus D) environmental awareness E) trade disputes Answer: E Explanation: There are five main political causes of instability in international markets: (1) some forms of government seem to be inherently unstable, (2) changes in political parties during elections can have major effects on trade conditions, (3) nationalism, (4) animosity targeted toward specific countries, and (5) trade disputes themselves. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) Monarchy, like ________, is a form of government ruled by one. A) aristocracy B) dictatorship C) democracy D) monopoly E) oligarchy Answer: B Explanation: Circa 500 BC, the ancient Greeks conceived of and criticized three fundamental forms of government: rule by one, rule by few, and rule by many. The common terms for these forms in use today are monarchy (or dictatorship), aristocracy (or oligarchy), and democracy. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) The ancient Greeks conceived three fundamental forms of government. Which term refers to a government ruled by one? A) aristocracy B) monarchy C) democracy D) monopoly E) oligarchy Answer: B Explanation: Circa 500 BC, the ancient Greeks conceived of and criticized three fundamental forms of government: rule by one, rule by few, and rule by many. The common terms for these forms in use today are monarchy (or dictatorship), aristocracy (or oligarchy), and democracy. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) Which government form can be most accurately described as rule by few? A) aristocracy B) dictatorship C) democracy D) monopoly E) monarchy Answer: A Explanation: Circa 500 BC, the ancient Greeks conceived of and criticized three fundamental forms of government: rule by one, rule by few, and rule by many. The common terms for these forms in use today are monarchy (or dictatorship), aristocracy (or oligarchy), and democracy. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) According to ancient Greeks, what fundamental government form represents rule by many? A) aristocracy B) dictatorship C) democracy D) monopoly E) monarchy Answer: C Explanation: Circa 500 BC, the ancient Greeks conceived of and criticized three fundamental forms of government: rule by one, rule by few, and rule by many. The common terms for these forms in use today are monarchy (or dictatorship), aristocracy (or oligarchy), and democracy. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) What is a common term for a form of government in use today? A) protectionism B) duopoly C) oligopoly D) capitalism E) oligarchy Answer: E Explanation: The common terms for the various forms of government in use today are monarchy (or dictatorship), aristocracy (or oligarchy), and democracy. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) What country recently allowed women the right to vote for the first time? A) Croatia B) Iran C) Bolivia D) Saudi Arabia E) Venezuela Answer: D Explanation: Saudi Arabia precluded women from voting until 2015, when the King changed the law. Difficulty: 1 Easy Topic: Differences in Political Systems Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) What event caused a drop in "economic freedom" in the United States, according to the Heritage Foundation? A) Hurricane Katrina B) the war in Iran C) Obamacare D) the bombing of the World Trade Towers E) the economic stimulus of 2008–2009 Answer: E Explanation: The Heritage Foundation concluded that the United States experiences its biggest drop in "economic freedom" because of the controlling impact of the economic stimulus of 2008–2009. Difficulty: 1 Easy Topic: North America's Marketplace in the World Economy Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) ________ is an intense feeling of state pride and unity, an awakening of a country's people to pride in their country. A) Nepotism B) Absolutism C) Fascism D) Nationalism E) Polarism Answer: D Explanation: Nationalism can best be described as an intense feeling of national pride and unity, an awakening of a nation's people to pride in their country. This pride can take an antiforeign business bias, where minor harassment and controls of foreign investment are supported, if not applauded. Difficulty: 1 Easy Topic: Nationalization and Privatization of Business Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) Which action is most likely a manifestation of nationalism? A) membership in bilateral trade treaties B) a call to buy a global counterpart's products C) restrictions on imports D) removal of tariffs and quotas E) a focus on global security Answer: C Explanation: Feelings of nationalism are manifested in a variety of ways, including a call to "buy our country's products only" (e.g., "Buy American"), restrictions on imports, restrictive tariffs, and other barriers to trade Difficulty: 2 Medium Topic: Nationalization and Privatization of Business Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) With which term would the phrase "Buy American" be most closely associated? A) socialism B) communism C) nationalism D) abstractionism E) polarism Answer: C Explanation: Feelings of nationalism are manifested in a variety of ways, including a call to "buy our country's products only" (e.g., "Buy American"), restrictions on imports, restrictive tariffs, and other barriers to trade. Difficulty: 2 Medium Topic: Nationalization and Privatization of Business Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) What is true of nationalism? A) The more a country feels threatened by some outside force the less nationalistic the country becomes. B) A call to "buy our country's products only" is one form of manifestation of national feelings. C) Nationalist feelings lead to loss of control over foreign investment. D) The more a country's domestic economy declines, the less nationalistic it becomes. E) Nationalistic feelings are not prevalent in economically prosperous countries. Answer: B Explanation: Feelings of nationalism are manifested in a variety of ways, including a call to "buy our country's products only" (e.g., "Buy American"), restrictions on imports, restrictive tariffs, and other barriers to trade. Difficulty: 1 Easy Topic: Nationalization and Privatization of Business Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) With respect to the political risk that can be faced by a company seeking to invest abroad, which action is most severe? A) confiscation B) expropriation C) domestication D) exchange controls E) local-content laws Answer: A Explanation: The most severe political risk is confiscation, that is, the seizing of a company's assets without payment. Confiscation was most prevalent in the 1950s and 1960s when many underdeveloped countries saw confiscation, albeit ineffective, as a means of economic growth. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-03 The political risks of global business and the factors that affect stability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) The seizing of a company's assets without payment is called A) confiscation. B) expropriation. C) domestication. D) exchange controls. E) local-content laws. Answer: A Explanation: Confiscation is the seizing of a company's assets without payment. Expropriation is the seizure of an investment by a government in which some reimbursement is made to the investment owner and domestication is the process by which a host country gradually transfers foreign investments to national control and ownership through a series of government decrees. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-03 The political risks of global business and the factors that affect stability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) When a government seizes an investment of a foreign investor but some reimbursement for the assets is made, the government follows a process called A) confiscation. B) expropriation. C) domestication. D) exchange controls. E) local-content laws. Answer: B Explanation: Expropriation is when the government seizes an investment but makes some reimbursement for the assets. Confiscation is the seizing of a company's assets without payment, and domestication is the process by which a host country gradually transfers foreign investments to national control and ownership through a series of government decrees. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) When an expropriated investment becomes a government-run entity, it is A) democratized. B) domesticated. C) nationalized. D) prioritized. E) socialized. Answer: C Explanation: When the expropriated investment is nationalized, it becomes a government-run entity. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) ________ occurs when host countries gradually cause the transfer of foreign investment to national control and ownership through a series of government decrees. A) Confiscation B) Expropriation C) Domestication D) Democratization E) Socialization Answer: C Explanation: Domestication occurs when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees that mandate local ownership and greater national involvement in a company's management. Confiscation is the seizing of a company's assets without payment, and expropriation is the seizure of an investment by a government in which some reimbursement is made to the investment owner. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) The government in Chile recently informed Mario's company that his retail grocery chain in Chile would have to be gradually turned over to the people of Chile by the year 2050 as it is a foreign company in Chile. Additionally, starting the following year, 50 percent of the board of directors of the Chilean operation of the company must be Chileans. What political risk action is Mario's company facing in Chile? A) confiscation B) expropriation C) domestication D) patronization E) nationalization Answer: C Explanation: Domestication occurs when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees that mandate local ownership and greater national involvement in a company's management. As Mario's company is gradually transferred to the control of the Chilean government, his company is facing domestication. Difficulty: 3 Hard Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 56) Which statement about domestication is correct? A) The ultimate goal of domestication is to force domestic investors to share more of the profits with the government. B) The risk of domestication appears to have decreased over the last two decades. C) Domestication has always led to more technologically advanced and competitive businesses. D) Countries often require companies to become domesticated as a condition for investment. E) Domestication refers to the seizing of a company's assets without payment. Answer: D Explanation: Today, countries often require prospective investors to agree to share ownership, use local content, enter into labor and management agreements, and share participation in export sales as a condition of entry; in effect, the company has to become domesticated as a condition for investment. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) Marziland found that a large amount of capital was leaving the country due to foreign corporate ownership, so it instituted controls over all movements of capital to conserve the supply of foreign exchange. These are called ________ controls. A) exchange B) local-content C) price D) tax E) production Answer: A Explanation: Exchange controls stem from shortages of foreign exchange held by a country. When a nation faces shortages of foreign exchange and/or a substantial amount of capital is leaving the country, controls may be levied over all movements of capital or selectively against the most politically vulnerable companies to conserve the supply of foreign exchange for the most essential uses. Difficulty: 2 Medium Topic: Foreign Exchange Risks Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 58) If there is a substantial amount of capital leaving a country, what is a country most likely to implement to control the situation? A) exchange controls B) local-content laws C) import restrictions D) tax controls E) price controls Answer: A Explanation: Exchange controls stem from shortages of foreign exchange held by a country. When a nation faces shortages of foreign exchange and/or a substantial amount of capital is leaving the country, controls may be levied over all movements of capital or selectively against the most politically vulnerable companies to conserve the supply of foreign exchange for the most essential uses. Difficulty: 1 Easy Topic: Foreign Exchange Risks Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) In Thailand, it is required that any milk product sold in the country by a foreign company must use the milk that is at least 50 percent produced by Thai dairy farmers. What economic risk is faced by the international producers of milk products in this situation? A) exchange controls B) local-content laws C) export restrictions D) tax controls E) price controls Answer: B Explanation: In addition to restricting imports of essential supplies to force local purchase, countries often require a portion of any product sold within the country to have local content, that is, to contain locally made parts. As Thailand has required that all milk products sold in its country must use the milk produced from Thai dairy farms, it has used a local-content law to force local purchase. This causes an economic risk for foreign investors. Difficulty: 2 Medium Topic: Foreign Exchange Risks Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 60) The United States requires that 50 percent of all parts used to construct an automobile in the United States be manufactured in the United States. As a result of this, when Toyota Motor Company builds automobile manufacturing plants in Tennessee and Ohio, it faces economic risks associated with A) exchange controls. B) local-content laws. C) export restrictions. D) tax controls. E) price controls. Answer: B Explanation: In addition to restricting imports of essential supplies to force local purchase, countries often require a portion of any product sold within the country to have local content, that is, to contain locally made parts. Therefore, the United States used local-content laws to force Toyota Motor Company to purchase locally made parts. Difficulty: 2 Medium Topic: Foreign Exchange Risks Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

61) Taxes must be classified as a(n) ________ risk when used as a means of controlling foreign investments. A) political B) social C) ignorable D) environmental E) harmless Answer: A Explanation: Taxes must be classified as a political risk when used as a means of controlling foreign investments. In such cases, they are raised without warning and in violation of formal agreements. Difficulty: 1 Easy Topic: The Influence of Taxation and Inflation Rates on International Business Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) The government of Namibia is strapped for cash, and it has decided to tax all foreign investments (such as food packaged in the country) by up to 40 percent of the appraised value. The Namibian government has found that this is the handiest and quickest means of finding operating funds. The economic risk in discussion here is A) exchange controls. B) local-content laws. C) tax restrictions. D) tax controls. E) price controls. Answer: D Explanation: Taxes must be classified as a political risk when used as a means of controlling foreign investments. In such cases, they are raised without warning and in violation of formal agreements. As the Nigerian government has used taxing as a means of controlling foreign investments, the economic risk in discussion here is tax controls. Difficulty: 2 Medium Topic: The Influence of Taxation and Inflation Rates on International Business Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

63) Price controls applied during inflationary periods may have the effect of A) controlling the cost of living. B) restricting exports to foreign countries. C) negotiating trade contracts favoring the host country. D) encouraging imports. E) collecting taxes on foreign investments. Answer: A Explanation: Essential products that command considerable public interest, such as pharmaceuticals, food, gasoline, and cars, are often subjected to price controls. Such controls applied during inflationary periods can be used to control the cost of living. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) In North Korea, foreign investors or producers are required to sell products at prices stated by the North Korean government rather than letting market value and demand determine the prices. This implies that there is application of A) exchange controls. B) local-content laws. C) import restrictions. D) tax controls. E) price controls. Answer: E Explanation: Essential products that command considerable public interest, such as pharmaceuticals, food, gasoline, and cars, are often subjected to price controls. Such controls applied during inflationary periods can be used to control the cost of living. They also may be used to force foreign companies to sell equity to local interests. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

65) Which of these items is most likely to be subjected to price control? A) leather garments B) mobile phone accessories C) aspirin and antacids D) camcorders and lenses E) ceramic tiles Answer: C Explanation: Essential products that command considerable public interest, such as pharmaceuticals, food, gasoline, and cars, are often subjected to price controls. Such controls applied during inflationary periods can be used to control the cost of living. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) Stopping or refusing to trade with another nation for political reasons is called A) monopolizing. B) boycotting. C) confiscation. D) democratization. E) expropriation. Answer: B Explanation: In addition to economic risks, one or a group of nations may boycott another nation, thereby stopping all trade between the countries, or may issue sanctions against the trade of specific products. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) What is true of political sanctions? A) Political sanctions normally control and rectify situations within a nation. B) Political sanctions are generally unsuccessful. C) Political sanctions are illegal. D) The United Nations encourages boycotts as a means of settling political disputes. E) The use of political sanctions is the most effective way to increase world trade. Answer: B Explanation: History indicates that sanctions are almost always unsuccessful in reaching desired goals, particularly when other major nations' traders ignore them. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) What are effective tools that political and social activists (PSAs) use to spread word about their causes? A) political sanctions B) monetary barriers and trade embargoes C) the Internet and cellphones D) local-content laws and questionnaires E) export controls Answer: C Explanation: The Internet and cell phones have together become effective tools of PSAs to spread the word about whatever cause they sponsor. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) Which of these organizations is an NGO (nongovernmental organization)? A) Central Intelligence Agency B) Peace Corps C) Millennium Challenge Corporation D) Oxfam E) FedEx Answer: D Explanation: Some NGOs have received global recognition—the Red Cross and Red Crescent, Amnesty International, Oxfam, UNICEF, Care, and Habitat for Humanity are examples—for their good works, political influence, and even their brand power. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) Why do terrorism experts predict multinational businesses will be targeted by terrorists more frequently? A) They impose export controls on the underdeveloped nations. B) They are the major cause for political sanctions against Arab nations. C) They are less well defended than government targets. D) They destroy and pollute the environment. E) They are subterfuge for espionage agents. Answer: C Explanation: There are reasons to expect that businesses will become increasingly attractive to terrorists, both because they are less well defended than government targets and because of what they symbolize. Difficulty: 2 Medium Topic: Terrorism, Terrorist Activities, and Countermeasures Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) Which form of terrorism is most likely to use the Internet to inflict damage? A) Germterrorism B) Bioterrorism C) Cyberterrorism D) Ecoterrorism E) Narcoterrorism Answer: C Explanation: Always on the horizon is the growing potential for cyberterrorism and cybercrime. Although still in its infancy, the Internet provides a vehicle for terrorist and criminal attacks by foreign and domestic antagonists wishing to inflict damage on a company with little chance of being caught. Difficulty: 1 Easy Topic: Terrorism, Terrorist Activities, and Countermeasures Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) As the FBI investigates security breaches, the analyses are more often pointing to ________ as the most serious threat. A) Russian government supported hackers B) religious extremists C) white supremacists D) American rogue hackers E) the Chinese government Answer: A Explanation: The Melissa virus and the denial of service (DoS) attacks that overloaded the websites of CNN, ZDNet, Yahoo!, and Amazon.com with a flood of electronic messages, crippling them for hours, were considered purposeful attacks on specific targets. The "Slammer" brought Internet service to a crawl. It doubled its numbers every 8.5 seconds during the first minute of its attack and infected more than 75,000 hosts within 10 minutes. After infecting hundreds of thousands of computers in Europe and North America, the "Goner worm" traveled to Australia overnight and brought down government agencies, financial and manufacturing sites, and at least 25 MNCs. Difficulty: 1 Easy Topic: Terrorism, Terrorist Activities, and Countermeasures Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) Bao is attempting to forecast political instability and help his company's management identify and evaluate political events and their potential influence on current and future international business decisions. Bao is engaged in A) political risk assessment. B) political confiscation. C) democratization. D) arbitration. E) risk expropriation. Answer: A Explanation: Political risk assessment is an attempt to forecast political instability to help management identify and evaluate political events and their potential influence on current and future international business decisions. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) In terms of political risk, what poses the greatest threat to international marketers? A) newer environmental regulations approved by global trade bodies B) change of economic policies C) exchange rate fluctuations affecting margins D) the possibility of the government actually failing E) membership or withdrawal of membership of the government in trade blocs Answer: D Explanation: Perhaps the greatest risk to international marketers is the threat of the government actually failing, causing chaos in the streets and markets. Difficulty: 2 Medium Topic: Managing Political Risk and Differences Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) Relations between governments and MNCs are generally positive if the investment A) increases the volume of imports. B) uses globally produced resources. C) transfers capital, technology, and skills. D) brings in a higher number of foreign nationals. E) decreases the volume of exports. Answer: C Explanation: Relations between governments and MNCs are generally positive if the investment (1) improves the balance of payments by increasing exports or reducing imports through import substitution; (2) uses locally produced resources; (3) transfers capital, technology, and/or skills; (4) creates jobs; and/or (5) makes tax contributions. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) Meteora Inc. is planning to enter the Kenyan market by establishing a mobile phone manufacturing operation in Kenya. Meteora is most likely to have a positive relationship with Kenyan government through its investment if it A) uses locally produced resources. B) imports phone components from China. C) establishes an R&D center in California and has all its technology patented there. D) ensures that its middle and upper management are expatriates. E) bargains for a tax holiday for the next five financial years. Answer: A Explanation: Relations between governments and MNCs are generally positive if the investment (1) improves the balance of payments by increasing exports or reducing imports through import substitution; (2) uses locally produced resources; (3) transfers capital, technology, and/or skills; (4) creates jobs; and/or (5) makes tax contributions. Therefore, if Meteora uses locally produced resources it is most likely to maintain positive relations with the Kenyan government. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

77) Juliet is concerned with the potential for political harassment when her company enters a new international market. To reduce the risk of political harassment, she is most likely to consider using ________ to enter the market. A) externally produced products B) a smaller investment base C) foreign technology D) a joint venture E) the threat of sanctions Answer: D Explanation: Typically less susceptible to political harassment, joint ventures can be with locals or other third-country multinational companies; in both cases, a company's financial exposure is limited. So, Juliet is most likely to use joint ventures to enter the market to minimize political harassment Difficulty: 2 Medium Topic: Advantages and Disadvantages of Joint Ventures Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 78) What strategy is used by multinational corporations to minimize political vulnerability and risk? A) expropriation B) sanctions C) buyouts D) confiscation E) licensing Answer: E Explanation: The strategies used by MNCs to minimize political vulnerability and risk are joint ventures, expanding the investment base, licensing, planned domestication, political bargaining, and political payoffs. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) Which strategy can be effective in forestalling or minimizing the effect of a total takeover of a multinational corporation's holdings by a foreign government? A) confiscation B) sole proprietorship C) expanding the investment base D) advertising E) leasing Answer: C Explanation: The strategies used by MNCs to minimize political vulnerability and risk are joint ventures, expanding the investment base, licensing, planned domestication, political bargaining, and political payoffs. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) Which strategy to minimize political vulnerability and risk has the advantage of engaging the power of several investors and banks in the host country whenever any kind of government takeover or harassment is threatened? A) joint ventures B) licensing C) expanding the investment base D) sole proprietorship E) political bargaining Answer: C Explanation: Including several investors and banks in financing an investment in the host country is a strategy that minimizes political vulnerability and risk. This approach has the advantage of engaging the power of the banks whenever any kind of government takeover or harassment is threatened. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) Which strategy is most effective in minimizing political risks for a multinational corporation in situations in which the technology is unique and the risk is high? A) trade embargo B) licensing C) expanding the investment base D) planned confiscation E) expropriation Answer: B Explanation: A strategy that some firms find eliminates almost all risks is to license technology for a fee. Licensing can be effective in situations in which the technology is unique and the risk is high. Of course, there is some risk assumed, because the licensee can refuse to pay the required fees while continuing to use the technology. Difficulty: 2 Medium Topic: Basic Issues in International Licensing Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) The most effective long-range solution to a situation where a foreign government is demanding local participation in a multinational corporation's business activities in the host country is A) joint ventures. B) licensing. C) expanding the investment base. D) planned domestication. E) political payoffs. Answer: D Explanation: In those cases in which a host country is demanding local participation, the most effective long-range solution is planned phasing out, that is, planned domestication. It can be profitable and operationally expedient for the foreign investor. Planned domestication is, in essence, a gradual process of participating with nationals in all phases of company operations. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) While expanding the investment base of a company, what can be used as a powerful ally in dealing with threats of government takeovers or harassment? A) banks that have lent money to the host government B) the World Trade Organization C) the International Labor Organization D) regional trade blocs E) opposing political parties Answer: A Explanation: Including several investors and banks in financing an investment in the host country is an effective strategy to lessen the political vulnerability of a company. This approach has the advantage of engaging the power of the banks whenever any kind of government takeover or harassment is threatened. This strategy becomes especially powerful if the banks have made loans to the host country; if the government threatens expropriation or other types of takeover, the financing bank has substantial power with the government. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) An attempt to lessen political risks by paying those in power to intervene on behalf of the multinational company is referred to as a A) subornation. B) protectionism. C) political payoff. D) buyout. E) rake-off. Answer: C Explanation: One approach to dealing with political vulnerability is the political payoff—an attempt to lessen political risks by paying those in power to intervene on behalf of the multinational company. Bribery poses problems for the marketer at home and abroad, because it is illegal for U.S. citizens to pay a bribe even if it is a common practice in the host country. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) What is the U.S. government's policy toward multinational corporations that are confronted with situations where bribery is an issue? A) A bribe may be paid as long as it is not a domestic situation. B) Bribery is justified if it is a documented traditional practice in a country. C) A bribe can be paid in a foreign country if it is tied to national security. D) It is illegal for a U.S. citizen to pay a bribe. E) The issue revolves around the customs of the country and each issue is decided separately. Answer: D Explanation: Bribery poses problems for the marketer at home and abroad, because it is illegal for U.S. citizens to pay a bribe even if it is a common practice in the host country. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) What principle U.S. agency supports U.S. businesses abroad? A) State Department of Entrepreneurship B) Better Business Bureau C) Department of Commerce D) Department of Foreign Relations E) Department of Defense Answer: C Explanation: The Department of Commerce (DOC) is the principal agency that supports U.S. business abroad. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-07 How and why governments encourage foreign investment. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) Within the same country, some foreign businesses may fall prey to politically induced harassment, while others may be placed under a government umbrella of protection and preferential treatment. What factor explains this difference? A) the level of domestication achieved B) the differences in level of technology between the two countries C) the cultural differences between the host nation and the business's home country D) the import tariffs set by the host country E) the evaluation of a company's contribution to the nation's interest Answer: E Explanation: Within the same country, some foreign businesses may fall prey to politically induced harassment, while others may be placed under a government umbrella of protection and preferential treatment. The difference lies in the evaluation of a company's contribution to the nation's interest. Difficulty: 2 Medium Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-07 How and why governments encourage foreign investment. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) What is the most important reason for a country to encourage foreign investment? A) to improve the global image of a country B) to accelerate the development of an economy C) to evade political tensions between countries D) to minimize negative political fallouts within the domestic economy E) to improve ties between the investing country and the host country Answer: B Explanation: The most important reason to encourage foreign investment is to accelerate the development of an economy. Multinational corporations may be expected to create local employment, transfer technology, generate export sales, stimulate growth and development of local industry, conserve foreign exchange, or meet a combination of these expectations as a requirement for market concessions. Difficulty: 1 Easy Topic: Benefits and Challenges of Foreign Direct Investment Learning Objective: 06-07 How and why governments encourage foreign investment. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) Which agency underwrites trade and investments for U.S. firms? A) Export-Import Bank B) the Federal Trade Commission C) the Agency for International Development D) Social Security Advisory Board E) the Overseas Private Investment Corporation Answer: A Explanation: Export-Import Bank (Ex-Im Bank) underwrites trade and investments for U.S. firms. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-07 How and why governments encourage foreign investment. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) Waldo's company was expanding into some underdeveloped countries, and needed to acquire risk insurance to cover potential fallout from political unrest that was occurring in those countries. What organization might be able to provide this for Waldo? A) Commodity Futures Trading Commission (CFTC) B) the Federal Trade Commission (FTC) C) the Small Business Administration (SBA) D) the United States International Trade Commission (USITC) E) the Overseas Private Investment Corporation Answer: E Explanation: The Overseas Private Investment Corporation (OPIC) provides risk insurance for companies investing in less-developed countries. Difficulty: 1 Easy Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-07 How and why governments encourage foreign investment. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) You live in a nation that is considered to be a sovereign state. What does this mean? Answer: A sovereign state is independent and free from all external control; enjoys full legal equality with other states; governs its own territory; selects its own political, economic, and social systems; and has the power to enter into agreements with other nations. Sovereignty refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. Difficulty: 3 Hard Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Discuss stability of governments and list the main political causes of instability in international markets. Answer: The ideal political climate for a multinational firm is a stable, friendly government. Radical shifts in government philosophy when an opposing political party ascends to power, pressure from nationalist and self-interest groups, weakened economic conditions, bias against foreign investment, or conflicts among governments are all issues that can affect the stability of a government. At the top of the list of political issues concerning foreign businesses is the stability or instability of prevailing government policies. There are five main political causes of instability in international markets: (1) some forms of government seem to be inherently unstable, (2) changes in political parties during elections can have major effects on trade conditions, (3) nationalism, (4) animosity targeted toward specific countries, and (5) trade disputes themselves. Difficulty: 3 Hard Topic: Differences in Political Systems Learning Objective: 06-01 What the sovereignty of nations means and how it can affect the stability of government policies. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) Describe the concept of nationalism and list some of the ways it manifests, particularly in today's political environment. Answer: Nationalism can best be described as an intense feeling of national pride and unity, an awakening of a nation's people to pride in their country. This pride can take an anti–foreign business bias, where minor harassment and controls of foreign investment are supported, if not applauded. Economic nationalism has as one of its central aims the preservation of national economic autonomy, in that residents identify their interests with the preservation of the sovereignty of the state in which they reside. In other words, national interest and security are more important than international relations. President Trump both personifies and advocates the concept. Difficulty: 3 Hard Topic: Nationalization and Privatization of Business Learning Objective: 06-02 How different governmental types, political parties, nationalism, targeted fear/animosity, and trade disputes can affect the environment for marketing in foreign countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) Discuss the terms confiscation, expropriation, and domestication. Choose one of these concepts and describe a situation in which it might occur. Answer: Confiscation is the seizing of a company's assets without payment. Expropriation occurs when the government seizes an investment but some reimbursement for the assets is made. Domestication occurs when the host country gradually causes the transfer of foreign investments to national control and ownership through a series of government decrees by mandating local ownership and greater national involvement in a company's management. The ultimate goal of domestication is to force foreign investors to share more of the ownership, management, and profits with nationals than was the case before domestication. Difficulty: 3 Hard Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) List and briefly discuss the various economic risks that international companies must face when they seek to market abroad. Answer: The text lists six economic risks. Exchange controls: When a nation faces shortages of foreign exchange and/or a substantial amount of capital is leaving the country, controls may be levied over all movements of capital or selectively against the most politically vulnerable companies to conserve the supply of foreign exchange for the most essential uses. Local-content laws: Countries often require a portion of any product sold within the country to have local content, that is, to contain locally made parts. Import restrictions: Selective restrictions on the import of raw materials, machines, and spare parts are fairly common strategies to force foreign industry to purchase more supplies within the host country and thereby create markets for local industry. Tax controls: Taxes must be classified as a political risk when used as a means of controlling foreign investments. In such cases, they are raised without warning and in violation of formal agreements. Price controls: Controls applied for essential products during inflationary periods can be used to control the cost of living. They also may be used to force foreign companies to sell equity to local interests. Labor problems: In many countries, labor unions have strong government support that they use effectively in obtaining special concessions from business. Layoffs may be forbidden, profits may have to be shared, and an extraordinary number of services may have to be provided. Difficulty: 3 Hard Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 06-04 The importance of the political system to international marketing and its effect on foreign investments. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) Briefly discuss the role of PSAs and NGOs. Answer: The impact of political and social activists (PSAs) can also interrupt the normal flow of trade. PSAs can range from those who seek to bring about peaceful change to those who resort to violence and terrorism to effect change. Often associated with political activism, nongovernmental organizations (NGOs) are increasingly affecting policy decisions made by governments. Many are involved in peaceful protests, lobbying, and even collaborations with governmental organizations. Many also are involved in mitigating much of the human misery plaguing parts of the planet. Some NGOs have received global recognition for their good works, political influence, and even their brand power. Difficulty: 3 Hard Topic: Different Forms of Government Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) Discuss the threats posed by cyberterrorism or cyberattacks. Give an example of a recent occurrence of these. Answer: Cyberterrorism and cybercrime are growing threats for businesses. Although still in its infancy, the Internet provides a vehicle for terrorist and criminal attacks by foreign and domestic antagonists wishing to inflict damage on a company with little chance of being caught. One problem in tracing cyberterrorists and criminals is that it is hard to determine if a cyberattack has been launched by a rogue state, a terrorist, or a hacker as a prank. Moreover, each wave of viruses gets more damaging and spreads so rapidly that considerable harm is done before it can be stopped. The "Slammer," for example, brought Internet service to a crawl. It doubled its numbers every 8.5 seconds during the first minute of its attack and infected more than 75,000 hosts within 10 minutes. Whether perpetrated by pranksters or hackers out to do harm, these incidents show that tools for cyberterrorism can be developed to do considerable damage to a company, an entire industry, or a country's infrastructure. Difficulty: 3 Hard Topic: Terrorism, Terrorist Activities, and Countermeasures Learning Objective: 06-05 The impact of political and social activists, violence, and terrorism on international business. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) What are the conditions under which relations between governments and MNCs are generally positive? Answer: Relations between governments and MNCs are generally positive if the investment: (1) improves the balance of payments by increasing exports or reducing imports through import substitution; (2) uses locally produced resources; (3) transfers capital, technology, or skills; (4) creates jobs; or (5) makes tax contributions. Difficulty: 3 Hard Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) Ranzan Inc. has invested in a country showing signs that it will use domestication in the near future to force foreign investors to share more of the profits with the government. Cite and describe a strategy to deal with this potential of domestication that Ranzan could follow to ensure that its business remains profitable. Answer: Ranzan Inc. could choose to implement planned domestication. Domestication occurs when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees by mandating local ownership and greater national involvement in a company's management. As a reasonable response to the potential of domestication, planned domestication can be profitable and operationally expedient for the foreign investor. Planned domestication is, in essence, a gradual process of participating with nationals in all phases of company operations. Difficulty: 3 Hard Topic: Government Intervention in Foreign Direct Investment Learning Objective: 06-06 How to assess and reduce the effect of political vulnerability. Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 100) Compare and contrast the government agencies that are involved in promoting foreign investment and international business. Answer: The Department of Commerce (DOC) is the principal agency that supports U.S. business abroad. The International Trade Administration (ITA), a bureau of the DOC, is dedicated to helping U.S. businesses compete in the global marketplace. Other agencies also provide assistance to U.S. companies. Export-Import Bank (Ex-Im Bank) underwrites trade and investments for U.S. firms. Foreign Credit Insurance Association (FCIA), an agency of the ExIm Bank, provides credit insurance that minimizes nonpayment risk caused by financial, economic, or political uncertainties. The Agency for International Development (AID) provides aid to underdeveloped countries and has limited protection in support of "essential" projects in approved countries and for approved products. The Overseas Private Investment Corporation (OPIC) provides risk insurance for companies investing in less-developed countries. Difficulty: 3 Hard Topic: Benefits and Challenges of Foreign Direct Investment Learning Objective: 06-07 How and why governments encourage foreign investment. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 7 The International Legal Environment: Playing by the Rules 1) The form of law found in the United States and England is classified as civil or code law. 2) The form of law found in Germany, France, and Japan is called civil or code law. 3) Code law is based on an all-inclusive system of written rules of law. 4) Steps are being taken in common-law countries to codify commercial law, even though the primary basis of commercial law is common law. 5) Common law prescribes specific patterns of social and economic behavior for everyone. 6) Code law prohibits the receipt and payment of interest on loans. 7) In Marxist–socialist societies, law is strictly subordinate to prevailing economic conditions. 8) The World Court can settle disputes between a company and a government. 9) When dealing with foreign countries, a marketer should refer to the laws of the home country for guidance. 10) Disputes relating to commercial transactions must be settled in courts and cannot be settled informally. 11) Statements made during conciliation may not be disclosed in subsequent litigation. 12) If conciliation is not used to settle a difference in an international business dispute or an agreement cannot be reached, the next step is litigation. 13) The sole requirement of an arbitration clause is that the parties agree to abide by the awards resulting from the process of arbitration. 14) One of the deterrents to litigation with respect to disputes in the international business arena is the fear of creating a poor image and damaging public relations. 15) A certain level of piracy may be beneficial for some companies as it provides an unplanned product trial. 16) Legal ownership in one country does not necessarily mean ownership in other countries. 17) The ownership of intellectual property rights in United States is established by prior use rather than registration. 18) In many code-law countries, ownership of intellectual property rights is established by registration rather than by prior use. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

19) The General Agreement on Tariffs and Trade is the most comprehensive multilateral agreement on intellectual property to date. 20) In the United States, a patent reverts to public domain if it is not manufactured and sold within a specified period. 21) Charging what the market will bear is a suggested strategy for IP-rich firms to make money in China. 22) The Internet is a libel-free zone. 23) The shipping companies collect taxes for products that are sold by a company through the Internet to customers outside its home country. 24) The Informed Consumer Standard is used in the consumer protection courts in Canada and it places the onus of making the right decisions on the buyer who is expected to have substantial knowledge of the industry and its products. 25) The laws regulating direct selling in China are unusually detailed compared to others around the world. 26) Global concern for the environment includes industrial pollution, hazardous waste disposal, and rampant deforestation, but excludes issues that focus directly on consumer products. 27) Antitrust laws were not enforced in the United States during most of the twentieth century. 28) Moving a business outside the political boundaries of the home country exempts the company from the home-country's laws. 29) One purpose of antitrust enforcement in international commerce is to keep U.S. companies from imposing restrictions on exports by other U.S.-based competitors. 30) Widgets, Inc. is beginning to export its products to Taiwan, but it isn't sure if it needs a license to do so. The responsibility of determining if a license is required rests with the Taiwanese company that is purchasing the products. 31) __________ law is derived from English law and is practiced in the U.S.. A) Code B) Common C) Religious D) Civil E) Universal

32) Which form of law is primarily found in the United States, England, Canada, and other countries once under English influence? A) code law B) common law C) religious law D) civil law E) universal law 33) Code law is also known as ________ law. A) business B) common C) religious D) civil E) universal 34) Germany's legal system centers on code law, which is derived from ________ law. A) English B) Economic C) Greek D) Persian E) Roman 35) The basis for ________ law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. A) civil B) common C) code D) commercial E) criminal 36) ________ law seeks "interpretation through the past decisions of higher courts which interpret the same statutes or apply established and customary principles of law to a similar set of facts." A) Constitutional B) Family C) Criminal D) Civil E) Common 37) Code law is based upon A) the interpretation through the past decisions of higher courts. B) the established and customary principles of law and their legal precedence. C) an all-inclusive system of written rules of law. D) the interpretation of the Koran. E) the codes of English law that apply in all countries under English influence. 3 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

38) Under _______ law, the legal system is generally divided into three separate codes: commercial, civil, and criminal. A) constitutional B) code C) family D) religious E) traditional 39) Laws governing ________ offer the most striking differences between common-law and code-law systems. A) international trade B) social welfare C) homicide D) intellectual property E) domestic industry 40) Under common law, the ownership of intellectual property is established by A) title deeds. B) use. C) tradition. D) patent. E) registration. 41) In code-law countries, the ownership of intellectual property is determined by A) heredity. B) nature of use. C) duration of usage. D) registration. E) indemnification. 42) ________ is considered complete as a result of catchall provisions found in most of this type of law systems. A) Common law B) Code law C) Islamic law D) Marxist–socialist tenets E) The English legal tradition 43) Apart from intellectual property laws, an illustration of how fundamental differences in the common and code systems can cause difficulty is in A) conducting civil trials. B) determining laws governing export and import. C) deciding heredity laws. D) determining criminal laws. E) evaluating the performance of a contract. 4 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

44) What is true of code-law systems? A) They represent a legal system that is not all-inclusive. B) They establish ownership of intellectual property by prior use rather than registration. C) They originate from tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. D) They sometimes fail to consider agreements to be enforceable unless properly notarized or registered. E) They fail to consider unforeseeable human acts such as riots as acts of nature. 45) The basis for ________ is the interpretation of the Koran. A) common law B) code law C) Islamic law D) Marxist–socialist tenets E) legal tradition 46) Islamic law is also known as A) Ulema. B) Umrah. C) Zakat. D) Shari'ah. E) Barakah. 47) The Islamic law prohibits the payment of A) taxes. B) profits. C) interest. D) equity. E) leases. 48) According to ________, law is strictly subordinate to prevailing economic conditions, such fundamental propositions as private ownership, contracts, due process, and other legal mechanisms. A) common law B) code law C) Islamic law D) Marxist–socialist tenets E) legal tradition 49) Because of political changes in the late twentieth century, which country has had to build from scratch an entire commercial legal system? A) France B) Germany C) Taiwan D) Russia E) Saudi Arabia 5 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

50) If there is a dispute between ________, the World Court can adjudicate. A) governments B) a company and a government C) two companies D) a citizen and a government E) trade associations of two countries 51) What method accounts for the majority of resolutions in international commercial transaction disputes? A) criminal suits B) conciliation C) arbitration D) litigation E) coercion 52) ________ is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences. A) Litigation B) Prosecution C) Arbitration D) Conciliation E) Coercion 53) Mariette's U.S.-based company is having a dispute with a Chinese partner. What method would be especially effective in resolving this dispute? A) arbitration B) conciliation C) coercion D) litigation E) a criminal suit 54) Teel's Tacos, a food company in the United States, is trying to resolve a dispute with a local company in Belize that has been operating under the same name in its country. All attempts made by the U.S. company to settle the issue in a friendly manner have failed, so the owners of the U.S.-based Teel's Tacos have decided to settle the dispute with the local company by appointing a mediator. They also want the sessions to be private because of the fear of creating a poor public image. Which of the following dispute resolution methods is best suited for this situation? A) conciliation B) prosecution C) arbitration D) coercion E) litigation

55) Ralph Richards's company has been attempting to solve a problem with a contract default by the Dutch government. He has tried conciliation but the two parties did not find any common ground on which they could begin a fruitful negotiation for settlement. What is likely to be the course of action that both the parties will try next? A) mediation B) informal settlement C) arbitration D) litigation E) coercion 56) In a typical ________ procedure, parties select a disinterested and informed party or parties to serve as a referee to determine the merits of the case and make a judgment that both parties agree to honor under the law. A) arbitration B) informal settlement C) conciliation D) litigation E) coercion 57) When formal arbitration organizations receive requests for arbitration, they initially attempt to resolve the issue through A) coercion. B) prosecution. C) direct legal intervention. D) litigation. E) conciliation. 58) A consumer products manufacturing company is trying to solve a dispute with one of its raw material suppliers over a breach of contract. After the failure of the initial attempts to solve the dispute in a friendly informal manner, the companies have approached an international commission to appoint an informed party to act as a referee and make a judgment that both parties will honor. What dispute resolution method is being used by these companies? A) litigation B) arbitration C) mediation D) coercion E) judicial intervention 59) What generally occurs during arbitration? A) Lawsuits are initiated between the conflicting parties. B) The preliminary step of conciliation is often bypassed. C) Arbitral centers demonstrate varying rules and procedures. D) The plaintiff and the defendant each select a person to present their case. E) Sessions are private and confidential.

60) What is usually placed in the arbitration clause and is becoming standard in many international contracts? A) the preferred court or legal body of arbitration B) the place of arbitration and the language used in the arbitration process C) the contract stating that the results of the arbitration process are not binding on both parties D) the judgment of the legal action initiated in the litigation stage E) the copy of the lawsuit filed by the plaintiff 61) Arbitration clauses require agreement wherein the concerned parties agree A) on who is right and who is wrong. B) on the validity of the litigation issues. C) to abide by the awards resulting from the arbitration. D) to not hire a legal counsel to represent them. E) to not name the arbitrators. 62) When all the other methods have failed, what is the final step in an international commercial dispute? A) conciliation B) encouraging one's government to force the other party to comply C) restarting the arbitration process D) litigation E) coercion 63) Ideally, what should be the first step in the settlement of a dispute? A) using the strategy of conciliation B) engaging in arbitration C) coercing the other party D) placating the injured party E) initiating a litigation 64) What poses a major challenge to international marketers while dealing with counterfeiting? A) the ease with which consumers can tell the difference between real and counterfeit products B) the theft of products by pirates during shipping C) government regulations legitimizing counterfeiting D) the collusion between contract manufacturers and illegitimate sellers E) the widespread availability of duplication software 65) What is the most attractive target for pirates because of high development cost and low reproducibility costs? A) apparel B) software C) auto parts D) books E) agricultural produce

66) What commonly counterfeited product has the potential for doing the greatest harm to the consuming public? A) toys B) CDs C) pharmaceuticals D) software E) clothing 67) In which country is the ownership of IP rights established by prior use? A) Japan B) Brazil C) Saudi Arabia D) Jordan E) United States 68) In the United States, ownership of intellectual property rights is established by "prior use versus registration," which implies that to claim the ownership of a trademark, an individual must A) be recognized by the United Nations trademark protection agency. B) pay for the right to own a trademark. C) establish first use of a trademark. D) prove the ownership of a trademark in a court of law. E) register a trademark only in his home country. 69) What international convention was established to recognize and protect intellectual property rights? A) Paris Convention B) Munich Agreement C) Tokyo Convention D) Eurasian Convention E) Kyoto Protocol 70) Which of the following conventions is responsible for the promotion of the protection of intellectual property rights among all the member countries of the UN? A) The Basel Convention B) The Madrid Arrangement C) The Tokyo Agreement D) The Eurasian Convention E) The World Intellectual Property Organization 71) The ________ is a multicountry agreement that has established a regional patent system that allows any nationality to file a single international application for a European patent. A) Madrid Arrangement B) Paris Convention C) TRIPs Agreement D) Basel Convention E) European Patent Convention 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

72) What is the most comprehensive multilateral agreement on intellectual property to date and covers a full range of rights that are embodied in current international agreements? A) World Intellectual Property Organization Charter B) Trade-Related Aspects of Intellectual Property Rights Agreement C) Inter-American Convention Agreement D) The Madrid Arrangement E) Paris Agreement for the Protection of Industrial Property 73) What is an approach mentioned in the text to prevent Chinese consumers from creatively copying foreign intellectual property? A) boycotting all trade activities with China B) placing embargoes on trade with China C) charging what the market will bear D) disengaging local representation in sales E) pursuing dispute resolution at the World Court 74) The Internet has no political or natural boundaries; as a result, A) existing laws are generally sufficient to cover contractual issues and piracy. B) existing cyberlaws incorporate the uniqueness of the Internet successfully. C) companies cannot rely on individual-country laws but must go to international courts. D) the individual-country laws, which may or may not include private protection, are used in the absence of uniform and internationally accepted cyberlaws. E) the regulatory environment is stable and consistent between countries. 75) ________ buy and register descriptive nouns, geographic names, names of ethnic groups and pharmaceutical substances, and other similar descriptors and hold them until they can be sold at an inflated price. A) Patent trolls B) Server farms C) Domain name registries D) Cybersquatters E) Universal resource locators 76) According to Canadian law, what is the standard expected by courts in Canada to determine whether a representation is false or misleading? A) de novo standard B) credulous person standard C) clearly erroneous standard D) informed consumer standard E) discretionary standard

77) Which act developed by the European Union erases many legal and trade differences that have existed for decades between the member nations? A) European Sanctity Act B) European Indemnification Act C) European Unification Act D) Single European Market Act E) Foreign Corrupt Practices Act 78) Which country has enacted the most stringent green marketing laws to regulate the management and recycling of packaging waste? A) South Korea B) China C) Germany D) United States E) India 79) The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a long-established principle of international law called the: A) right of imminent domain. B) legal transfer of power. C) rights of foreign powers and citizens. D) objective theory of jurisdiction. E) McNeil principle of international law. 80) The _________ of the United States makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. A) Taft-Hartley Act B) Informed Consumer Standard C) Foreign Corrupt Practices Act D) Best Practices Act E) International Codes of Law 81) The first objective of ________ laws is to protect American consumers by ensuring that they benefit from products and ideas produced by foreign competitors as well as by domestic competitors. A) incorporation B) intellectual property C) antitrust D) indemnification E) insurance

82) Which of the following U.S. government agencies oversees antitrust enforcement in international commerce? A) Department of State B) Department of Justice C) Department of Commerce D) Department of Defense E) Department of Home Land Security 83) Under the antiboycott law, U.S. companies are forbidden to participate in any unauthorized foreign boycott. Which situation brought about the antiboycott law in the U.S.? A) the boycott of Cuba by the U.S. B) the boycott of South Africa by the world community C) the boycott of Israel by the Arab League D) the boycott of China by the United States E) the boycott of the U.S. by the U.S.S.R. (the wheat embargo) 84) U.S. firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country in which the sale is considered by the U.S. government to affect the A) competitive balance of world trade. B) competitive balance of free competition inside the U.S. C) relationship of the U.S. with the world community. D) overall balance of payments of the United States. E) national security of the United States. 85) The revised set of export regulations published by the Department of Commerce to speed up the process of granting export licenses is the A) Agreement on International Trade and Negotiations. B) Export-Import Manual. C) International Trade Regulations. D) Export Charter. E) Export Administration Regulations. 86) What license is required for products exported from the United States? A) international or bilateral license B) general or a validated license C) single license D) exporter or third-party license E) shipment license or agent license 87) The responsibility of determining if a license is required rests with the A) Department of Commerce of the exporting nation. B) regulatory body of the industry. C) exporter. D) U.S. Customs department. E) importer. 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

88) The exporter is responsible for selecting the ________ that leads to a description in the Commerce Control List (CCL) and indicates the exportability status of the item. A) Entity List Number B) Priority Number C) Export License Number D) Trade Regulations Number E) Export Control Classification Number 89) What list indicates the exportability status of an item based on the ECCN? A) Commerce Control List B) Entity List C) Common List D) Priority Export List E) International Trade List 90) The Export License Application and Information Network (ELAIN) is an electronic service that enables exporters to A) ship their goods to clients whose licenses are approved without conditions. B) check the status of their license and classification applications. C) submit commodity classification requests via the Internet . D) submit license applications via the Internet. E) submit the export and re-export applications and high-performance computer notices via the Internet. 91) What are the four forms of law that comprise the majority of the legal systems in the world? Name one country for each system. 92) Legal disputes can arise in three situations: between governments, between a company and a government, and between two companies. How are each of these handled? 93) Compare and contrast conciliation and arbitration. In what situation would conciliation be most appropriate? In what situation would arbitration be most appropriate? 94) Compare and contrast "prior use" and "registration" ownership of IP rights. Give an example of each. 95) List and describe the major international conventions designed for mutual recognition and protection of intellectual property rights. 96) What are cybersquatters? How do they operate and why are they a problem for businesses? 97) Briefly describe the Canadian legal process to determine whether a representation is false or misleading. 98) Describe the issues companies are facing with respect to green marketing legislation. 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

99) Will leaving the country make an American businessman immune to U.S. laws? Explain your reasoning with specific examples. 100) Compare and contrast the two types of licenses required for export.

International Marketing, 18e (Cateora) Chapter 7 The International Legal Environment: Playing by the Rules 1) The form of law found in the United States and England is classified as civil or code law. Answer: FALSE Explanation: Common law is derived from English law and found in England, the United States, Canada, and other countries once under English influence. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) The form of law found in Germany, France, and Japan is called civil or code law. Answer: TRUE Explanation: Civil or code law, derived from Roman law, is found in Germany, Japan, France, and non-Islamic and non-Marxist countries. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Code law is based on an all-inclusive system of written rules of law. Answer: TRUE Explanation: Code law is based on an all-inclusive system of written rules (codes) of law. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) Steps are being taken in common-law countries to codify commercial law, even though the primary basis of commercial law is common law. Answer: TRUE Explanation: Steps are being taken in common-law countries to codify commercial law even though the primary basis of commercial law is common law, that is, precedents set by court decisions. An example of the new uniformity is the acceptance of the Uniform Commercial Code by most states in the United States. Even though U.S. commercial law has been codified to some extent under the Uniform Commercial Code, the philosophy of interpretation is anchored in common law. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Common law prescribes specific patterns of social and economic behavior for everyone. Answer: FALSE Explanation: Islamic law, not common law, prescribes specific patterns of social and economic behavior for everyone. Islamic law encompasses religious duties and obligations, as well as the secular aspect of law regulating human acts. Islamic law defines a complete system that prescribes specific patterns of social and economic behavior for all individuals. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) Code law prohibits the receipt and payment of interest on loans. Answer: FALSE Explanation: Islamic law, not code law, prohibits the receipt and payment of interest on loans. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) In Marxist–socialist societies, law is strictly subordinate to prevailing economic conditions. Answer: TRUE Explanation: Under the premise that law, according to Marxist–socialist tenets, is strictly subordinate to prevailing economic conditions, such fundamental propositions as private ownership, contracts, due process, and other legal mechanisms have had to be developed. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The World Court can settle disputes between a company and a government. Answer: FALSE Explanation: Legal disputes can arise in three situations: between governments, between a company and a government, and between two companies. The World Court can adjudicate disputes between governments, whereas the other two situations must be handled in the courts of the country of one of the parties involved or through arbitration. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 07-02 The important factors in the jurisdiction of legal disputes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) When dealing with foreign countries, a marketer should refer to the laws of the home country for guidance. Answer: TRUE Explanation: Because there is no "international commercial law," the foreign marketer must look to the legal system of each country involved—the laws of the home country, the laws of the countries within which business is conducted, or both. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 07-02 The important factors in the jurisdiction of legal disputes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) Disputes relating to commercial transactions must be settled in courts and cannot be settled informally. Answer: FALSE Explanation: Most disputes that arise in commercial transactions are settled informally. When resolution is not forthcoming, however, conciliation can be an important first step in settling a dispute. Difficulty: 1 Easy Topic: Country Risk Produced by Legal Systems Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Statements made during conciliation may not be disclosed in subsequent litigation. Answer: TRUE Explanation: Unlike arbitration and litigation, conciliation sessions are private, and all conferences between parties and the mediator are confidential; the statements made by the parties may not be disclosed or used as evidence in any subsequent litigation or arbitration. Difficulty: 2 Medium Topic: Country Risk Produced by Legal Systems Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) If conciliation is not used to settle a difference in an international business dispute or an agreement cannot be reached, the next step is litigation. Answer: FALSE Explanation: If conciliation is not used or an agreement cannot be reached, the next step is arbitration. When all else fails, arbitration rather than litigation is the preferred method for resolving international commercial disputes. Difficulty: 1 Easy Topic: Country Risk Produced by Legal Systems Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) The sole requirement of an arbitration clause is that the parties agree to abide by the awards resulting from the process of arbitration. Answer: FALSE Explanation: Although an arbitration clause in a contract can avert problems, sometimes enforcing arbitration agreements can be difficult. Arbitration clauses require agreement on two counts: (1) The parties agree to arbitrate in the case of a dispute according to the rules and procedures of some arbitration tribunal and (2) they agree to abide by the awards resulting from the arbitration. Difficulty: 1 Easy Topic: Country Risk Produced by Legal Systems Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) One of the deterrents to litigation with respect to disputes in the international business arena is the fear of creating a poor image and damaging public relations. Answer: TRUE Explanation: Fear of creating a poor image and damaging public relations is one of the deterrents to litigation. Difficulty: 1 Easy Topic: Country Risk Produced by Legal Systems Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) A certain level of piracy may be beneficial for some companies as it provides an unplanned product trial. Answer: TRUE Explanation: Recent research implies that for companies like Microsoft, some level of piracy actually can serve the company. It can be seen as a kind of product trial that ultimately builds commitment. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) Legal ownership in one country does not necessarily mean ownership in other countries. Answer: TRUE Explanation: One of the more frequent errors is assuming that because the company has established rights in the United States, they will be protected around the world or that rightful ownership can be established should the need arise. There have been many cases in which companies have legally lost the rights to trademarks and have had to buy back these rights or pay royalties for their use. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) The ownership of intellectual property rights in United States is established by prior use rather than registration. Answer: TRUE Explanation: In the United States, a common-law country, ownership of intellectual property rights is established by prior use—whoever can establish first use is typically considered the rightful owner. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) In many code-law countries, ownership of intellectual property rights is established by registration rather than by prior use. Answer: TRUE Explanation: In many code-law countries ownership is established by registration rather than by prior use—the first to register a trademark or other property right is considered the rightful owner. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) The General Agreement on Tariffs and Trade is the most comprehensive multilateral agreement on intellectual property to date. Answer: FALSE Explanation: The Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement, a major provision of the World Trade Organization, is the most comprehensive multilateral agreement on intellectual property to date. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) In the United States, a patent reverts to public domain if it is not manufactured and sold within a specified period. Answer: FALSE Explanation: Once a trademark, patent, or other intellectual property right is registered, most countries require that these rights be used and properly policed. The United States is one of the few countries in which an individual can hold a patent without the patented entity being manufactured and sold throughout the duration of the patent period. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) Charging what the market will bear is a suggested strategy for IP-rich firms to make money in China. Answer: TRUE Explanation: The authors suggest that an excellent way for IP-rich firms to make money in China currently and in the near future is to use the oldest pricing strategy of all: Charge what the market will bear. Difficulty: 2 Medium Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-05 How to protect against piracy and counterfeiting. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) The Internet is a libel-free zone. Answer: FALSE Explanation: Lawsuits involving libel, defamation, and product liability cause companies to voluntarily restrict their website to selected countries rather than leave themselves open to legal action. The Internet is not a libel-free zone. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-06 The many issues of evolving cyberlaw. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) The shipping companies collect taxes for products that are sold by a company through the Internet to customers outside its home country. Answer: FALSE Explanation: In "brick-and mortar" sales, the retailer collects taxes, but with the Internet site in one country and the customer in another, the issue of tax collection becomes complex. One proposal was to have shipping companies such as FedEx or credit card companies collect— obviously, neither party is receiving this suggestion enthusiastically. Difficulty: 2 Medium Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-06 The many issues of evolving cyberlaw. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) The Informed Consumer Standard is used in the consumer protection courts in Canada and it places the onus of making the right decisions on the buyer who is expected to have substantial knowledge of the industry and its products. Answer: FALSE Explanation: Canadian courts are expected to apply the "credulous person standard," which means that if any reasonable person could possibly misunderstand the representation, the representation is misleading. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) The laws regulating direct selling in China are unusually detailed compared to others around the world. Answer: TRUE Explanation: China has relaxed some of its restrictions on direct marketing that particularly affected companies such as Mary Kay. However, its laws regulating direct selling are unusually detailed compared to others around the world. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) Global concern for the environment includes industrial pollution, hazardous waste disposal, and rampant deforestation, but excludes issues that focus directly on consumer products. Answer: FALSE Explanation: Global concern for the environment extends beyond industrial pollution, hazardous waste disposal, and rampant deforestation to include issues that focus directly on consumer products. Green marketing laws focus on environmentally friendly products and product packaging and its effect on solid waste management. Difficulty: 1 Easy Topic: Environmental Sustainability Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) Antitrust laws were not enforced in the United States during most of the twentieth century. Answer: FALSE Explanation: With the exception of the United States, antitrust laws were either nonexistent or not enforced in most of the world's countries for the better part of the twentieth century. However, the European Union, Japan, and many other countries have begun to actively enforce their antitrust laws, patterned after those in the United States. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) Moving a business outside the political boundaries of the home country exempts the company from the home-country's laws. Answer: FALSE Explanation: Leaving the political boundaries of a home country does not exempt a business from home-country laws. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-08 The different ways U.S. laws can be applied to U.S. companies operating outside the United States. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) One purpose of antitrust enforcement in international commerce is to keep U.S. companies from imposing restrictions on exports by other U.S.-based competitors. Answer: TRUE Explanation: The second purpose of antitrust legislation is to protect American export and investment opportunities against any privately imposed restrictions. The concern is that all U.S.based firms engaged in the export of goods, services, or capital should be allowed to compete on merit and not be shut out by restrictions imposed by bigger or less principled competitors. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 07-08 The different ways U.S. laws can be applied to U.S. companies operating outside the United States. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) Widgets, Inc. is beginning to export its products to Taiwan, but it isn't sure if it needs a license to do so. The responsibility of determining if a license is required rests with the Taiwanese company that is purchasing the products. Answer: FALSE Explanation: The responsibility of determining if a license is required rests with the exporter. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

31) __________ law is derived from English law and is practiced in the U.S.. A) Code B) Common C) Religious D) Civil E) Universal Answer: B Explanation: Common law is derived from English law and found in England, the United States, Canada, and other countries once under English influence. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) Which form of law is primarily found in the United States, England, Canada, and other countries once under English influence? A) code law B) common law C) religious law D) civil law E) universal law Answer: B Explanation: Common law is derived from English law and found in England, the United States, Canada, and other countries once under English influence. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) Code law is also known as ________ law. A) business B) common C) religious D) civil E) universal Answer: D Explanation: Civil or code law is derived from Roman law and found in Germany, Japan, France, and non-Islamic and non-Marxist countries. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) Germany's legal system centers on code law, which is derived from ________ law. A) English B) Economic C) Greek D) Persian E) Roman Answer: E Explanation: Civil or code law is derived from Roman law and found in Germany, Japan, France, and non-Islamic and non-Marxist countries. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) The basis for ________ law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. A) civil B) common C) code D) commercial E) criminal Answer: B Explanation: The basis for common law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. Common law seeks "interpretation through the past decisions of higher courts which interpret the same statutes or apply established and customary principles of law to a similar set of facts." Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) ________ law seeks "interpretation through the past decisions of higher courts which interpret the same statutes or apply established and customary principles of law to a similar set of facts." A) Constitutional B) Family C) Criminal D) Civil E) Common Answer: E Explanation: The basis for common law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. Common law seeks "interpretation through the past decisions of higher courts which interpret the same statutes or apply established and customary principles of law to a similar set of facts." Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) Code law is based upon A) the interpretation through the past decisions of higher courts. B) the established and customary principles of law and their legal precedence. C) an all-inclusive system of written rules of law. D) the interpretation of the Koran. E) the codes of English law that apply in all countries under English influence. Answer: C Explanation: Code law is based on an all-inclusive system of written rules of law. Under code law, the legal system is generally divided into three separate codes: commercial, civil, and criminal. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) Under _______ law, the legal system is generally divided into three separate codes: commercial, civil, and criminal. A) constitutional B) code C) family D) religious E) traditional Answer: B Explanation: Code law is based on an all-inclusive system of written rules of law. Under code law, the legal system is generally divided into three separate codes: commercial, civil, and criminal. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) Laws governing ________ offer the most striking differences between common-law and code-law systems. A) international trade B) social welfare C) homicide D) intellectual property E) domestic industry Answer: D Explanation: Laws governing intellectual property offer the most striking differences between common-law and code-law systems. Under common law, ownership is established by use; under code law, ownership is determined by registration. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) Under common law, the ownership of intellectual property is established by A) title deeds. B) use. C) tradition. D) patent. E) registration. Answer: B Explanation: Under common law, ownership is established by use; under code law, ownership is determined by registration. In some code-law countries, certain agreements may not be enforceable unless properly notarized or registered; in a common-law country, the same agreement may be binding so long as proof of the agreement can be established. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) In code-law countries, the ownership of intellectual property is determined by A) heredity. B) nature of use. C) duration of usage. D) registration. E) indemnification. Answer: D Explanation: Under common law, ownership is established by use; under code law, ownership is determined by registration. In some code-law countries, certain agreements may not be enforceable unless properly notarized or registered; in a common-law country, the same agreement may be binding so long as proof of the agreement can be established. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) ________ is considered complete as a result of catchall provisions found in most of this type of law systems. A) Common law B) Code law C) Islamic law D) Marxist–socialist tenets E) The English legal tradition Answer: B Explanation: Code law is considered complete as a result of catchall provisions found in most code-law systems, whereas common law is recognized as not being all-inclusive. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) Apart from intellectual property laws, an illustration of how fundamental differences in the common and code systems can cause difficulty is in A) conducting civil trials. B) determining laws governing export and import. C) deciding heredity laws. D) determining criminal laws. E) evaluating the performance of a contract. Answer: E Explanation: Apart from intellectual property laws, an illustration of how fundamental differences in the common and code systems can cause difficulty is in the performance of a contract. Under common law in the United States, the impossibility of performance does not necessarily excuse compliance with the provisions of a contract unless compliance is impossible because of an act of God. Difficulty: 2 Medium Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) What is true of code-law systems? A) They represent a legal system that is not all-inclusive. B) They establish ownership of intellectual property by prior use rather than registration. C) They originate from tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. D) They sometimes fail to consider agreements to be enforceable unless properly notarized or registered. E) They fail to consider unforeseeable human acts such as riots as acts of nature. Answer: D Explanation: In some code-law countries, certain agreements may not be enforceable unless properly notarized or registered; in a common-law country, the same agreement may be binding so long as proof of the agreement can be established. Difficulty: 2 Medium Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) The basis for ________ is the interpretation of the Koran. A) common law B) code law C) Islamic law D) Marxist–socialist tenets E) legal tradition Answer: C Explanation: The basis for the Shari'ah (Islamic law) is interpretation of the Koran. It encompasses religious duties and obligations, as well as the secular aspect of law regulating human acts. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) Islamic law is also known as A) Ulema. B) Umrah. C) Zakat. D) Shari'ah. E) Barakah. Answer: D Explanation: The basis for the Shari'ah (Islamic law) is interpretation of the Koran. It encompasses religious duties and obligations, as well as the secular aspect of law regulating human acts. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) The Islamic law prohibits the payment of A) taxes. B) profits. C) interest. D) equity. E) leases. Answer: C Explanation: Among the unique aspects of Islamic law is the prohibition against the payment of interest. The Islamic law of contracts states that any given transaction should be devoid of riba, which is defined as unlawful advantage by way of excess of deferment, that is, interest or usury. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) According to ________, law is strictly subordinate to prevailing economic conditions, such fundamental propositions as private ownership, contracts, due process, and other legal mechanisms. A) common law B) code law C) Islamic law D) Marxist–socialist tenets E) legal tradition Answer: D Explanation: Russia and most of the republics of the former Soviet Union and China have had to build from scratch an entire commercial legal system. Under the premise that law, according to Marxist–socialist tenets, is strictly subordinate to prevailing economic conditions, such fundamental propositions as private ownership, contracts, due process, and other legal mechanisms have had to be developed. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) Because of political changes in the late twentieth century, which country has had to build from scratch an entire commercial legal system? A) France B) Germany C) Taiwan D) Russia E) Saudi Arabia Answer: D Explanation: Russia and most of the republics of the former Soviet Union and China have had to build from scratch an entire commercial legal system. Under the premise that law, according to Marxist–socialist tenets, is strictly subordinate to prevailing economic conditions, such fundamental propositions as private ownership, contracts, due process, and other legal mechanisms have had to be developed. Difficulty: 1 Easy Topic: Civil Law, Common Law, and Theocratic Law Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) If there is a dispute between ________, the World Court can adjudicate. A) governments B) a company and a government C) two companies D) a citizen and a government E) trade associations of two countries Answer: A Explanation: Legal disputes can arise in three situations: between governments, between a company and a government, and between two companies. The World Court can adjudicate disputes between governments, whereas the other two situations must be handled in the courts of the country of one of the parties involved or through arbitration. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-02 The important factors in the jurisdiction of legal disputes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) What method accounts for the majority of resolutions in international commercial transaction disputes? A) criminal suits B) conciliation C) arbitration D) litigation E) coercion Answer: B Explanation: Most disputes that arise in commercial transactions are settled informally. Conciliation (also known as mediation) is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) ________ is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences. A) Litigation B) Prosecution C) Arbitration D) Conciliation E) Coercion Answer: D Explanation: Conciliation (also known as mediation) is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences. The function of the mediator is to carefully listen to each party and to explore, clarify, and discuss the various practical options and possibilities for a solution with the intent that the parties will agree on a solution. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) Mariette's U.S.-based company is having a dispute with a Chinese partner. What method would be especially effective in resolving this dispute? A) arbitration B) conciliation C) coercion D) litigation E) a criminal suit Answer: B Explanation: Conciliation is considered especially effective when resolving disputes with Chinese business partners, because they feel less threatened by conciliation than arbitration. The Chinese believe that when a dispute occurs, informal, friendly negotiation should be used first to solve the problem; if that fails, conciliation should be tried. Difficulty: 2 Medium Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 54) Teel's Tacos, a food company in the United States, is trying to resolve a dispute with a local company in Belize that has been operating under the same name in its country. All attempts made by the U.S. company to settle the issue in a friendly manner have failed, so the owners of the U.S.-based Teel's Tacos have decided to settle the dispute with the local company by appointing a mediator. They also want the sessions to be private because of the fear of creating a poor public image. Which of the following dispute resolution methods is best suited for this situation? A) conciliation B) prosecution C) arbitration D) coercion E) litigation Answer: A Explanation: Conciliation is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences. Unlike arbitration and litigation, conciliation sessions are private, and all conferences between parties and the mediator are confidential; the statements made by the parties may not be disclosed or used as evidence in any subsequent litigation or arbitration. Difficulty: 2 Medium Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

55) Ralph Richards's company has been attempting to solve a problem with a contract default by the Dutch government. He has tried conciliation but the two parties did not find any common ground on which they could begin a fruitful negotiation for settlement. What is likely to be the course of action that both the parties will try next? A) mediation B) informal settlement C) arbitration D) litigation E) coercion Answer: C Explanation: If conciliation is not used or an agreement cannot be reached, the next step is arbitration. When all else fails, arbitration rather than litigation is the preferred method for resolving international commercial disputes. Difficulty: 2 Medium Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 56) In a typical ________ procedure, parties select a disinterested and informed party or parties to serve as a referee to determine the merits of the case and make a judgment that both parties agree to honor under the law. A) arbitration B) informal settlement C) conciliation D) litigation E) coercion Answer: A Explanation: The usual arbitration procedure is for the parties involved to select a disinterested and informed party or parties as referees to determine the merits of the case and make a judgment that both parties agree to honor. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) When formal arbitration organizations receive requests for arbitration, they initially attempt to resolve the issue through A) coercion. B) prosecution. C) direct legal intervention. D) litigation. E) conciliation. Answer: E Explanation: Arbitration under the rules of the International Chamber of Commerce (ICC) affords an excellent example of how most formal arbitration organizations operate. When an initial request for arbitration is received, the chamber first attempts conciliation between the disputants. If this fails, the process of arbitration is started. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) A consumer products manufacturing company is trying to solve a dispute with one of its raw material suppliers over a breach of contract. After the failure of the initial attempts to solve the dispute in a friendly informal manner, the companies have approached an international commission to appoint an informed party to act as a referee and make a judgment that both parties will honor. What dispute resolution method is being used by these companies? A) litigation B) arbitration C) mediation D) coercion E) judicial intervention Answer: B Explanation: The usual arbitration procedure is for the parties involved to select a disinterested and informed party or parties as referees to determine the merits of the case and make a judgment that both parties agree to honor. Although informal arbitration is workable, most arbitration is conducted under the auspices of one of the more formal domestic and international arbitration groups organized specifically to facilitate the resolution of commercial disputes. Difficulty: 2 Medium Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

59) What generally occurs during arbitration? A) Lawsuits are initiated between the conflicting parties. B) The preliminary step of conciliation is often bypassed. C) Arbitral centers demonstrate varying rules and procedures. D) The plaintiff and the defendant each select a person to present their case. E) Sessions are private and confidential. Answer: D Explanation: The plaintiff and the defendant select one person each from among acceptable arbitrators to defend their case, and the ICC Court of Arbitration appoints a third member, generally chosen from a list of distinguished lawyers, jurists, and professors. Difficulty: 2 Medium Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) What is usually placed in the arbitration clause and is becoming standard in many international contracts? A) the preferred court or legal body of arbitration B) the place of arbitration and the language used in the arbitration process C) the contract stating that the results of the arbitration process are not binding on both parties D) the judgment of the legal action initiated in the litigation stage E) the copy of the lawsuit filed by the plaintiff Answer: B Explanation: Contracts and other legal documents should include clauses specifying the use of arbitration to settle disputes. While preparing contracts and other legal documents, including the number of arbitrators, the place of arbitration (city and/or country), and the language of the arbitration in the clause is useful. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) Arbitration clauses require agreement wherein the concerned parties agree A) on who is right and who is wrong. B) on the validity of the litigation issues. C) to abide by the awards resulting from the arbitration. D) to not hire a legal counsel to represent them. E) to not name the arbitrators. Answer: C Explanation: Arbitration clauses require agreement on two counts: (1) The parties agree to arbitrate in the case of a dispute according to the rules and procedures of some arbitration tribunal and (2) they agree to abide by the awards resulting from the arbitration. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) When all the other methods have failed, what is the final step in an international commercial dispute? A) conciliation B) encouraging one's government to force the other party to comply C) restarting the arbitration process D) litigation E) coercion Answer: D Explanation: When all else fails, the final step to solve a dispute is litigation. It is the process in which a dispute between parties is contested in a formal judicial setting; commonly instigated by a lawsuit asserting one party's version of the facts. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

63) Ideally, what should be the first step in the settlement of a dispute? A) using the strategy of conciliation B) engaging in arbitration C) coercing the other party D) placating the injured party E) initiating a litigation Answer: D Explanation: One authority suggests that the settlement of every dispute should follow four steps: first, try to placate the injured party; if this does not work, conciliate, arbitrate, and, finally, litigate. The final step is typically taken only when all other methods fail. Difficulty: 1 Easy Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) What poses a major challenge to international marketers while dealing with counterfeiting? A) the ease with which consumers can tell the difference between real and counterfeit products B) the theft of products by pirates during shipping C) government regulations legitimizing counterfeiting D) the collusion between contract manufacturers and illegitimate sellers E) the widespread availability of duplication software Answer: D Explanation: The collusion between the contract manufacturer and illegitimate sellers poses a great difficulty for law enforcement authorities trying to tackle the problem of counterfeiting and piracy. Counterfeiting and piracy of intellectual property constitute outright theft. Difficulty: 2 Medium Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) What is the most attractive target for pirates because of high development cost and low reproducibility costs? A) apparel B) software C) auto parts D) books E) agricultural produce Answer: B Explanation: Software, music, and movies are especially attractive targets for pirates because they are costly to develop but cheap to reproduce and distribute over the Internet. Difficulty: 2 Medium Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) What commonly counterfeited product has the potential for doing the greatest harm to the consuming public? A) toys B) CDs C) pharmaceuticals D) software E) clothing Answer: C Explanation: Although counterfeit CDs, toys, and similar products cost companies billions of dollars in lost revenue and have the potential of damaging the product's brand image, the counterfeiting of pharmaceuticals can do serious physical harm. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) In which country is the ownership of IP rights established by prior use? A) Japan B) Brazil C) Saudi Arabia D) Jordan E) United States Answer: E Explanation: In the United States, a common-law country, ownership of IP rights is established by prior use—whoever can establish first use is typically considered the rightful owner. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) In the United States, ownership of intellectual property rights is established by "prior use versus registration," which implies that to claim the ownership of a trademark, an individual must A) be recognized by the United Nations trademark protection agency. B) pay for the right to own a trademark. C) establish first use of a trademark. D) prove the ownership of a trademark in a court of law. E) register a trademark only in his home country. Answer: C Explanation: In the United States, a common-law country, ownership of IP rights is established by prior use—whoever can establish first use is typically considered the rightful owner. In many code-law countries, however, ownership is established by registration rather than by prior use— the first to register a trademark or other property right is considered the rightful owner. Difficulty: 2 Medium Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) What international convention was established to recognize and protect intellectual property rights? A) Paris Convention B) Munich Agreement C) Tokyo Convention D) Eurasian Convention E) Kyoto Protocol Answer: A Explanation: One of the three major international conventions is The Paris Convention for the Protection of Industrial Property, commonly referred to as the Paris Convention, which includes the United States and 100 other countries. In addition, the World Intellectual Property Organization (WIPO) of the United Nations is responsible for the promotion of the protection of intellectual property and for the administration of the various multilateral treaties through cooperation among its member states. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) Which of the following conventions is responsible for the promotion of the protection of intellectual property rights among all the member countries of the UN? A) The Basel Convention B) The Madrid Arrangement C) The Tokyo Agreement D) The Eurasian Convention E) The World Intellectual Property Organization Answer: E Explanation: The World Intellectual Property Organization (WIPO) of the United Nations is responsible for the promotion of the protection of intellectual property and for the administration of the various multilateral treaties through cooperation among its member states. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) The ________ is a multicountry agreement that has established a regional patent system that allows any nationality to file a single international application for a European patent. A) Madrid Arrangement B) Paris Convention C) TRIPs Agreement D) Basel Convention E) European Patent Convention Answer: E Explanation: Two multicountry patent arrangements have streamlined patent procedures in Europe. The European Patent Convention (EPC) established a regional patent system allowing any nationality to file a single international application for a European patent. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) What is the most comprehensive multilateral agreement on intellectual property to date and covers a full range of rights that are embodied in current international agreements? A) World Intellectual Property Organization Charter B) Trade-Related Aspects of Intellectual Property Rights Agreement C) Inter-American Convention Agreement D) The Madrid Arrangement E) Paris Agreement for the Protection of Industrial Property Answer: B Explanation: The Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement, a major provision of the World Trade Organization, is the most comprehensive multilateral agreement on intellectual property to date. TRIPs sets standards of protection for a full range of intellectual property rights that are embodied in current international agreements. Difficulty: 1 Easy Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) What is an approach mentioned in the text to prevent Chinese consumers from creatively copying foreign intellectual property? A) boycotting all trade activities with China B) placing embargoes on trade with China C) charging what the market will bear D) disengaging local representation in sales E) pursuing dispute resolution at the World Court Answer: C Explanation: The author suggests an excellent way for IP-rich firms to make money in China currently and in the near future, using the oldest pricing strategy of all: Charge what the market will bear. Even with the reluctant help of the Chinese authorities in enforcing the WTO/TRIPs agreement, Chinese consumers will continue the creative copying of foreign intellectual property until they are charged what they perceive as "reasonable" prices. Difficulty: 2 Medium Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-05 How to protect against piracy and counterfeiting. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) The Internet has no political or natural boundaries; as a result, A) existing laws are generally sufficient to cover contractual issues and piracy. B) existing cyberlaws incorporate the uniqueness of the Internet successfully. C) companies cannot rely on individual-country laws but must go to international courts. D) the individual-country laws, which may or may not include private protection, are used in the absence of uniform and internationally accepted cyberlaws. E) the regulatory environment is stable and consistent between countries. Answer: D Explanation: The European Union, the United States, and many other countries are drafting legislation to address the myriad legal questions not clearly addressed by current law. Until uniform international laws apply worldwide, companies will have to rely on individual-country laws, which may or may not provide protection. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-06 The many issues of evolving cyberlaw. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) ________ buy and register descriptive nouns, geographic names, names of ethnic groups and pharmaceutical substances, and other similar descriptors and hold them until they can be sold at an inflated price. A) Patent trolls B) Server farms C) Domain name registries D) Cybersquatters E) Universal resource locators Answer: D Explanation: Cybersquatters buy and register descriptive nouns, geographic names, names of ethnic groups and pharmaceutical substances, and other similar descriptors and hold them until they can be sold at an inflated price. If a cybersquatter has registered a generic domain name that a company wants, the only recourse is to buy it. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-06 The many issues of evolving cyberlaw. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) According to Canadian law, what is the standard expected by courts in Canada to determine whether a representation is false or misleading? A) de novo standard B) credulous person standard C) clearly erroneous standard D) informed consumer standard E) discretionary standard Answer: B Explanation: Courts have been directed by Canadian law to take into account, in determining whether a representation is false or misleading, the "general impression" conveyed by the representation as well as its literal meaning. The courts are expected to apply the "credulous person standard," which means that if any reasonable person could possibly misunderstand the representation, the representation is misleading. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

77) Which act developed by the European Union erases many legal and trade differences that have existed for decades between the member nations? A) European Sanctity Act B) European Indemnification Act C) European Unification Act D) Single European Market Act E) Foreign Corrupt Practices Act Answer: D Explanation: In a recent decision, the European Court ruled that a French cosmetics company could sell its wares by mail in Germany and advertise them at a markdown from their original prices, a direct contradiction of German law. As the Single European Market Act is implemented, many of the legal and trade differences that have existed for decades will vanish. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) Which country has enacted the most stringent green marketing laws to regulate the management and recycling of packaging waste? A) South Korea B) China C) Germany D) United States E) India Answer: C Explanation: Germany has passed the most stringent green marketing laws that regulate the management and recycling of packaging waste. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a long-established principle of international law called the: A) right of imminent domain. B) legal transfer of power. C) rights of foreign powers and citizens. D) objective theory of jurisdiction. E) McNeil principle of international law. Answer: D Explanation: The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a long-established principle of international law, the "objective theory of jurisdiction." Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-08 The different ways U.S. laws can be applied to U.S. companies operating outside the United States. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) The _________ of the United States makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. A) Taft-Hartley Act B) Informed Consumer Standard C) Foreign Corrupt Practices Act D) Best Practices Act E) International Codes of Law Answer: C Explanation: The Foreign Corrupt Practices Act (FCPA) makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. Stiff penalties can be assessed against company officials, directors, employees, or agents found guilty of paying a bribe or of knowingly participating in or authorizing the payment of a bribe. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-08 The different ways U.S. laws can be applied to U.S. companies operating outside the United States. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) The first objective of ________ laws is to protect American consumers by ensuring that they benefit from products and ideas produced by foreign competitors as well as by domestic competitors. A) incorporation B) intellectual property C) antitrust D) indemnification E) insurance Answer: C Explanation: Antitrust enforcement has two purposes in international commerce. The first is to protect American consumers by ensuring that they benefit from products and ideas produced by foreign competitors as well as by domestic competitors. The second purpose of antitrust legislation is to protect American export and investment opportunities against any privately imposed restrictions. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 07-08 The different ways U.S. laws can be applied to U.S. companies operating outside the United States. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) Which of the following U.S. government agencies oversees antitrust enforcement in international commerce? A) Department of State B) Department of Justice C) Department of Commerce D) Department of Defense E) Department of Home Land Security Answer: B Explanation: The Antitrust Division of the Department of Justice is committed to controlling foreign transactions at home or abroad that have a substantial and foreseeable effect on U.S. commerce. When such business practices occur, there is no question in the Antitrust Division that U.S. laws apply. Difficulty: 1 Easy Topic: Laws Affecting International Business Learning Objective: 07-08 The different ways U.S. laws can be applied to U.S. companies operating outside the United States. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) Under the antiboycott law, U.S. companies are forbidden to participate in any unauthorized foreign boycott. Which situation brought about the antiboycott law in the U.S.? A) the boycott of Cuba by the U.S. B) the boycott of South Africa by the world community C) the boycott of Israel by the Arab League D) the boycott of China by the United States E) the boycott of the U.S. by the U.S.S.R. (the wheat embargo) Answer: C Explanation: Under the antiboycott law, U.S. companies are forbidden to participate in any unauthorized foreign boycott; furthermore, they are required to report any request to cooperate with a boycott. The antiboycott law was a response to the Arab League boycott of Israeli businesses. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 07-08 The different ways U.S. laws can be applied to U.S. companies operating outside the United States. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) U.S. firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country in which the sale is considered by the U.S. government to affect the A) competitive balance of world trade. B) competitive balance of free competition inside the U.S. C) relationship of the U.S. with the world community. D) overall balance of payments of the United States. E) national security of the United States. Answer: E Explanation: American firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell products to a country in which the sale is considered by the U.S. government to affect national security. Furthermore, responsibility extends to the final destination of the product, regardless of the number of intermediaries that may be involved in the transfer of goods. Difficulty: 2 Medium Topic: Laws Affecting International Business Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) The revised set of export regulations published by the Department of Commerce to speed up the process of granting export licenses is the A) Agreement on International Trade and Negotiations. B) Export-Import Manual. C) International Trade Regulations. D) Export Charter. E) Export Administration Regulations. Answer: E Explanation: In an effort to alleviate many of the problems and confusions of exporting and to expedite the process, the Department of Commerce has published a revised set of export regulations known as the Export Administration Regulations (EAR). They are intended to speed up the process of granting export licenses by removing a large number of items from specific export license control and concentrating licensing on a specific list of items, most of which pertain to national security, nuclear nonproliferation, terrorism, or chemical and biological weapons. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) What license is required for products exported from the United States? A) international or bilateral license B) general or a validated license C) single license D) exporter or third-party license E) shipment license or agent license Answer: B Explanation: Products exported from the United States require a general or a validated export license, depending on the product, where it is going, the end use, and the final user. The general license permits exportation of certain products that are not subject to EAR control with nothing more than a declaration of the type of product, its value, and its destination. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) The responsibility of determining if a license is required rests with the A) Department of Commerce of the exporting nation. B) regulatory body of the industry. C) exporter. D) U.S. Customs department. E) importer. Answer: C Explanation: The responsibility of determining if a license is required rests with the exporter. The exporter is responsible for selecting the proper classification number, known as the Export Control Classification Number (ECCN), for the item to be exported. Difficulty: 1 Easy Topic: Overview of Importing and Exporting Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) The exporter is responsible for selecting the ________ that leads to a description in the Commerce Control List (CCL) and indicates the exportability status of the item. A) Entity List Number B) Priority Number C) Export License Number D) Trade Regulations Number E) Export Control Classification Number Answer: E Explanation: The exporter is responsible for selecting the proper classification number, known as the Export Control Classification Number (ECCN), for the item to be exported. The ECCN leads to a description in the Commerce Control List (CCL), which indicates the exportability status of the item. Difficulty: 1 Easy Topic: Overview of Importing and Exporting Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) What list indicates the exportability status of an item based on the ECCN? A) Commerce Control List B) Entity List C) Common List D) Priority Export List E) International Trade List Answer: A Explanation: The exporter is responsible for selecting the proper classification number, known as the Export Control Classification Number (ECCN), for the item to be exported. The ECCN leads to a description in the Commerce Control List (CCL), which indicates the exportability status of the item. Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) The Export License Application and Information Network (ELAIN) is an electronic service that enables exporters to A) ship their goods to clients whose licenses are approved without conditions. B) check the status of their license and classification applications. C) submit commodity classification requests via the Internet . D) submit license applications via the Internet. E) submit the export and re-export applications and high-performance computer notices via the Internet. Answer: D Explanation: ELAIN (Export License Application and Information Network) enables exporters that have authorization to submit license applications via the Internet for all commodities except supercomputers to all free-world destinations. When approved, licensing decisions are conveyed back to the exporters via the Internet Difficulty: 2 Medium Topic: Overview of Importing and Exporting Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) What are the four forms of law that comprise the majority of the legal systems in the world? Name one country for each system. Answer: Four heritages form the bases for the majority of the legal systems of the world: (1) common law, derived from English law and found in England, the United States, Canada, and other countries once under English influence; (2) civil or code law, derived from Roman law and found in Germany, Japan, France, and non-Islamic and non-Marxist countries; (3) Islamic law, derived from the interpretation of the Koran and found in Pakistan, Iran, Saudi Arabia, and other Islamic states; and (4) a commercial legal system in the Marxist–socialist economies of Russia and the republics of the former Soviet Union, Eastern Europe, China, and other Marxist–socialist states whose legal system centered on the economic, political, and social policies of the state. Difficulty: 3 Hard Topic: Laws Affecting International Business Learning Objective: 07-01 The four heritages of today's legal systems. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Legal disputes can arise in three situations: between governments, between a company and a government, and between two companies. How are each of these handled? Answer: The World Court can adjudicate disputes between governments, whereas the other two situations must be handled in the courts of the country of one of the parties involved or through arbitration. Unless a commercial dispute involves a national issue between nation states, the International Court of Justice or any similar world court does not handle it. Because there is no "international commercial law," the foreign marketer must look to the legal system of each country involved—the laws of the home country, the laws of the countries within which business is conducted, or both. When international commercial disputes must be settled under the laws of one of the countries concerned, the paramount question in a dispute is: Which law governs? Jurisdiction is generally determined in one of three ways: (1) on the basis of jurisdictional clauses included in contracts, (2) on the basis of where a contract was entered into, or (3) on the basis of where the provisions of the contract were performed. Difficulty: 3 Hard Topic: Laws Affecting International Business Learning Objective: 07-02 The important factors in the jurisdiction of legal disputes. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) Compare and contrast conciliation and arbitration. In what situation would conciliation be most appropriate? In what situation would arbitration be most appropriate? Answer: Conciliation (also known as mediation) is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences. The function of the mediator is to carefully listen to each party and to explore, clarify, and discuss the various practical options and possibilities for a solution with the intent that the parties will agree on a solution. Unlike arbitration and litigation, conciliation sessions are private, and all conferences between parties and the mediator are confidential; the statements made by the parties may not be disclosed or used as evidence in any subsequent litigation or arbitration. The track record for the conciliation process is excellent, with a majority of disputes reaching settlement and leading to the resumption of business between the disputants. If conciliation is not used or an agreement cannot be reached, the next step is arbitration. When all else fails, arbitration rather than litigation is the preferred method for resolving international commercial disputes. The usual arbitration procedure is for the parties involved to select a disinterested and informed party or parties as referees to determine the merits of the case and make a judgment that both parties agree to honor. Although informal arbitration is workable, most arbitration is conducted under the auspices of one of the more formal domestic and international arbitration groups organized specifically to facilitate the resolution of commercial disputes. These groups have formal rules for the process and experienced arbitrators to assist. In most countries, decisions reached in formal arbitration are enforceable under the law. Difficulty: 3 Hard Topic: Resolving International Business Disputes Learning Objective: 07-03 The various methods of dispute resolution. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

94) Compare and contrast "prior use" and "registration" ownership of IP rights. Give an example of each. Answer: In the United States, a common-law country, ownership of IP rights is established by prior use—whoever can establish first use is typically considered the rightful owner. In many code-law countries, however, ownership is established by registration rather than by prior use— the first to register a trademark or other property right is considered the rightful owner. For example, a trademark in Jordan belongs to whoever registers it first in Jordan. Thus you can find "McDonald's" restaurants, "Microsoft" software, and "Safeway" groceries all legally belonging to Jordanians. After a lengthy court battle that went to the Spanish Supreme Court, Nike lost its right to use the "Nike" brand name for sports apparel in Spain. Cidesport of Spain had been using Nike for sports apparel since 1932 and sued to block Nike (U.S.) sportswear sales. Because Cidesport does not sell shoes under the Nike label, Nike (U.S.) will be able to continue selling its brand of sports shoes in Spain. A company that believes it can always establish ownership in another country by proving it used the trademark or brand name first is wrong and risks the loss of these assets. Difficulty: 3 Hard Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) List and describe the major international conventions designed for mutual recognition and protection of intellectual property rights. Answer: Many countries participate in international conventions designed for mutual recognition and protection of intellectual property rights. There are three major international conventions: The Paris Convention for the Protection of Industrial Property, commonly referred to as the Paris Convention, includes the United States and 100 other countries. The Inter-American Convention includes most of the Latin American nations and the United States. The Madrid Arrangement, which established the Bureau for International Registration of Trademarks, includes 26 European countries. In addition, the World Intellectual Property Organization (WIPO) of the United Nations is responsible for the promotion of the protection of intellectual property and for the administration of the various multilateral treaties through cooperation among its member states. Difficulty: 3 Hard Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-04 The unique problems of protecting intellectual property rights internationally. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) What are cybersquatters? How do they operate and why are they a problem for businesses? Answer: Cybersquatters (CSQs) buy and register descriptive nouns, geographic names, names of ethnic groups and pharmaceutical substances, and other similar descriptors and hold them until they can be sold at an inflated price. For example, a cybersquatter sold "www.themortgage.com" for $500,000; the record price paid so far is $7.5 million for the domain name "www.business.com." If a cybersquatter has registered a generic domain name that a company wants, the only recourse is to buy it. Difficulty: 3 Hard Topic: Property Rights and Intellectual Property Rights Learning Objective: 07-06 The many issues of evolving cyberlaw. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) Briefly describe the Canadian legal process to determine whether a representation is false or misleading. Answer: Courts have been directed by Canadian law to take into account, in determining whether a representation is false or misleading, the "general impression" conveyed by the representation as well as its literal meaning. The courts are expected to apply the "credulous person standard," which means that if any reasonable person could possibly misunderstand the representation, the representation is misleading. In essence, puffery, an acceptable practice in the United States, could be interpreted in Canada as false and misleading advertising. Thus a statement such as "the strongest drive shaft in Canada" would be judged misleading unless the advertiser had absolute evidence that the drive shaft was stronger than any other drive shaft for sale in Canada. Difficulty: 3 Hard Topic: Laws Affecting International Business Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) Describe the issues companies are facing with respect to green marketing legislation. Answer: Multinational corporations face a growing variety of legislation designed to address environmental issues. Global concern for the environment extends beyond industrial pollution, hazardous waste disposal, and rampant deforestation to include issues that focus directly on consumer products. Green marketing laws focus on environmentally friendly products and product packaging and its effect on solid waste management. Germany has passed the most stringent green marketing laws that regulate the management and recycling of packaging waste. Many European countries also have devised schemes to identify products that comply with certain criteria that make them more environmentally friendly than similar products. Products that meet these criteria are awarded an "ecolabel" that the manufacturer can display on packaging to signal to customers that it is an environmentally friendly product. The EU is becoming more aggressive in issuing new directives and in harmonizing ecolabeling and other environmental laws across all member states. Difficulty: 3 Hard Topic: Laws Affecting International Business Learning Objective: 07-07 The legal differences between countries and how those differences can affect international marketing plans. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) Will leaving the country make an American businessman immune to U.S. laws? Explain your reasoning with specific examples. Answer: Leaving the political boundaries of a home country does not exempt a business from home-country laws. Regardless of the nation where business is done, a U.S. citizen is subject to certain laws of the United States. What is illegal for an American business at home can also be illegal by U.S. law in foreign jurisdictions for the firm, its subsidiaries, and licensees of U.S. technology. Laws that prohibit taking a bribe, trading with the enemy, participating in a commercial venture that negatively affects the U.S. economy, participating in an unauthorized boycott such as the Arab boycott, or any other activity deemed to be against the best interests of the United States apply to U.S. businesses and their subsidiaries and licensees regardless of where they operate. Thus, at any given time a U.S. citizen in a foreign country must look not only at the laws of the host country but at home law as well. The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a long-established principle of international law, the "objective theory of jurisdiction." This concept holds that even if an act is committed outside the territorial jurisdiction of U.S. courts, those courts can nevertheless have jurisdiction if the act produces effects within the home country. The only possible exception may be when the violation is the result of enforced compliance with local law. Difficulty: 3 Hard Topic: Laws Affecting International Business Learning Objective: 07-08 The different ways U.S. laws can be applied to U.S. companies operating outside the United States. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 100) Compare and contrast the two types of licenses required for export. Answer: The first step when complying with export licensing regulations is to determine the appropriate license for the product. Products exported from the United States require a general or a validated export license, depending on the product, where it is going, the end use, and the final user. The general license permits exportation of certain products that are not subject to EAR (Export Administration Regulations) control with nothing more than a declaration of the type of product, its value, and its destination. The validated license, issued only on formal applications, is a specific document authorizing exportation within specific limitations designated under the EAR. Difficulty: 3 Hard Topic: Overview of Importing and Exporting Learning Objective: 07-09 The steps necessary to move goods across country borders. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

International Marketing, 18e (Cateora) Chapter 8 Developing a Global Vision through Marketing Research 1) In the context of problem definition in international marketing research, the environments within which the research tools are applied are often different in foreign markets. 2) The marketing research process should begin with the determination of the sources of information to fulfill the research objectives. 3) Data that has already been collected by some other agency are known as secondary data. 4) Commercial sources, trade associations, management groups, and state and local governments are good sources of primary data for a researcher. 5) One of the reliability problems faced by a marketing researcher who seeks to do secondary research in a foreign market is that official statistics are sometimes too optimistic. 6) Less developed countries are particularly prone to being both overly optimistic and unreliable in reporting relevant economic data about their countries. 7) Checking the consistency of one set of secondary data with other valid data is not an effective way of judging validity. 8) Data collected specifically for a particular research project at hand is known as secondary data. 9) In quantitative research, if questions are asked, they are almost always open-ended or indepth. 10) The most often used form of qualitative questioning is the survey questionnaire that contains questions with a set of choices from which respondents select their responses. 11) Quantitative research is helpful in revealing the impact of sociocultural factors on behavior patterns and in developing research hypotheses that can be tested in subsequent studies. 12) If secondary data sources don't answer a researcher's questions adequately, primary data should be collected. 13) When respondents are able to recognize the usefulness and value of a product or concept, they will be better able to express their attitudes and opinions. 14) Most problems in collecting primary data in international marketing research stem from the excessive cost of primary research in these markets. 15) Completion rates on questionnaires can be hampered by a culture that places a higher value on privacy. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

16) Sampling cannot be used if there is a lack of social and economic information. 17) In international marketing, the greatest problem in sampling stems from the lack of adequate demographic data and available lists from which to draw meaningful samples. 18) The most universal survey research problem in foreign countries is fear of government reprisal. 19) The parallel method of translation is typically inaccurate because of commonly used idioms in both languages involved in the translation. 20) A review of the different approaches to multicountry research suggests that the ideal approach is to have local researchers in each country, with close coordination and networking between the client company and the local research companies. 21) When Sophia created her questionnaire on Paris fashions, she created it in English, then it went through a successive process of translation into French and retranslation into English, each time by a different translator. This process continues to be repeated until an English version can be translated into French by a different translator, into the same English. This process is known as decentering. 22) Businesspeople in Japan tend to respond to mail surveys at a higher rate than businesspeople in the U.S. 23) Observational research on the Internet typically excludes monitoring of chat rooms, blogs, and personal websites to assess consumers' opinions about products and services for privacy reasons. 24) Easy accessibility of volumes of secondary data is the biggest advantage the Internet now provides to international marketing researchers. 25) Two methods of forecasting demand are particularly suitable for international marketers: probabilistic forecasting and reference-class forecasting. 26) As a marketing researcher for his company, Rashid was tasked with determining the market size and growth rate of the company's new target market in a foreign country. He polled the sales manager for a similar company in the country, gathered information from government sources, and talked to his domestic manager. Rashid was using triangulation to help forecast demand. 27) It is helpful for a foreign market researcher to have a skeptical attitude in handling both primary and secondary data. 28) Centralization of the marketing research function in the parent country ensures that the field personnel and resident managers in the foreign country have more intimate knowledge of the subtleties of the market. 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

29) The ideal approach to multicountry marketing research is to have local researchers in each country, with close coordination and networking between the client company and the local research companies. 30) In Japan, the public, face-saving truth is referred to as honne. 31) ________ is traditionally defined as the systematic gathering, recording, and analyzing of data to provide information useful to marketing decision making. A) Marketing reach B) Market skimming C) Marketing research D) Marketing exposure E) Target marketing 32) Unisys Corporation's international marketing research calls for collecting and assessing various types of information. Which of the following types of information is Unisys Corporation most likely to be interested in if it gathers information related to profitability for the division's products, inflation, business cycle trends, and the like? A) economic and demographic data B) cultural, sociological, and political climate C) overview of market conditions D) summary of the technological environment E) competitive situation 33) Which type of information is Unisys Corporation most likely to be interested in if it gathers information related to ecology, safety, and leisure time and their potential impacts on the division's business? A) economic and demographic data B) cultural, sociological, and political climate C) overview of market conditions D) summary of the technological environment E) competitive situation 34) Which type of information is Unisys Corporation most likely to be interested in if it conducts a general noneconomic review of conditions affecting the division's business, such as ecology and leisure time? A) monetary and demographic data B) cultural, sociological, and political climate C) overview of market conditions D) summary of the technological environment E) competitive situation

35) What should an organization do once it has determined the sources of information to fulfill the marketing research objectives? A) Gather the relevant data from secondary or primary sources, or both. B) Analyze, interpret, and summarize the information gathered. C) Consider the costs and benefits of the research effort. D) Effectively communicate the results to decision makers. E) Conduct surveys and in-depth interviews with the respondents. 36) Bessie has decided to pursue a marketing research effort to acquire information before her company makes a strategic relocation move to the West Coast. What would be the first step that Bessie (and the marketing researchers) should take as she embarks on the research effort? A) Define the research problem and establish research objectives. B) Analyze, interpret, and summarize the results. C) Determine the sources of information to fulfill the research objectives. D) Consider the costs and benefits of the research effort. E) Gather relevant data from secondary or primary sources, or both. 37) What is the first step of the marketing research process? A) determining the sources of information to fulfill the research objectives B) analyzing, interpreting, and summarizing the results C) defining the research problem and establishing research objectives D) considering the costs and benefits of the research effort E) gathering the relevant data from secondary or primary sources, or both 38) Hal and his team have undertaken a marketing research study to help his company expand in the eastern European region. Which marketing research step is most likely to be the last step in Hal's research effort? A) defining the research problem and establishing research objectives B) analyzing, interpreting, and summarizing the results C) effectively communicating the results to the decision makers D) considering the costs and benefits of the research effort E) gathering the relevant data from secondary or primary sources, or both 39) Natalie is reading government reports on the economy of Morocco so she can make a report to her manager about the viability of opening a branch of her company there. Which step in the marketing research process is Natalie conducting? A) defining the research problem and establish research objectives B) communicating the results to decision makers C) analyzing, interpreting, and summarizing the results D) considering the costs and benefits of the research effort E) gathering the relevant data from secondary or primary sources, or both

40) Once a researcher has defined the research problem and established research objectives, the researcher should A) effectively communicate the problem and objectives to decision makers. B) analyze, interpret, and summarize the results. C) determine the sources of information to fulfill the research objectives. D) assess the suitability of available statistical methods for analyzing the data. E) evaluate the cost and benefits of the research effort. 41) Marco has decided to use information collected by other researchers in his upcoming research project on cultural trends. This is an example of using a ________ data source. A) first-hand B) secondary C) primary D) direct E) personal 42) In the context of sources of data, commercial sources, trade associations, management groups, and state and local governments are examples of ________ data. A) first-hand B) secondary C) primary D) personal E) direct 43) Which statement is true about the reliability of secondary data while conducting market research? A) The data in less developed countries are particularly prone to being less positive in nature when reported by these countries. B) Reliability of data remains unaffected by the prevailing tax structures in countries. C) Official statistics are sometimes too optimistic, reflecting national pride rather than practical reality. D) Economic data about less developed countries are more reliable when reported by these countries. E) Willful errors in the reporting of marketing data are predominantly absent in most industrialized countries. 44) Next to the United States, which country has the best quantity and quality of marketingrelated data available? A) Brazil B) Australia C) China D) Japan E) Kenya

45) Maureen leads the international marketing department of Mayfone, a smartphone manufacturer. Mayfone has recently decided to expand its presence in Ecuador. As part of the marketing research effort, Maureen has decided to use data on competitors provided by independent market research agencies located in Ecuador. In the context of assimilating secondary data, which of the following problems is Maureen most likely to face? A) defining the research problem B) communicating the results C) comparability of data D) storage of data E) willingness to respond 46) What is most likely a problem associated with the use of secondary data? A) defining the research problem B) ability to communicate opinions C) reliability of data D) storage of data E) willingness to respond 47) What question should a marketing researcher ask when trying to establish the reliability of secondary data sources in the international arena? A) How much do the data cost? B) What language is used in the parent country? C) How long did it take to complete the survey in question? D) Who collected the data? E) What type of survey was used during the data collection process? 48) ________ data refers to the data that are collected specifically for the particular research project at hand when research questions are still unanswered after seeking all reasonable secondary data sources. A) Derived B) Primary C) Referential D) Syndicated E) Cohort 49) What is one of the two basic types into which marketing research methods can be grouped? A) analytical research B) qualitative research C) descriptive research D) deductive research E) exploratory research

50) In ________, usually a large number of respondents are asked to reply, either verbally or in writing, to structured questions using a specific response format or to select a response from a set of choices. A) quantitative research B) a focus group interview C) descriptive research D) an in-depth interview E) explanatory research 51) Before launching its latest line of environment-friendly and child-friendly wooden toys, a toy manufacturer gave samples of these toys to a large and culturally diverse set of families. It then conducted a survey in which the parents were asked to rate the toys on a step-wise scale of "not satisfied" to "extremely pleased." This research is most likely an example of ________ research. A) quantitative B) longitudinal C) descriptive D) qualitative E) explanatory 52) Before launching its latest line of health drinks, a beverage manufacturer provided free samples of the health drinks to families. It then conducted a survey with mostly open-ended questions in which the participants were asked about their first impressions about the drinks. This is an example of ________ research. A) qualitative B) analytical C) quantitative D) laboratory E) statistical 53) Which statement is true about qualitative research? A) It provides a marketer with responses that can be presented with precise estimations. B) It includes recording consumers' first impressions about products. C) It usually involves asking respondents to select a response from a set of choices. D) Data from qualitative research can be easily summarized in percentages, averages, or other statistics. E) It is generally associated with survey research that involves yes/no questions. 54) Qualitative research studies A) responses that can be presented with precise estimations. B) the dynamic interplay of peoples' feelings and ideas. C) respondents who are asked to select a response from a set of choices. D) data that can be summarized in percentages, averages, or other statistics. E) survey research that involves yes/no questions.

55) Which statement is true about quantitative research? A) It includes direct observation of consumers in choice or product usage situations. B) It studies the dynamic interplay between peoples' feelings and their resulting actions. C) It is generally associated with survey research that involves yes/no questions. D) It includes recording consumers' first impressions about products. E) It almost always uses open-ended or in-depth and unstructured responses. 56) Sarah asks the respondents in a research study a series of open-ended questions about the respondents' feelings and thoughts on the subject of child labor. Sarah is conducting ________ research. A) statistical B) qualitative C) tertiary D) quantitative E) numerical 57) In the international arena, the greatest problem in sampling stems from the A) lack of adequate demographic data from which meaningful samples can be drawn. B) lack of expertise in designing sampling layouts for a nondomestic market. C) higher probability of foreign government intervention in the sampling process. D) inability of international market researchers to speak foreign languages. E) difficulty in determining sample size suitable for the relevant foreign market. 58) In many rural areas, there are no street maps, some streets are not identified, and some houses are not numbered. Which of the following aspects of market research is this situation most likely to directly affect? A) product enhancement analysis B) inventory analysis C) the optimization process D) the sampling process E) the decentralization process 59) The most universal survey research problem in foreign countries is the ________ barrier. A) technological B) legal C) cultural D) literacy E) language

60) A toy manufacturer conducted a survey to estimate the market demand for its specialized wood-based toys in a foreign country. For the survey, it interviewed all the families in four rural towns of that country but it did not have sufficient information to make the distinction between those with children and those without children. The market demand forecast based on this survey failed to match the actual demand for the toys. Which of the following is the most likely reason for this failure? A) difficulty in defining the research objective B) unwillingness of the respondents to reply to survey questions C) difficulty in translating the responses D) inappropriate sample selection due to lack of adequate demographic data E) lack of appropriate methods for analyzing the data 61) Back translations may not always ensure an accurate translation because of commonly used idioms in both languages. Which type of translation is used to overcome this problem? A) serial translation B) centering C) linear translation D) complimentary translation E) parallel translation 62) Marketers use three different techniques to ferret out translation errors in marketing research questionnaires ahead of time. What is one of these techniques? A) simultaneous translation B) serial translation C) back translation D) linear translation E) recentering 63) In ________ translation, more than two translators are used for the back translation; the results are compared, differences discussed, and the most appropriate translation selected. A) parallel B) recentering C) linear D) random E) front 64) Decentering is a hybrid of ________ translation. A) parallel B) simultaneous C) linear D) random E) back

65) Lola, along with many of her friends, grew up in a very poor country and didn't attend school. A consumer products company wants to do marketing research in her country and plans to send out a survey. What problem is most likely to hamper the research using this tool? A) taboos B) product fit C) lack of interest D) translation E) illiteracy 66) An American marketing research company wanted to use a survey to determine if it was feasible to build shopping centers in several countries. Since all of the countries spoke a different language, the company used two translators for each country—one to translate it into the native language, and one to translate it back into English. The original document was revised repeatedly until the translated version matched it in meaning. This describes the process of A) decentering. B) bi-translation. C) parallel translation. D) centering. E) reciprocal translation. 67) In ________ translation, a questionnaire is translated from one language to another, and then a second party translates it again into the original, and the two original language versions are compared. A) serial B) parallel C) back D) simultaneous E) complimentary 68) Cho is having difficulty with her company's advertising in Japan. As a representative of Cherry Motors, she intends to use American campaigns in the Japanese market. She is surprised to learn that the slogan "Body by Bass" (the company that makes external structures for Cherry Motors) loosely translated in Japanese means "Corpse by Bass." Which of the following problems did Cho experience with her company's advertising in this scenario? A) improper syntax B) improper colloquialisms or slang C) improper grammar D) improper local language E) improper foreign language

69) In the ________ method, successive translation and retranslation of a questionnaire takes place, each time by a different translator, and the version that is finally used and its translation have equally comprehensive and equivalent terminologies in both languages. A) serial translation B) triangulation C) linear translation D) netnography E) decentering 70) Alexandria's research focuses on consumers in Brazil, Russia, Canada, and Nigeria. In this case, Alexandria is most likely engaged in ________ research. A) geographical B) anthropological C) psychological D) sociological E) multicultural 71) Systematic monitoring of chat rooms, blogs, and personal websites to assess consumers' opinions about products and services is known as A) tomography. B) serigraphy. C) vitreography. D) netnography. E) lithography. 72) By systematically monitoring chat rooms, blogs, and personal websites to assess consumers' opinions about the new line of health drinks that his company has launched, Carlos is engaging in the practice of A) tomography. B) serigraphy. C) vitreography. D) netnography. E) lithography. 73) What is a severe limitation of using the Internet for primary research? A) The data on the Internet are usually outdated. B) The educational qualifications of the respondents of surveys on the Internet cannot be identified accurately. C) Secondary data cannot be accessed on the Internet for conducting research. D) A sample universe composed solely of Internet respondents represents a potential bias. E) Using the Internet for primary research is the most expensive way of conducting primary research.

74) According to the text, today the real power of the Internet for international marketing research is the A) reduction in the time required for completing primary research. B) reduction in the cost of conducting primary research. C) increase in the reliability of the surveys conducted using the Internet. D) ability to overcome legal barriers to conducting primary research. E) ability to easily access volumes of secondary data. 75) Two methods of forecasting demand are particularly suitable for international marketers. What is one of these methods? A) probabilistic forecasting B) expert opinion C) simulation D) extrapolation E) scenario building 76) G&P's marketing research department needed to get figures on market size and growth rates in a company they were targeting for growth. They opted to use government officials and outside consultants for the information. This is a method known as A) probabilistic forecasting. B) expert opinion. C) simulation. D) extrapolation. E) scenario building. 77) What is a method of demand forecasting that begins by establishing a relationship between the item to be estimated and a measurable variable? A) probabilistic forecasting B) analogy C) simulation D) extrapolation E) scenario building 78) The key in using expert opinion to help forecast demand is ________; that is, comparing estimates produced by different sources. A) indemnification B) simulation C) morphing D) modeling E) triangulation

79) The ________ method for estimating demand assumes that demand for a product develops in much the same way in all countries, as comparable economic development occurs in each country. A) reference class forecasting B) analogy C) morphing D) scenario building E) triangulation 80) A toy manufacturer has excellent sales figures for its toys in country A, but inadequate figures in the neighboring country B. In country A, per capita consumption is known to increase at a predictable ratio as per capita gross domestic product (GDP) increases. If per capita GDP is known for country B, per capita demand for the toys can be estimated using the relationships established in country A. Which of the following methods of forecasting does this example illustrate? A) probabilistic forecasting B) reference class forecasting C) expert opinion D) analogy E) linear regression 81) To deal with the problems in analyzing and interpreting research information in an international market, a marketing researcher must possess three talents. What is one of these talents? A) the ability to work within assigned budget B) creative talent for adapting research methods C) proven talent to use and apply advanced statistics D) superior logical ability and thorough knowledge of the language of the home country E) the ability to extrapolate home-country data 82) What is a disadvantage of decentralized research management? A) The control hardly rests closer to the market. B) Various international laws restrict decentralized research. C) Field personnel and resident managers lack intimate knowledge of the subtleties of the market. D) There is unwarranted dominance of large-market studies in decisions about global standardization. E) Decentralized research has higher probability of translational errors. 83) One disadvantage of decentralized research management is possible ineffective communication with A) field personnel. B) home-office executives. C) customers. D) local agencies. E) resident managers. 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

84) In Japanese corporate culture, which action is most likely to constitute a typical significant impediment to averting and responding to a crisis? A) Employees like to work on their own rather than in a group. B) Negotiations are avoided at any cost. C) Decisions are generally taken by lower level employees who directly deal with the problem. D) Employees who are lower in the hierarchy find it hard to question their superiors. E) The process of decision making is extremely complex and time consuming. 85) What is true about the Japanese corporate culture? A) Employees like to work on their own rather than in a group. B) Negotiations are avoided at any cost. C) Decisions are generally taken by lower level employees who directly deal with the problem. D) The process of decision making is extremely complex and time consuming. E) The focus on consensus and group makes it hard to challenge what has been decided. 86) What country has a hierarchical, relationship-based corporate culture? A) Germany B) France C) South Korea D) Switzerland E) Australia 87) The public, face-saving truth is referred to as ________ in Japan. A) kanban B) tatemae C) keiretsu D) zaibatsu E) honne 88) In Japan, ________ refers to the factual truth, irrespective of the damage it might do to the social relationships within and between Japanese companies. A) kanban B) honne C) keiretsu D) zaibatsu E) tatemae 89) The text describes four kinds of company—agency—customer relationships that might be used to bridge the cultural barrier that is present in most international marketing research. Which is deemed to be best suited for managing the cultural barrier across the chain of communication? A) company—agency—customers B) company—agency—local agency—customers C) company—foreign agency—customers D) company—foreign agency—Internet—customers E) company—Internet—customers 14 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

90) The text describes four kinds of company—agency—customer relationships that might be used to bridge the cultural barrier that is present in most international marketing research. In which model do cultural and organizational barriers cross simultaneously, thus maximizing chances for miscommunication? A) company—agency—customers B) company—agency—local agency—customers C) company—foreign agency—local agency—customers D) company—foreign agency—Internet—customers E) company—Internet—customers 91) International marketers often need to collect certain types of information not normally collected by domestic marketing researchers. Unisys Corporation gives some guidance about the kind of information that organizations need to collect in the international environment during planning. List and briefly discuss each of the five types of information suggested by the Unisys Corporation model. 92) List the six steps in the research process. 93) With references to international marketing research, discuss four problems related to the availability and use of secondary data. 94) Discuss the key features of quantitative research, and contrast it with qualitative research.. 95) Discuss four potential problems associated with gathering primary data in the international arena. 96) Compare and contrast back translation and parallel translation. 97) Explain at least four uses of the Internet in international marketing research. 98) Define the expert opinion method of demand forecasting, including the challenges of using it. 99) Define the analogy method of demand forecasting, and give an example of how it could be used. 100) What are the various advantages and disadvantages of the decentralization of the international marketing research function?

International Marketing, 18e (Cateora) Chapter 8 Developing a Global Vision through Marketing Research 1) In the context of problem definition in international marketing research, the environments within which the research tools are applied are often different in foreign markets. Answer: TRUE Explanation: An unfamiliar environment tends to cloud problem definition. Researchers either fail to anticipate the influence of the local culture on the problem or fail to identify the selfreference criterion and therefore treat the problem definition as if it were in the researcher's home environment. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) The marketing research process should begin with the determination of the sources of information to fulfill the research objectives. Answer: FALSE Explanation: The marketing research process should begin by defining the research problem and establishing research objectives. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Data that has already been collected by some other agency are known as secondary data. Answer: TRUE Explanation: Secondary data is collected by an independent agency or individual other than the firm conducting research. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) Commercial sources, trade associations, management groups, and state and local governments are good sources of primary data for a researcher. Answer: FALSE Explanation: Commercial sources, trade associations, management groups, and state and local governments are secondary data sources of detailed U.S. market information. Secondary data is collected by an independent agency or individual other than the firm conducting research. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) One of the reliability problems faced by a marketing researcher who seeks to do secondary research in a foreign market is that official statistics are sometimes too optimistic. Answer: TRUE Explanation: In the case of secondary research, one of the problems associated with such a data source is that official statistics are sometimes too optimistic, reflecting national pride rather than practical reality, while tax structures and fear of the tax collector often adversely affect data. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) Less developed countries are particularly prone to being both overly optimistic and unreliable in reporting relevant economic data about their countries. Answer: TRUE Explanation: Although not unique to them, less developed countries are particularly prone to being both overly optimistic and unreliable in reporting relevant economic data about their countries. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) Checking the consistency of one set of secondary data with other valid data is not an effective way of judging validity. Answer: FALSE Explanation: Checking the consistency of one set of secondary data with other data of known validity is an effective and often-used way of judging validity. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-03 Sources of secondary data. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) Data collected specifically for a particular research project at hand is known as secondary data. Answer: FALSE Explanation: The data collected specifically for a particular research project at hand is known as primary data. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) In quantitative research, if questions are asked, they are almost always open-ended or indepth. Answer: FALSE Explanation: In quantitative research, usually a large number of respondents are asked to reply either verbally or in writing to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

10) The most often used form of qualitative questioning is the survey questionnaire that contains questions with a set of choices from which respondents select their responses. Answer: FALSE Explanation: The most often used form of qualitative questioning is the focus group interview. Qualitative research seeks to interpret what the people in the sample are like—their outlooks, their feelings, the dynamic interplay of their feelings and ideas, their attitudes and opinions, and their resulting actions. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Quantitative research is helpful in revealing the impact of sociocultural factors on behavior patterns and in developing research hypotheses that can be tested in subsequent studies. Answer: FALSE Explanation: Qualitative research is helpful in revealing the impact of sociocultural factors on behavior patterns and in developing research hypotheses that can be tested in subsequent studies designed to quantify the concepts and relevant relationships uncovered in qualitative data collection. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) If secondary data sources don't answer a researcher's questions adequately, primary data should be collected. Answer: TRUE Explanation: If, after seeking all reasonable secondary data sources, research questions are still not adequately answered, a market researcher must collect primary data—that is, data collected specifically for the particular research project at hand. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) When respondents are able to recognize the usefulness and value of a product or concept, they will be better able to express their attitudes and opinions. Answer: TRUE Explanation: The ability to express attitudes and opinions about a product or concept depends on a respondent's ability to recognize the usefulness and value of such a product or concept. It is difficult for a person to formulate needs, attitudes, and opinions about goods whose use may not be understood, that are not in common use within the community, or that have never been available. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 14) Most problems in collecting primary data in international marketing research stem from the excessive cost of primary research in these markets. Answer: FALSE Explanation: Most problems in collecting primary data in international marketing research stem from cultural differences among countries and range from the inability or unwillingness of respondents to communicate their opinions to inadequacies in questionnaire translation. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 15) Completion rates on questionnaires can be hampered by a culture that places a higher value on privacy. Answer: TRUE Explanation: The incentives for completion of questionnaires will also vary across cultures— some that may work in the United States will not in other countries, particularly in those that place a higher value on privacy. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

16) Sampling cannot be used if there is a lack of social and economic information. Answer: FALSE Explanation: The adequacy of sampling techniques is affected by a lack of detailed social and economic information. But a lack of detailed information does not prevent the use of sampling; it simply makes it more difficult. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) In international marketing, the greatest problem in sampling stems from the lack of adequate demographic data and available lists from which to draw meaningful samples. Answer: TRUE Explanation: In international marketing, the greatest problem in sampling stems from the lack of adequate demographic data and available lists from which to draw meaningful samples. If current, reliable lists are not available, sampling becomes more complex and generally less reliable. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) The most universal survey research problem in foreign countries is fear of government reprisal. Answer: FALSE Explanation: The most universal survey research problem in foreign countries is the language barrier. Differences in idiom and the difficulty of exact translation create problems in eliciting the specific information desired and in interpreting the respondents' answers. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

19) The parallel method of translation is typically inaccurate because of commonly used idioms in both languages involved in the translation. Answer: FALSE Explanation: Back translations may not always ensure an accurate translation because of commonly used idioms in both languages. Parallel translation is used to overcome this problem. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 20) A review of the different approaches to multicountry research suggests that the ideal approach is to have local researchers in each country, with close coordination and networking between the client company and the local research companies. Answer: TRUE Explanation: Networking among companies, even competing ones, through strategic alliances can be important in the research and development effort. This cooperation is important at all stages of the research project, from research design to data collection to final analysis. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

21) When Sophia created her questionnaire on Paris fashions, she created it in English, then it went through a successive process of translation into French and retranslation into English, each time by a different translator. This process continues to be repeated until an English version can be translated into French by a different translator, into the same English. This process is known as decentering. Answer: TRUE Explanation: Decentering is a hybrid of back translation. It is a successive process of translation and retranslation of a questionnaire, each time by a different translator. The process continues to be repeated until an English version can be translated into French and back translated, by a different translator, into the same English. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Communication Accessibility: Keyboard Navigation 22) Businesspeople in Japan tend to respond to mail surveys at a higher rate than businesspeople in the U.S. Answer: FALSE Explanation: Japanese businesspeople as compared to their American counterparts tend not to respond to mail surveys. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

23) Observational research on the Internet typically excludes monitoring of chat rooms, blogs, and personal websites to assess consumers' opinions about products and services for privacy reasons. Answer: FALSE Explanation: Observational research on the Internet, also known as netnography, involves systematic monitoring of chat rooms, blogs, and personal websites to assess consumers' opinions about products and services. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 24) Easy accessibility of volumes of secondary data is the biggest advantage the Internet now provides to international marketing researchers. Answer: TRUE Explanation: Today the real power of the Internet for international marketing research is the ability to easily access volumes of secondary data. These data have been available in print form for years, but now they are much easier to access and, in many cases, are more current. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 25) Two methods of forecasting demand are particularly suitable for international marketers: probabilistic forecasting and reference-class forecasting. Answer: FALSE Explanation: Given the greater uncertainties and data limitations associated with foreign markets, two methods of forecasting demand are particularly suitable for international marketers: expert opinion and analogy. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

26) As a marketing researcher for his company, Rashid was tasked with determining the market size and growth rate of the company's new target market in a foreign country. He polled the sales manager for a similar company in the country, gathered information from government sources, and talked to his domestic manager. Rashid was using triangulation to help forecast demand. Answer: TRUE Explanation: The key in using expert opinion to help forecast demand is triangulation, that is, comparing estimates produced by different sources. Triangulation is a term borrowed from naval charting meaning using at least three differing measures of the same concept to verify the accuracy of any one method. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 27) It is helpful for a foreign market researcher to have a skeptical attitude in handling both primary and secondary data. Answer: TRUE Explanation: The foreign market researcher must possess three talents to generate meaningful marketing information. One of those is a skeptical attitude in handling both primary and secondary data. The other two are a high degree of cultural understanding and creative talent. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) Centralization of the marketing research function in the parent country ensures that the field personnel and resident managers in the foreign country have more intimate knowledge of the subtleties of the market. Answer: FALSE Explanation: The advantage to decentralization, not centralization, of the marketing research function is that control rests in hands closer to the market. Field personnel, resident managers, and customers generally have more intimate knowledge of the subtleties of the market and an appreciation of the diversity that characterizes most foreign markets. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) The ideal approach to multicountry marketing research is to have local researchers in each country, with close coordination and networking between the client company and the local research companies. Answer: TRUE Explanation: A comprehensive review of the different approaches to multicountry research suggests that the ideal approach is to have local researchers in each country, with close coordination and networking between the client company and the local research companies. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) In Japan, the public, face-saving truth is referred to as honne. Answer: FALSE Explanation: Tatemae is the public, face-saving truth, whereas honne is the factual truth, irrespective of the damage it might do to the all-important social relationships within and between Japanese companies. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-06 Using international marketing research. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

31) ________ is traditionally defined as the systematic gathering, recording, and analyzing of data to provide information useful to marketing decision making. A) Marketing reach B) Market skimming C) Marketing research D) Marketing exposure E) Target marketing Answer: C Explanation: Marketing research is traditionally defined as the systematic gathering, recording, and analyzing of data to provide information useful to marketing decision making. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) Unisys Corporation's international marketing research calls for collecting and assessing various types of information. Which of the following types of information is Unisys Corporation most likely to be interested in if it gathers information related to profitability for the division's products, inflation, business cycle trends, and the like? A) economic and demographic data B) cultural, sociological, and political climate C) overview of market conditions D) summary of the technological environment E) competitive situation Answer: A Explanation: Companies are most likely to gather information related to profitability for the division's products, inflation, business cycle trends, and the like, when they are interested in economic and demographic information related to a country. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) Which type of information is Unisys Corporation most likely to be interested in if it gathers information related to ecology, safety, and leisure time and their potential impacts on the division's business? A) economic and demographic data B) cultural, sociological, and political climate C) overview of market conditions D) summary of the technological environment E) competitive situation Answer: B Explanation: Companies are most likely to gather information related to ecology, safety, and leisure time and their potential impacts on the division's business when they are interested in the cultural, sociological, and political climate. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) Which type of information is Unisys Corporation most likely to be interested in if it conducts a general noneconomic review of conditions affecting the division's business, such as ecology and leisure time? A) monetary and demographic data B) cultural, sociological, and political climate C) overview of market conditions D) summary of the technological environment E) competitive situation Answer: B Explanation: Companies are most likely to conduct a general noneconomic review of conditions affecting the division's business when they are interested in the cultural, sociological, and political climate. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) What should an organization do once it has determined the sources of information to fulfill the marketing research objectives? A) Gather the relevant data from secondary or primary sources, or both. B) Analyze, interpret, and summarize the information gathered. C) Consider the costs and benefits of the research effort. D) Effectively communicate the results to decision makers. E) Conduct surveys and in-depth interviews with the respondents. Answer: C Explanation: After an organization has determined the sources of information to fulfill the research objectives, it should consider the costs and benefits of the research effort. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) Bessie has decided to pursue a marketing research effort to acquire information before her company makes a strategic relocation move to the West Coast. What would be the first step that Bessie (and the marketing researchers) should take as she embarks on the research effort? A) Define the research problem and establish research objectives. B) Analyze, interpret, and summarize the results. C) Determine the sources of information to fulfill the research objectives. D) Consider the costs and benefits of the research effort. E) Gather relevant data from secondary or primary sources, or both. Answer: A Explanation: In this case, while embarking on her research effort, Bessie should first define the research problem and establish research objectives. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

37) What is the first step of the marketing research process? A) determining the sources of information to fulfill the research objectives B) analyzing, interpreting, and summarizing the results C) defining the research problem and establishing research objectives D) considering the costs and benefits of the research effort E) gathering the relevant data from secondary or primary sources, or both Answer: C Explanation: The first step of the market research process is to define the research problem and establish research objectives. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) Hal and his team have undertaken a marketing research study to help his company expand in the eastern European region. Which marketing research step is most likely to be the last step in Hal's research effort? A) defining the research problem and establishing research objectives B) analyzing, interpreting, and summarizing the results C) effectively communicating the results to the decision makers D) considering the costs and benefits of the research effort E) gathering the relevant data from secondary or primary sources, or both Answer: C Explanation: Hal and his team are likely to communicate the results of the research study to the decision makers as the last step in the marketing research process. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

39) Natalie is reading government reports on the economy of Morocco so she can make a report to her manager about the viability of opening a branch of her company there. Which step in the marketing research process is Natalie conducting? A) defining the research problem and establish research objectives B) communicating the results to decision makers C) analyzing, interpreting, and summarizing the results D) considering the costs and benefits of the research effort E) gathering the relevant data from secondary or primary sources, or both Answer: E Explanation: Natalie is in the third step in the marketing research process: gather the relevant data from secondary or primary sources, or both. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) Once a researcher has defined the research problem and established research objectives, the researcher should A) effectively communicate the problem and objectives to decision makers. B) analyze, interpret, and summarize the results. C) determine the sources of information to fulfill the research objectives. D) assess the suitability of available statistical methods for analyzing the data. E) evaluate the cost and benefits of the research effort. Answer: C Explanation: Once the problem is adequately defined and research objectives have been established, a researcher must determine the availability of the information needed. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) Marco has decided to use information collected by other researchers in his upcoming research project on cultural trends. This is an example of using a ________ data source. A) first-hand B) secondary C) primary D) direct E) personal Answer: B Explanation: Secondary data sources are those that have already been collected by others. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) In the context of sources of data, commercial sources, trade associations, management groups, and state and local governments are examples of ________ data. A) first-hand B) secondary C) primary D) personal E) direct Answer: B Explanation: Commercial sources, trade associations, management groups, and state and local governments are additional secondary data sources for a researcher. Secondary data has been collected by an independent agency or individual other than the firm conducting research. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) Which statement is true about the reliability of secondary data while conducting market research? A) The data in less developed countries are particularly prone to being less positive in nature when reported by these countries. B) Reliability of data remains unaffected by the prevailing tax structures in countries. C) Official statistics are sometimes too optimistic, reflecting national pride rather than practical reality. D) Economic data about less developed countries are more reliable when reported by these countries. E) Willful errors in the reporting of marketing data are predominantly absent in most industrialized countries. Answer: C Explanation: Available data may not have the level of reliability necessary for confident decision making for many reasons. Official statistics are sometimes too optimistic, reflecting national pride rather than practical reality, while tax structures and fear of the tax collector often adversely affect data. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) Next to the United States, which country has the best quantity and quality of marketingrelated data available? A) Brazil B) Australia C) China D) Japan E) Kenya Answer: D Explanation: While the quantity and quality of marketing-related data available in the United States is unmatched in other countries, things are improving. The data available on and in Japan is a close second, and several European countries do a good job of collecting and reporting data. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) Maureen leads the international marketing department of Mayfone, a smartphone manufacturer. Mayfone has recently decided to expand its presence in Ecuador. As part of the marketing research effort, Maureen has decided to use data on competitors provided by independent market research agencies located in Ecuador. In the context of assimilating secondary data, which of the following problems is Maureen most likely to face? A) defining the research problem B) communicating the results C) comparability of data D) storage of data E) willingness to respond Answer: C Explanation: In this case, Maureen would most likely face the problem of comparability of data. The problems associated with the use of secondary data include its availability, reliability, and comparability. Comparability of data can even be a problem when the best commercial research firms collect data across countries, and managers are well advised to query their vendors about this problem. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 46) What is most likely a problem associated with the use of secondary data? A) defining the research problem B) ability to communicate opinions C) reliability of data D) storage of data E) willingness to respond Answer: C Explanation: The problems associated with the use of secondary data include its availability, reliability, and comparability. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) What question should a marketing researcher ask when trying to establish the reliability of secondary data sources in the international arena? A) How much do the data cost? B) What language is used in the parent country? C) How long did it take to complete the survey in question? D) Who collected the data? E) What type of survey was used during the data collection process? Answer: D Explanation: To effectively judge the reliability of secondary data sources, following questions should be asked: Who collected the data? For what purposes were the data collected? How (by what methodology) were the data collected? Are the data internally consistent and logical in light of known data sources or market factors? Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-03 Sources of secondary data. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) ________ data refers to the data that are collected specifically for the particular research project at hand when research questions are still unanswered after seeking all reasonable secondary data sources. A) Derived B) Primary C) Referential D) Syndicated E) Cohort Answer: B Explanation: If, after seeking all reasonable secondary data sources, research questions are still not adequately answered, the market researcher must collect primary data—that is, data collected specifically for the particular research project at hand. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) What is one of the two basic types into which marketing research methods can be grouped? A) analytical research B) qualitative research C) descriptive research D) deductive research E) exploratory research Answer: B Explanation: Marketing research methods can be grouped into two basic types: quantitative and qualitative research. In both methods, the marketer is interested in gaining knowledge about the market. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) In ________, usually a large number of respondents are asked to reply, either verbally or in writing, to structured questions using a specific response format or to select a response from a set of choices. A) quantitative research B) a focus group interview C) descriptive research D) an in-depth interview E) explanatory research Answer: A Explanation: In quantitative research, usually a large number of respondents are asked to reply, either verbally or in writing, to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices. The structured responses received in a survey can be summarized in percentages, averages, or other statistics. Difficulty: 1 Easy Topic: Options for Conducting Survey-Based Research Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) Before launching its latest line of environment-friendly and child-friendly wooden toys, a toy manufacturer gave samples of these toys to a large and culturally diverse set of families. It then conducted a survey in which the parents were asked to rate the toys on a step-wise scale of "not satisfied" to "extremely pleased." This research is most likely an example of ________ research. A) quantitative B) longitudinal C) descriptive D) qualitative E) explanatory Answer: A Explanation: In this case, the type of research used is quantitative. In quantitative research, usually a large number of respondents are asked to reply, either verbally or in writing, to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices. Difficulty: 2 Medium Topic: Options for Conducting Survey-Based Research Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 52) Before launching its latest line of health drinks, a beverage manufacturer provided free samples of the health drinks to families. It then conducted a survey with mostly open-ended questions in which the participants were asked about their first impressions about the drinks. This is an example of ________ research. A) qualitative B) analytical C) quantitative D) laboratory E) statistical Answer: A Explanation: In this case, the researchers conducted qualitative research. In qualitative research, if questions are asked, they are almost always open-ended or in-depth, and unstructured responses that reflect the person's thoughts and feelings on the subject are sought. Difficulty: 2 Medium Topic: Options for Conducting Survey-Based Research Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

53) Which statement is true about qualitative research? A) It provides a marketer with responses that can be presented with precise estimations. B) It includes recording consumers' first impressions about products. C) It usually involves asking respondents to select a response from a set of choices. D) Data from qualitative research can be easily summarized in percentages, averages, or other statistics. E) It is generally associated with survey research that involves yes/no questions. Answer: B Explanation: In qualitative research, if questions are asked, they are almost always open-ended or in-depth, and unstructured responses that reflect the person's thoughts and feelings on the subject are sought. Consumers' first impressions about products may be useful. Difficulty: 2 Medium Topic: Options for Conducting Survey-Based Research Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) Qualitative research studies A) responses that can be presented with precise estimations. B) the dynamic interplay of peoples' feelings and ideas. C) respondents who are asked to select a response from a set of choices. D) data that can be summarized in percentages, averages, or other statistics. E) survey research that involves yes/no questions. Answer: B Explanation: Qualitative research seeks to interpret what the people in the sample are like— their outlooks, their feelings, the dynamic interplay of their feelings and ideas, their attitudes and opinions, and their resulting actions. Difficulty: 2 Medium Topic: Options for Conducting Survey-Based Research Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) Which statement is true about quantitative research? A) It includes direct observation of consumers in choice or product usage situations. B) It studies the dynamic interplay between peoples' feelings and their resulting actions. C) It is generally associated with survey research that involves yes/no questions. D) It includes recording consumers' first impressions about products. E) It almost always uses open-ended or in-depth and unstructured responses. Answer: C Explanation: In quantitative research, usually a large number of respondents are asked to reply, either verbally or in writing, to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices. Difficulty: 2 Medium Topic: Options for Conducting Survey-Based Research Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) Sarah asks the respondents in a research study a series of open-ended questions about the respondents' feelings and thoughts on the subject of child labor. Sarah is conducting ________ research. A) statistical B) qualitative C) tertiary D) quantitative E) numerical Answer: B Explanation: In this case, Sarah is conducting qualitative research. In qualitative research, if questions are asked, they are almost always open-ended or in-depth, and unstructured responses that reflect a person's thoughts and feelings on the subject are sought. Difficulty: 2 Medium Topic: Options for Conducting Survey-Based Research Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

57) In the international arena, the greatest problem in sampling stems from the A) lack of adequate demographic data from which meaningful samples can be drawn. B) lack of expertise in designing sampling layouts for a nondomestic market. C) higher probability of foreign government intervention in the sampling process. D) inability of international market researchers to speak foreign languages. E) difficulty in determining sample size suitable for the relevant foreign market. Answer: A Explanation: In the international arena, the greatest problem in sampling stems from the lack of adequate demographic data and available lists from which to draw meaningful samples. If current, reliable lists are not available, sampling becomes more complex and generally less reliable. Difficulty: 2 Medium Topic: Options for Conducting Survey-Based Research Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) In many rural areas, there are no street maps, some streets are not identified, and some houses are not numbered. Which of the following aspects of market research is this situation most likely to directly affect? A) product enhancement analysis B) inventory analysis C) the optimization process D) the sampling process E) the decentralization process Answer: D Explanation: The greatest problem in sampling stems from the lack of adequate demographic data and available lists from which to draw meaningful samples. If current, reliable lists are not available, sampling becomes more complex and generally less reliable. The researcher has to estimate characteristics and population parameters, sometimes with little basic data on which to build an accurate estimate. Difficulty: 2 Medium Topic: Options for Conducting Survey-Based Research Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) The most universal survey research problem in foreign countries is the ________ barrier. A) technological B) legal C) cultural D) literacy E) language Answer: E Explanation: The most universal survey research problem in foreign countries is the language barrier. Differences in idiom and the difficulty of exact translation create problems in eliciting the specific information desired and in interpreting the respondents' answers. Difficulty: 1 Easy Topic: Options for Conducting Survey-Based Research Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 60) A toy manufacturer conducted a survey to estimate the market demand for its specialized wood-based toys in a foreign country. For the survey, it interviewed all the families in four rural towns of that country but it did not have sufficient information to make the distinction between those with children and those without children. The market demand forecast based on this survey failed to match the actual demand for the toys. Which of the following is the most likely reason for this failure? A) difficulty in defining the research objective B) unwillingness of the respondents to reply to survey questions C) difficulty in translating the responses D) inappropriate sample selection due to lack of adequate demographic data E) lack of appropriate methods for analyzing the data Answer: D Explanation: The actual demand for the toys did not match the forecast made on the basis of the survey due to inappropriate sample selection. The greatest problem in sampling stems from the lack of adequate demographic data and available lists from which to draw meaningful samples. The adequacy of sampling techniques is also affected by a lack of detailed social and economic information. Difficulty: 3 Hard Topic: Options for Conducting Survey-Based Research Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

61) Back translations may not always ensure an accurate translation because of commonly used idioms in both languages. Which type of translation is used to overcome this problem? A) serial translation B) centering C) linear translation D) complimentary translation E) parallel translation Answer: E Explanation: Parallel translation overcomes the problems faced in back translation. In this process, more than two translators are used for the back translation; the results are compared, differences discussed, and the most appropriate translation selected. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 62) Marketers use three different techniques to ferret out translation errors in marketing research questionnaires ahead of time. What is one of these techniques? A) simultaneous translation B) serial translation C) back translation D) linear translation E) recentering Answer: C Explanation: Marketers use three different techniques, back translation, parallel translation, and decentering, to help ferret out translation errors ahead of time. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

63) In ________ translation, more than two translators are used for the back translation; the results are compared, differences discussed, and the most appropriate translation selected. A) parallel B) recentering C) linear D) random E) front Answer: A Explanation: Parallel translation overcomes the problems faced in back translation. In this process, more than two translators are used for the back translation; the results are compared, differences discussed, and the most appropriate translation selected. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 64) Decentering is a hybrid of ________ translation. A) parallel B) simultaneous C) linear D) random E) back Answer: E Explanation: Decentering is a hybrid of back translation. It is a successive process of translation and retranslation of a questionnaire, each time by a different translator. In this process, the wording of the original instrument undergoes a change, and the version that is finally used and its translation have equally comprehensive and equivalent terminologies in both languages. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

65) Lola, along with many of her friends, grew up in a very poor country and didn't attend school. A consumer products company wants to do marketing research in her country and plans to send out a survey. What problem is most likely to hamper the research using this tool? A) taboos B) product fit C) lack of interest D) translation E) illiteracy Answer: E Explanation: In some less developed countries with low literacy rates, written questionnaires are completely useless. Within countries, too, the problem of dialects and different languages can make a national questionnaire survey impractical. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 66) An American marketing research company wanted to use a survey to determine if it was feasible to build shopping centers in several countries. Since all of the countries spoke a different language, the company used two translators for each country—one to translate it into the native language, and one to translate it back into English. The original document was revised repeatedly until the translated version matched it in meaning. This describes the process of A) decentering. B) bi-translation. C) parallel translation. D) centering. E) reciprocal translation. Answer: A Explanation: This describes the process of decentering. Decentering is a hybrid of back translation. It is a successive process of translation and retranslation of a questionnaire, each time by a different translator. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

67) In ________ translation, a questionnaire is translated from one language to another, and then a second party translates it again into the original, and the two original language versions are compared. A) serial B) parallel C) back D) simultaneous E) complimentary Answer: C Explanation: In back translation, a questionnaire is translated from one language to another, and then a second party translates it back into the original, and the two original language versions are compared. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 68) Cho is having difficulty with her company's advertising in Japan. As a representative of Cherry Motors, she intends to use American campaigns in the Japanese market. She is surprised to learn that the slogan "Body by Bass" (the company that makes external structures for Cherry Motors) loosely translated in Japanese means "Corpse by Bass." Which of the following problems did Cho experience with her company's advertising in this scenario? A) improper syntax B) improper colloquialisms or slang C) improper grammar D) improper local language E) improper foreign language Answer: B Explanation: Cho is facing a problem with improper colloquialisms or slang in the company's advertising. In writing questions for translation in a marketing research questionnaire, it is important that precise terms, not colloquialisms or slang, be used in the original to be translated. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Communication Accessibility: Keyboard Navigation

69) In the ________ method, successive translation and retranslation of a questionnaire takes place, each time by a different translator, and the version that is finally used and its translation have equally comprehensive and equivalent terminologies in both languages. A) serial translation B) triangulation C) linear translation D) netnography E) decentering Answer: E Explanation: Decentering is a hybrid of back translation. It is a successive process of translation and retranslation of a questionnaire, each time by a different translator. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 70) Alexandria's research focuses on consumers in Brazil, Russia, Canada, and Nigeria. In this case, Alexandria is most likely engaged in ________ research. A) geographical B) anthropological C) psychological D) sociological E) multicultural Answer: E Explanation: Alexandria is most likely engaged in multicultural research. Multicultural research involves countries that have different languages, economies, social structures, behavior, and attitude patterns. When designing multicultural studies, it is essential that these differences be taken into account. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

71) Systematic monitoring of chat rooms, blogs, and personal websites to assess consumers' opinions about products and services is known as A) tomography. B) serigraphy. C) vitreography. D) netnography. E) lithography. Answer: D Explanation: Observational research consists of systematic monitoring of chat rooms, blogs, and personal websites to assess consumers' opinions about products and services. Observational research is also known as netnography. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 72) By systematically monitoring chat rooms, blogs, and personal websites to assess consumers' opinions about the new line of health drinks that his company has launched, Carlos is engaging in the practice of A) tomography. B) serigraphy. C) vitreography. D) netnography. E) lithography. Answer: D Explanation: In this case, Carlos is engaging in the practice of netnography. Systematic monitoring of chat rooms, blogs, and personal websites to assess consumers' opinions about products and services is known as netnography. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

73) What is a severe limitation of using the Internet for primary research? A) The data on the Internet are usually outdated. B) The educational qualifications of the respondents of surveys on the Internet cannot be identified accurately. C) Secondary data cannot be accessed on the Internet for conducting research. D) A sample universe composed solely of Internet respondents represents a potential bias. E) Using the Internet for primary research is the most expensive way of conducting primary research. Answer: D Explanation: The ability to conduct primary research is one of the exciting aspects about the Internet. However, the potential bias of a sample universe composed solely of Internet respondents presents some severe limitations, and firms vary substantially in their abilities to turn data collected into competitive advantages. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation 74) According to the text, today the real power of the Internet for international marketing research is the A) reduction in the time required for completing primary research. B) reduction in the cost of conducting primary research. C) increase in the reliability of the surveys conducted using the Internet. D) ability to overcome legal barriers to conducting primary research. E) ability to easily access volumes of secondary data. Answer: E Explanation: Today the real power of the Internet for international marketing research is the ability to easily access volumes of secondary data. These data have been available in print form for years, but now they are much easier to access and, in many cases, are more current. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation

75) Two methods of forecasting demand are particularly suitable for international marketers. What is one of these methods? A) probabilistic forecasting B) expert opinion C) simulation D) extrapolation E) scenario building Answer: B Explanation: Given the greater uncertainties and data limitations associated with foreign markets, two methods of forecasting demand are particularly suitable for international marketers: expert opinion and analogy. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) G&P's marketing research department needed to get figures on market size and growth rates in a company they were targeting for growth. They opted to use government officials and outside consultants for the information. This is a method known as A) probabilistic forecasting. B) expert opinion. C) simulation. D) extrapolation. E) scenario building. Answer: B Explanation: For many market estimation problems, particularly in foreign countries that are new to the marketer, expert opinion is advisable. In this method, experts are polled for their opinions about market size and growth rates. Such experts may be the companies' own sales managers or outside consultants and government officials. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

77) What is a method of demand forecasting that begins by establishing a relationship between the item to be estimated and a measurable variable? A) probabilistic forecasting B) analogy C) simulation D) extrapolation E) scenario building Answer: B Explanation: In analogy, first, a relationship must be established between the item to be estimated and a measurable variable in a country that is to serve as the basis for the analogy. Once a known relationship is established, the estimator attempts to draw an analogy between the known situation and the country in question. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) The key in using expert opinion to help forecast demand is ________; that is, comparing estimates produced by different sources. A) indemnification B) simulation C) morphing D) modeling E) triangulation Answer: E Explanation: Triangulation is the key in using expert opinion to help forecast demand, and it involves comparing estimates produced by different sources. One of the tricky parts is how best to combine the different opinions. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) The ________ method for estimating demand assumes that demand for a product develops in much the same way in all countries, as comparable economic development occurs in each country. A) reference class forecasting B) analogy C) morphing D) scenario building E) triangulation Answer: B Explanation: The analogy method for estimating demand assumes that demand for a product develops in much the same way in all countries, as comparable economic development occurs in each country. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) A toy manufacturer has excellent sales figures for its toys in country A, but inadequate figures in the neighboring country B. In country A, per capita consumption is known to increase at a predictable ratio as per capita gross domestic product (GDP) increases. If per capita GDP is known for country B, per capita demand for the toys can be estimated using the relationships established in country A. Which of the following methods of forecasting does this example illustrate? A) probabilistic forecasting B) reference class forecasting C) expert opinion D) analogy E) linear regression Answer: D Explanation: The example illustrates the analogy method of forecasting demand. The analogy method of forecasting demand assumes that demand for a product develops in much the same way in all countries, as comparable economic development occurs in each country. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

81) To deal with the problems in analyzing and interpreting research information in an international market, a marketing researcher must possess three talents. What is one of these talents? A) the ability to work within assigned budget B) creative talent for adapting research methods C) proven talent to use and apply advanced statistics D) superior logical ability and thorough knowledge of the language of the home country E) the ability to extrapolate home-country data Answer: B Explanation: To deal with the problems in analyzing and interpreting research information in international market, a researcher must possess a creative talent for adapting research methods. Apart from this, the researcher must possess a high degree of cultural understanding of the market in which research is being conducted, and a skeptical attitude in handling both primary and secondary data is helpful as well. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) What is a disadvantage of decentralized research management? A) The control hardly rests closer to the market. B) Various international laws restrict decentralized research. C) Field personnel and resident managers lack intimate knowledge of the subtleties of the market. D) There is unwarranted dominance of large-market studies in decisions about global standardization. E) Decentralized research has higher probability of translational errors. Answer: D Explanation: One disadvantage of decentralized research management is the potential unwarranted dominance of large-market studies in decisions about global standardization. Another is possible ineffective communications with home-office executives. Difficulty: 2 Medium Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) One disadvantage of decentralized research management is possible ineffective communication with A) field personnel. B) home-office executives. C) customers. D) local agencies. E) resident managers. Answer: B Explanation: One disadvantage of decentralized research management is possible ineffective communications with home-office executives. Another is the potential unwarranted dominance of large-market studies in decisions about global standardization. Difficulty: 1 Easy Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) In Japanese corporate culture, which action is most likely to constitute a typical significant impediment to averting and responding to a crisis? A) Employees like to work on their own rather than in a group. B) Negotiations are avoided at any cost. C) Decisions are generally taken by lower level employees who directly deal with the problem. D) Employees who are lower in the hierarchy find it hard to question their superiors. E) The process of decision making is extremely complex and time consuming. Answer: D Explanation: There is a culture of deference inside Japanese corporations that makes it hard for those lower in the hierarchy to question their superiors or inform them about problems. The focus on consensus and group is an asset in building teamwork, but also can make it hard to challenge what has been decided or designed. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 08-06 Using international marketing research. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

85) What is true about the Japanese corporate culture? A) Employees like to work on their own rather than in a group. B) Negotiations are avoided at any cost. C) Decisions are generally taken by lower level employees who directly deal with the problem. D) The process of decision making is extremely complex and time consuming. E) The focus on consensus and group makes it hard to challenge what has been decided. Answer: E Explanation: There is a culture of deference inside Japanese corporations that makes it hard for those lower in the hierarchy to question their superiors or inform them about problems. The focus on consensus and group is an asset in building teamwork, but also can make it hard to challenge what has been decided or designed. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 08-06 Using international marketing research. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 86) What country has a hierarchical, relationship-based corporate culture? A) Germany B) France C) South Korea D) Switzerland E) Australia Answer: C Explanation: South Korea and Vietnam have a hierarchical, relationship-based corporate culture. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 08-06 Using international marketing research. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

87) The public, face-saving truth is referred to as ________ in Japan. A) kanban B) tatemae C) keiretsu D) zaibatsu E) honne Answer: B Explanation: The Japanese have two words for truth, tatemae and honne. Tatemae is the public, face-saving truth, whereas honne is the factual truth, irrespective of the damage it might do to the all-important social relationships within and between Japanese companies. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 08-06 Using international marketing research. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 88) In Japan, ________ refers to the factual truth, irrespective of the damage it might do to the social relationships within and between Japanese companies. A) kanban B) honne C) keiretsu D) zaibatsu E) tatemae Answer: B Explanation: The Japanese have two words for truth, tatemae and honne. Tatemae is the public, face-saving truth, whereas honne is the factual truth, irrespective of the damage it might do to the all-important social relationships within and between Japanese companies. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 08-06 Using international marketing research. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

89) The text describes four kinds of company—agency—customer relationships that might be used to bridge the cultural barrier that is present in most international marketing research. Which is deemed to be best suited for managing the cultural barrier across the chain of communication? A) company—agency—customers B) company—agency—local agency—customers C) company—foreign agency—customers D) company—foreign agency—Internet—customers E) company—Internet—customers Answer: B Explanation: The company—agency—local agency—customers relationship is better suited for managing the cultural barrier across the chain of communication because the translation is worked out between employees of the international marketing research agency. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 08-06 Using international marketing research. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) The text describes four kinds of company—agency—customer relationships that might be used to bridge the cultural barrier that is present in most international marketing research. In which model do cultural and organizational barriers cross simultaneously, thus maximizing chances for miscommunication? A) company—agency—customers B) company—agency—local agency—customers C) company—foreign agency—local agency—customers D) company—foreign agency—Internet—customers E) company—Internet—customers Answer: A Explanation: In the company—agency—customers relationship, both cultural and organizational barriers are being crossed simultaneously, thus maximizing the chances for miscommunication. Difficulty: 2 Medium Topic: Elements of Culture Learning Objective: 08-06 Using international marketing research. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) International marketers often need to collect certain types of information not normally collected by domestic marketing researchers. Unisys Corporation gives some guidance about the kind of information that organizations need to collect in the international environment during planning. List and briefly discuss each of the five types of information suggested by the Unisys Corporation model. Answer: Economic and demographic: General data on growth in the economy, inflation, business cycle trends, and the like; profitability analysis for the division's products; specific industry economic studies; analysis of overseas economies; and key economic indicators for the United States and major foreign countries, as well as population trends, such as migration, immigration, and aging. Cultural, sociological, and political climate: A general noneconomic review of conditions affecting the division's business. In addition to the more obvious subjects, it covers ecology, safety, and leisure time and their potential impacts on the division's business. Overview of market conditions: A detailed analysis of market conditions that the division faces, by market segment, including international. Summary of the technological environment: A summary of the state-of-the-art technology as it relates to the division's business, carefully broken down by product segments. Competitive situation: A review of competitors' sales revenues, methods of market segmentation, products, and apparent strategies on an international scope. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

92) List the six steps in the research process. Answer: Define the research problem and establish research objectives. Determine the sources of information to fulfill the research objectives. Consider the costs and benefits of the research effort. Gather the relevant data from secondary or primary sources, or both. Analyze, interpret, and summarize the results. Effectively communicate the results to decision makers. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-01 The importance of problem definition in international research. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 93) With references to international marketing research, discuss four problems related to the availability and use of secondary data. Answer: The various problems related to the availability and uses of secondary data include: Availability of data: While the quantity and quality of marketing-related data available in the United States is unmatched in other countries, things are improving. The data available on and in Japan is a close second, and several European countries do a good job of collecting and reporting data. The availability of data is affected by a researcher's language skills. Reliability of data: Available data may not have the level of reliability necessary for confident decision making for many reasons. Official statistics are sometimes too optimistic, reflecting national pride rather than practical reality, while tax structures and fear of the tax collector often adversely affect data. Comparability of data: Comparability of available data is the third shortcoming faced by foreign marketers. In the United States, current sources of reliable and valid estimates of socioeconomic factors and business indicators are readily available. In other countries, especially those less developed, data can be many years out of date and it could have been collected on an infrequent and unpredictable schedule. Furthermore, even though many countries are now gathering reliable data, there are generally no historical series with which to compare the current information. Validating secondary data: Many countries have high standards for the collection and preparation of data as generally found in the United States, but secondary data from any source, including the United States, must be checked and interpreted carefully. 43 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-02 The problems of availability and use of secondary data.; 08-03 Sources of secondary data. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) Discuss the key features of quantitative research, and contrast it with qualitative research.. Answer: In quantitative research, usually a large number of respondents are asked to reply either verbally or in writing to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices. Questions are designed to obtain specific responses regarding aspects of the respondents' behavior, intentions, attitudes, motives, and demographic characteristics. Quantitative research provides the marketer with responses that can be presented with precise estimations. The structured responses received in a survey can be summarized in percentages, averages, or other statistics. In qualitative research, on the other hand, if questions are asked, they are almost always openended or in-depth, and unstructured responses, including storytelling, that reflect the person's thoughts and feelings on the subject are sought. Consumers' first impressions about products may be useful. Direct observation of consumers in choice or product usage situations is another important qualitative approach to marketing research. It is used in international marketing research to formulate and define a problem more clearly and to determine relevant questions to be examined in subsequent research. Qualitative research is also helpful in revealing the impact of sociocultural factors on behavior patterns and in developing research hypotheses that can be tested in subsequent studies designed to quantify the concepts and relevant relationships uncovered in qualitative data collection. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) Discuss four potential problems associated with gathering primary data in the international arena. Answer: With reference to international marketing research, the various problems associated with gathering primary data include: Ability to communicate opinions: The ability to express attitudes and opinions about a product or concept depends on the respondent's ability to recognize the usefulness and value of such a product or concept. It is difficult for a person to formulate needs, attitudes, and opinions about goods whose use may not be understood, that are not in common use within the community, or that have never been available. Willingness to respond: Cultural differences among countries offer the best explanation for the unwillingness or the inability of many to respond to research surveys. Sampling in field surveys: The greatest problem in sampling stems from the lack of adequate demographic data and available lists from which to draw meaningful samples. If current, reliable lists are not available, sampling becomes more complex and generally less reliable. Language and comprehension: The most universal survey research problem in foreign countries is the language barrier. Differences in idiom and the difficulty of exact translation create problems in eliciting the specific information desired and in interpreting the respondents' answers. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-04 Quantitative and qualitative research methods.; 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

96) Compare and contrast back translation and parallel translation. Answer: Similarities: Both back translation and parallel translation involve first translating a research questionnaire from one language to another, and then translating it back to the original language. The two original language versions are compared. This process often pinpoints misinterpretations and misunderstandings before they reach the public. Differences: Back translations may not always ensure an accurate translation because of commonly used idioms in both languages. Parallel translation is used to overcome this problem. In this process, more than two translators are used for the back translation; the results are compared, differences discussed, and the most appropriate translation selected. Most recently, researchers have suggested augmenting this process by integrating pretesting steps and iteratively adapting the translations. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

97) Explain at least four uses of the Internet in international marketing research. Answer: Online surveys and buyer panels: These can include incentives for participation, and they have better "branching" capabilities (asking different questions based on previous answers) than more expensive mail and phone surveys. Online focus groups: Bulletin boards can be used for this purpose. Web visitor tracking: Servers automatically track and time visitors' travel through websites. Advertising measurement: Servers track links to other sites, and their usefulness can therefore be assessed. Customer identification systems: Many companies are installing registration procedures that allow them to track visits and purchases over time, creating a "virtual panel." E-mail marketing lists: Customers can be asked to sign up on e-mail lists to receive future direct marketing efforts via the Internet. Embedded research: The Internet continues to automate traditional economic roles of customers, such as searching for information about products and services, comparison shopping among alternatives, interacting with service providers, and maintaining the customer–brand relationship. More and more of these Internet processes look and feel like research processes themselves. The methods are often embedded directly into the actual purchase and use situations and therefore are more closely tied to actual economic behavior than traditional research methods. Observational research (also known as netnography): Chat rooms, blogs, and personal websites can all be systematically monitored to assess consumers' opinions about products and services. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

98) Define the expert opinion method of demand forecasting, including the challenges of using it. Answer: For many market estimation problems, particularly in foreign countries that are new to the marketer, expert opinion is advisable. In this method, experts are polled for their opinions about market size and growth rates. Such experts may be the companies' own sales managers or outside consultants and government officials. The key in using expert opinion to help forecast demand is triangulation, that is, comparing estimates produced by different sources. One of the tricky parts is how best to combine the different opinions. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 99) Define the analogy method of demand forecasting, and give an example of how it could be used. Answer: The analogy method assumes that demand for a product develops in much the same way in all countries, as comparable economic development occurs in each country. First, a relationship must be established between the item to be estimated and a measurable variable in a country that is to serve as the basis for the analogy. Once a known relationship is established, the estimator attempts to draw an analogy between the known situation and the country in question. Caution must be used with analogy though because the method assumes that factors other than the variable used are similar in both countries, such as the same tastes, taxes, prices, selling methods, availability of products, consumption patterns, and so forth. Examples will vary. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

100) What are the various advantages and disadvantages of the decentralization of the international marketing research function? Answer: Advantages of decentralization: In terms of efficiency, local analysts appear able to provide information more rapidly and accurately than a staff research department. The obvious advantage to decentralization of the research function is that control rests in hands closer to the market. Field personnel, resident managers, and customers generally have more intimate knowledge of the subtleties of the market and an appreciation of the diversity that characterizes most foreign markets. Disadvantages of decentralization: One disadvantage of decentralized research management is possible ineffective communications with home-office executives. Another is the potential unwarranted dominance of large-market studies in decisions about global standardization. That is to say, larger markets, particularly the United States, justify more sophisticated research procedures and larger sample sizes, and results derived via simpler approaches that are appropriate in smaller countries are often erroneously discounted. Difficulty: 3 Hard Topic: Problems with Market Research in Foreign Markets Learning Objective: 08-05 Multicultural sampling and its problems in less-developed countries. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 9 Economic Development and the Americas 1) Of the three kinds of distances that international marketers must traverse, time zones have the greatest influence on the success of their commercial efforts abroad. 2) The liberalization of trade and investment policies in developing countries have little impact on the way countries will trade and prosper in the 21st century. 3) The level of political stability in a country is the single most important environmental element to which the foreign marketer must adjust the marketing task. 4) Consumption patterns change rapidly in static economies. 5) Economic development translates to rapid economic growth and increases in consumer demand. 6) According to the UN classification, industrially developing countries just entering world trade with relatively low per capita incomes are referred to as less-developed countries. 7) The UN classification of countries based on economic development has been criticized because it no longer seems relevant in the rapidly industrializing world. 8) Chile is a newly industrialized country. As such, it has per capita incomes lower than LDCs. 9) Under the United Nations' stages of economic development for classifying countries with respect to levels of industrialization, Brazil falls under the group of more-developed countries (MDCs). 10) Newly industrialized countries (NICs) are characterized by markets with fewer restrictive trade practices and significant free market reforms. 11) Mercosur is a free trade group formed by the United States. 12) Privatization of state-owned industries released immediate capital to invest in strategic areas. 13) High transaction costs associated with the use of the Internet prevent smaller firms in emerging countries from selling into a global market. 14) Economic growth is measured solely in economic goals. 15) The trend toward privatization is occurring in industrialized as well as in developing countries. 16) The quality of an infrastructure directly affects a country's economic growth potential. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) A more developed economy tends to have fewer types of marketing functions that are needed. 18) Marketing is an economy's arbitrator between productive capacity and growth potential. 19) According to Jagdish Sheth, rather than diffusion of innovations, the focus of new product development should be on affordability and accessibility. 20) For international marketing, the level of market development parallels the stages of economic development. 21) In the United States, the vast majority of the population lives in urban areas and has higher earnings than those who live in rural areas. 22) Big emerging markets are of major political importance within their regions. 23) Poland has been identified as a big emerging market by the Department of Commerce. 24) Canada is a member of NAFTA. 25) The United States–Canada Free Trade Area (CFTA) was a customs union like the European Community. 26) The DR-CAFTA includes a wide array of tariff reductions aimed at increasing trade and employment. 27) Mercosur is the largest common-market agreement in the Americas. 28) The Mercosur originally envisioned central institutions similar to those of the European Union institutions. 29) One of the most important aspects of the Latin American Integration Association (LAIA) that differs from LAFTA, its predecessor, is the differential treatment of member countries according to their level of economic development. 30) As a country develops, market behavior changes and eventually it leads to market segmentation. 31) Which country is an MDC (more-developed country)? A) Brazil B) Russia C) Germany D) Argentina E) Vietnam

32) According to the U.S. Department of Commerce, Latin American and other emerging markets will account for ________ of the world's total growth in the next two decades and beyond. A) 20% B) 30% C) 50% D) 75% E) 90% 33) What is considered the single most important environmental element of a country to which the foreign marketer must adjust the marketing task? A) political stability B) economic level C) social norms D) literacy level E) cultural orientation 34) Dynamic economies differ from static economies in that dynamic economies A) need not match marketing efforts with the market needs and wants. B) have rapidly changing consumption patterns. C) have a highly predictable and loyal consumer base. D) define marketing as typically nothing more than a supply effort. E) do not require a marketer to be prepared for economic shifts and emerging markets. 35) Economic ________ refers to an increase in national production that is reflected by an increase in the average per capita gross domestic product or gross national income. A) repression B) duress C) equilibrium D) development E) sustainability 36) The ________ classifies a country's stage of economic development on the basis of its level of industrialization into three categories and the three categories are MDCs, LDCs, and LLDCs. A) U.S. Department of Commerce B) North Atlantic Treaty Organization C) International Organization for Standardization D) United Nations E) International Development Association

37) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, in which category does an industrialized country with high per capita income fall? A) less-developed countries B) least-developed countries C) more-developed countries D) frontier markets E) pre-emerging markets 38) Which statement is true about MDCs (more-developed countries)? A) These countries are just entering world trade. B) The majority of their populations stay in rural areas. C) These countries have high per capita incomes. D) These countries have little world trade involvement. E) These countries have mainly agrarian economies. 39) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, Canada falls under the category of ________ countries. A) Third World B) least-developed C) more-developed D) less-developed E) pre-emerging 40) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, ________ countries consist of industrially developing countries just entering world trade with relatively low per capita incomes. A) first world B) least-developed C) less-developed D) Third World E) more-developed 41) A country that is industrially underdeveloped, agrarian, has a subsistence society with rural populations, and has extremely low per capita income levels falls under the category of A) first world countries. B) least-developed countries. C) less-developed countries. D) newly industrialized countries. E) frontier markets.

42) The United Nations' classification of stages of economic development has been criticized primarily because A) many countries that are classified as LDCs are industrializing at a very rapid rate, while others are advancing at more traditional rates of economic development. B) countries classified as LLDCs are growing at a very rapid rate. C) it no longer takes into account social overhead capital as an indicator of economic development. D) it only focuses on the literacy level in a country. E) countries that are classified as LDCs are industrializing at a slow rate. 43) Most newly industrialized countries (NICs) have moved away from restrictive trade practices and instituted significant free market reforms. As a result, these countries have A) attracted both trade and foreign direct investment. B) become poor importers as well as exporters. C) experienced low gross national income. D) stepped up their protectionist policies. E) majorly given up on their domestic markets. 44) Newly industrialized countries (NICs) differ from less-developed countries in that NICs A) include Canada, the United States, and Germany. B) attract insignificant or no foreign investment. C) have per capita incomes that are lower than other developing countries. D) have moved away from restrictive trade practices and instituted significant free market reforms. E) have shown slow industrialization and expansion of targeted industries. 45) Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan are examples of ________ countries. A) least-developed B) Third World C) underdeveloped D) newly industrialized E) closed economy 46) Which country was involved in the formation of the free trade group Mercosur? A) Australia B) China C) Argentina D) Russia E) Thailand

47) _________ is a free trade group that includes 200 million people, and was formed by Argentina, Brazil, Paraguay, and Uruguay. A) NAFTA B) Caricom C) Mercosur D) SACU E) DR-CAFTA 48) When countries sell off state-owned enterprises and privatize them, it usually results in a(n) A) lack of accommodation of outside investors. B) decline in productivity throughout the private sector. C) increase in modernization by new investors. D) instant change in political leadership. E) continuing drain on future natural resources. 49) What is true of privatization of state-owned enterprises? A) It leads to a decline in productivity throughout the private sector. B) It was done in order to stop the drain on national budgets due to inefficient state-owned enterprises. C) It blocks capital mobility to strategic areas. D) It leads to a change in political leadership. E) It acts as a setback to the process of modernization. 50) What is a characteristic impact of privatization of state-owned enterprises? A) It normally has a negative effect on economic growth. B) It blocks investment of capital in strategic areas. C) It often leads to new economic growth. D) It results in a draining of the future national resources. E) It brings about a political shift in the country. 51) During the early market growth of many countries, the first large open market was A) Russia. B) the United States. C) Australia. D) Germany. E) the United Kingdom. 52) A country's investment in information technology is a key to economic growth. Specifically, the Internet A) further increases the advantage of rich economies over the poor ones. B) increases market transaction costs. C) allows for innovative services but at a relatively higher cost. D) enables smaller firms in emerging economies to sell into a global market. E) decreases the economies of scale from vertical integration.

53) What is true about the activities of foreign investors in developing countries? A) Foreign investors are seen as vital partners in economic development. B) Today, most developing countries have more conservative attitudes toward foreign investments than before. C) Foreign firms are expropriated and charged with excessively high tariffs and quotas by all developing countries. D) Foreign businesses are generally not allowed to raise money by means of shares in developing countries. E) Foreign investment is banned in most developing countries. 54) What is an indicator of a country's economic development? A) population expansion B) expanding state ownership C) the country's infrastructure D) social reformation E) cultural diversity 55) Paved roads, railroads, seaports, communication networks, and financial networks are examples of A) environmental resources. B) inventory. C) infrastructure. D) factors of production. E) freight claims. 56) Economic planners are often more ________ oriented than marketing oriented. A) production B) advertising C) logistics D) theory E) distribution 57) Economic planners are least likely to be concerned with the problems related to A) production. B) finance. C) capacity. D) distribution. E) investment. 58) ________ is an economy's arbitrator between productive capacity and consumer demand. A) Warehousing B) Marketing C) Convergence D) Procurement E) Outsourcing 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

59) The level of market development roughly parallels the stages of economic A) stagnation. B) duress. C) repression. D) equilibrium. E) development. 60) Estimating market potential in less-developed countries involves additional challenges, but most of the difficulty arises from the A) coexistence of three distinct kinds of markets in each country. B) dependence of the markets on the industrialized sectors. C) lower wage rates of the workforce. D) high fluctuation in the currency rate. E) higher concentration of population residing in the urban areas. 61) The transitional sector differs from the modern urban sector in that the transitional sector A) is an exclusively agriculture-oriented sector. B) consists of population that works in the countryside. C) consists of an expanding Westernized middle class. D) represents the high-income urban slums. E) consists of population that moves from the country to the large cities. 62) Which market sector has an expanding Westernized middle class? A) the traditional sector B) the modern sector C) the rural services sector D) the transitional sector E) the agricultural sector 63) Developing countries with markets that are geographically large, have strong growth rates, are regional economic drivers, and represent sizable markets for a wide range of products have been identified by the U.S. Department of Commerce as ________ markets. A) frontier B) big emerging C) two-sided D) niche E) grey 64) Country A is a developing country that has a significant population and represents a sizable market for a wide range of products. It has a strong growth rate and is considered a regional economic driver. Based on this information, Country A can be classified as a ________ market. A) grey B) big emerging C) two-sided D) frontier E) niche 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

65) Which country has been identified by the Department of Commerce as a BEM (big emerging market)? A) Philippines B) Egypt C) Venezuela D) Mexico E) Nicaragua 66) The type of growth that is happening in BEMs today is analogous to what happened in A) Saudi Arabia in the 1800s. B) India during the rule of the British Empire. C) Russia after the fall of the Czar. D) Europe after World War II. E) Iraq between 1890 and 1990. 67) Which country is a part of the free trade area known as CFTA? A) France B) Uruguay C) the United States D) Argentina E) Brazil 68) The three members of the North American Free Trade Agreement (NAFTA) are A) the United States, the United Kingdom, and France. B) the United States, Cuba, and Uruguay. C) Canada, China, and Japan. D) the United States, France, and Germany. E) Canada, Mexico, and the United States. 69) The CFTA was designed to A) establish tariffs between the U.S. and Europe. B) create several independent commercial markets for goods and services. C) become a customs union like the European Community. D) involve both economic and political unions. E) eliminate tariffs and other trade barriers between the United States and Canada. 70) Which country announced that it would seek free trade with the United States shortly after the ratification of the United States–Canada Free Trade Area (CFTA)? A) Germany B) Australia C) Mexico D) The United Kingdom E) China

71) ________ required the United States, Canada, and Mexico to remove all tariffs and trade barriers over 15 years, and beginning in 2008, all tariff barriers were officially dropped. A) Mercosur B) LAIA C) CARICOM D) NAFTA E) DR-CFTA 72) What key provision of NAFTA restricts Japan from assembling autos in Mexico and avoiding U.S. or Canadian tariffs and quotas, unless the auto had a specific percentage of Mexican (i.e., North American) content? A) services B) standards C) rules of origin D) uniform customs procedures E) government procurement 73) What is true about NAFTA? A) It allows the use of standards and technical regulations as obstacles to trade. B) It was ratified and became effective in the year 2000. C) It prohibits U.S. and Canadian financial institutions to open wholly owned subsidiaries in Mexico. D) Its provisions require goods to contain minimum of 10% North American content to be traded duty free. E) Its provisions require Canada, Mexico, and the United States to implement uniform customs procedures and regulations. 74) NAFTA differs from Mercosur in that NAFTA A) was provided legal basis by the Treaty of Asunción. B) is the second-largest common-market agreement in the Americas after Mercosur. C) includes Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay. D) aims to address and improve all aspects of doing business within North America. E) aims to establish a common currency for its Latin American members. 75) Given the fact that NAFTA is now effective in the U.S., Mexico, and Canada, an American company that has its production plant in Sri Lanka will be willing to relocate its production plant to Mexico mostly because A) it will improve the image of its goods. B) Mexico has lower wages than Sri Lanka. C) it will enable the company to get an entirely western consumer base for its products. D) moving finished goods from Mexico to the United States is cheaper and faster than moving them from Sri Lanka. E) workers in Mexico are more skilled than those in Sri Lanka.

76) What country is a member of the free trade agreement DR-CAFTA? A) Bahrain B) Bhutan C) Morocco D) Costa Rica E) Oman 77) Which is the comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States that includes a wide array of tariff reductions aimed at increasing trade and employment? A) DR-CAFTA B) NAFTA C) CFTA D) SAARC E) Mercosur 78) The success of the Caribbean Free Trade Association led to the creation of the A) Central American Integration System. B) Community of Latin American and Caribbean States. C) Caribbean Community and Common Market. D) Union of South American Nations. E) United Nations Economic Commission for Latin America and the Caribbean. 79) CARICOM established the CSME (CARICOM Single Market and Economy) with the major goal of A) establishing central institutions similar to those of the European Union institutions. B) forming a political union. C) implementing a common currency for all member nations. D) increasing nontariff barriers. E) implementing uniform customs procedures. 80) In the context of a political and economic revolution that has been taking place in Latin America, state ownership has resulted in A) inclusion of foreign and domestic private ownership. B) efficient state treasuries. C) efficient public companies. D) predictable regulatory environments. E) inefficient public companies. 81) What country is a member of the Latin American Integration Association (LAIA, aka ALADI)? A) Bahamas B) Cuba C) Nicaragua D) Costa Rica E) Honduras 11 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

82) Haiti is a member of A) CARICOM. B) NAFTA. C) CFTA. D) LAIA. E) Mercosur. 83) What is the largest common-market agreement in the Americas? A) CFTA B) NAFTA C) Mercosur D) DR-CAFTA E) SAFTA 84) What is the second-largest common-market agreement in the Americas, after NAFTA? A) CFTA B) TPP C) Mercosur D) DR-CAFTA E) SAFTA 85) Which of the following treaties provided the legal basis for Mercosur? A) Treaty of Verdun B) Treaty of Asunción C) Treaty of Westphalia D) Treaty of Versailles E) Treaty of Montevideo 86) What accounts for the lion's share of Mercosur exports to Europe? A) clothing and apparel B) telecommunication equipment C) consumer durables D) petroleum and minerals E) agricultural and agro-industrial products 87) What is true of state ownership in Latin America? A) Privatization of state-owned enterprises blocked the release of immediate capital to invest in strategic areas. B) State ownership is the most ideal engine for economic growth. C) Privatization of state-owned enterprises continually drained the future national resources. D) State ownership has resulted in complicated and unpredictable regulatory environments. E) State ownership has consistently resulted in the inclusion of foreign and domestic private ownership, and the formation of efficient public companies.

88) The long-term goal of the LAIA (Latin American Integration Association), better known by its Spanish acronym, ALADI, is to A) improve the literacy levels in member countries. B) reduce the child mortality rates in member countries. C) establish a Latin American common market. D) establish a common currency for all its member countries. E) standardize the industrial production in the member countries. 89) One way that LAIA differs from LAFTA, its predecessor, is A) the differential treatment of member countries according to their level of economic development. B) the inclusion of rules of origin. C) the exclusion of tariff barrier. D) the members are forbidden from establishing bilateral trade agreements among member countries. E) the introduction of a common currency for the member countries. 90) More household money goes for ________ in emerging markets than in developed markets. A) housing B) durable goods C) food D) leisure E) education 91) Explain the importance of time zones for trade relationships and marketing operations. What are the three multinational market regions that comprise major trading blocs? 92) Describe the political and economic changes affecting developing countries, including foreign investment, transition from socialist to market-driven economies, and trade policies. 93) Explain the concept of economic development. 94) Describe the three categories used by the United Nations to classify a country's stage of economic development on the basis of its level of industrialization. 95) List and briefly describe five of the nine factors that existed during the economic growth of newly industrialized countries (NICs). 96) Explain how the Internet impacts economic development in emerging economies. 97) Describe the origin and purpose of Mercosur and its role in improving trade associations among American nations. 98) Why was Caribbean Community and Common Market (CARICOM) created? What are its goals? 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

3) The level of political stability in a country is the single most important environmental element to which the foreign marketer must adjust the marketing task. Answer: FALSE Explanation: The economic level of a country is the single most important environmental element to which the foreign marketer must adjust the marketing task. The stage of economic growth within a country affects the attitudes toward foreign business activity, the demand for goods, the distribution systems found within a country, and the entire marketing process. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 4) Consumption patterns change rapidly in static economies. Answer: FALSE Explanation: In static economies, consumption patterns become rigid, and marketing is typically nothing more than a supply effort. In a dynamic economy, consumption patterns change rapidly. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Economic development translates to rapid economic growth and increases in consumer demand. Answer: TRUE Explanation: Economic development, as commonly defined today, tends to mean rapid economic growth and increases in consumer demand—improvements achieved "in decades rather than centuries." Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

6) According to the UN classification, industrially developing countries just entering world trade with relatively low per capita incomes are referred to as less-developed countries. Answer: TRUE Explanation: Industrially developing countries just entering world trade, many of which are in Asia and Latin America, with relatively low per capita incomes are classified as less-developed countries (LDCs). Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 7) The UN classification of countries based on economic development has been criticized because it no longer seems relevant in the rapidly industrializing world. Answer: TRUE Explanation: The UN classification has been criticized because it no longer seems relevant in the rapidly industrializing world. Also, many countries that are classified as LDCs are industrializing at a very rapid rate, whereas others are advancing at more traditional rates of economic development. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) Chile is a newly industrialized country. As such, it has per capita incomes lower than LDCs. Answer: FALSE Explanation: Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs (less-developed countries) or MDCs (more-developed countries) are more typically referred to as NICs (newly industrialized countries). These countries have shown rapid industrialization of targeted industries and have per capita incomes that exceed other developing countries. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

9) Under the United Nations' stages of economic development for classifying countries with respect to levels of industrialization, Brazil falls under the group of more-developed countries (MDCs). Answer: FALSE Explanation: Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs (less-developed countries) or MDCs (more-developed countries) are more typically referred to as NICs (newly industrialized countries). Brazil is considered one of the NICs. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 10) Newly industrialized countries (NICs) are characterized by markets with fewer restrictive trade practices and significant free market reforms. Answer: TRUE Explanation: Newly industrialized countries (NICs) have shown rapid industrialization of targeted industries and have per capita incomes that exceed other developing countries. They have moved away from restrictive trade practices and instituted significant free market reforms; as a result, they attract both trade and foreign direct investment. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Mercosur is a free trade group formed by the United States. Answer: FALSE Explanation: Mercosur is a free trade group formed by Argentina, Brazil, Paraguay, and Uruguay. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-04 The variety of stages of economic development among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

12) Privatization of state-owned industries released immediate capital to invest in strategic areas. Answer: TRUE Explanation: State-owned enterprises (SOEs) had placed a drain on national budgets. Privatization released immediate capital to invest in strategic areas and gave relief from a continuing drain on future national resources. Difficulty: 1 Easy Topic: Nationalization and Privatization of Business Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 13) High transaction costs associated with the use of the Internet prevent smaller firms in emerging countries from selling into a global market. Answer: FALSE Explanation: Lower transaction costs associated with the use of the Internet enable small firms in Asia or Latin America to work together to develop a global reach. Smaller firms in emerging economies can now sell into a global market. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 14) Economic growth is measured solely in economic goals. Answer: FALSE Explanation: Economic growth is measured not solely in economic goals but also in social achievements. Better education, better and more effective government, the elimination of many social inequities, and improvements in moral and ethical responsibilities are some of the expectations of developing countries. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

15) The trend toward privatization is occurring in industrialized as well as in developing countries. Answer: TRUE Explanation: Many countries have deregulated industry, opened their doors to foreign investment, lowered trade barriers, and begun privatizing SOEs. The trend toward privatization is currently a major economic phenomenon in industrialized as well as in developing countries. Difficulty: 1 Easy Topic: Nationalization and Privatization of Business Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 16) The quality of an infrastructure directly affects a country's economic growth potential. Answer: TRUE Explanation: The quality of an infrastructure directly affects a country's economic growth potential and the ability of an enterprise to engage effectively in business. Infrastructure is a crucial component of the uncontrollable elements facing marketers. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) A more developed economy tends to have fewer types of marketing functions that are needed. Answer: FALSE Explanation: The more developed an economy, the greater the variety of marketing functions demanded, and the more sophisticated and specialized the institutions become to perform marketing functions. Difficulty: 2 Medium Topic: The Changing Nature of the Global Economy Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

18) Marketing is an economy's arbitrator between productive capacity and growth potential. Answer: FALSE Explanation: Marketing is an economy's arbitrator between productive capacity and consumer demand. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 19) According to Jagdish Sheth, rather than diffusion of innovations, the focus of new product development should be on affordability and accessibility. Answer: TRUE Explanation: Among recommendations for changes in marketing theory, strategy, and policy, Sheth lists three adaptations for marketing practice in emerging markets. One of them is, the focus of new product development should be on affordability and accessibility. Difficulty: 1 Easy Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) For international marketing, the level of market development parallels the stages of economic development. Answer: TRUE Explanation: The level of market development roughly parallels the stages of economic development. The more developed an economy, the greater the variety of marketing functions demanded, and the more sophisticated and specialized the institutions become to perform marketing functions. Difficulty: 1 Easy Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

21) In the United States, the vast majority of the population lives in urban areas and has higher earnings than those who live in rural areas. Answer: TRUE Explanation: In the United States 81 percent of inhabitants live in urban areas. The disposable income gap between urban and rural also varies across countries. In the U.S. urban dwellers on average earn 19 percent more than their rural cousin. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 22) Big emerging markets are of major political importance within their regions. Answer: TRUE Explanation: Big emerging markets have undertaken significant programs of economic reform and are of major political importance within their regions. Difficulty: 1 Easy Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) Poland has been identified as a big emerging market by the Department of Commerce. Answer: TRUE Explanation: India, China, Brazil, Mexico, Poland, Turkey, and South Africa are prominent examples of countries the Department of Commerce has identified as BEMs. Difficulty: 1 Easy Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

24) Canada is a member of NAFTA. Answer: TRUE Explanation: The three members of NAFTA are the United States, Canada, and Mexico. Difficulty: 1 Easy Topic: North America's Marketplace in the World Economy Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 25) The United States–Canada Free Trade Area (CFTA) was a customs union like the European Community. Answer: FALSE Explanation: The agreement between the United States and Canada was not a customs union like the European Community; no economic or political union of any kind was involved. It provided only for the elimination of tariffs and other trade barriers. Difficulty: 1 Easy Topic: North America's Marketplace in the World Economy Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) The DR-CAFTA includes a wide array of tariff reductions aimed at increasing trade and employment. Answer: TRUE Explanation: The Central America–Dominican Republic–United States Free Trade Agreement (DR-CAFTA) includes a wide array of tariff reductions aimed at increasing trade and employment among the seven signatories. Thus, it represents another important step toward the ultimate goal of a free trade agreement encompassing all the Americas. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-07 The foundational market metrics of American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

27) Mercosur is the largest common-market agreement in the Americas. Answer: FALSE Explanation: Southern Cone Free Trade Area (Mercosur) is the second-largest common-market agreement in the Americas after NAFTA. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 28) The Mercosur originally envisioned central institutions similar to those of the European Union institutions. Answer: FALSE Explanation: Southern Cone Free Trade Area (Mercosur) members were concerned about sacrificing sovereign control over taxes and other policy matters; hence the agreement envisioned no central institutions similar to those of the European Union institutions. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) One of the most important aspects of the Latin American Integration Association (LAIA) that differs from LAFTA, its predecessor, is the differential treatment of member countries according to their level of economic development. Answer: TRUE Explanation: One of the most important aspects of LAIA that differs from LAFTA, its predecessor, is the differential treatment of member countries according to their level of economic development. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

30) As a country develops, market behavior changes and eventually it leads to market segmentation. Answer: TRUE Explanation: As a country develops, incomes change, population concentrations shift, expectations for a better life adjust to higher standards, new infrastructures evolve, and social capital investments are made. Market behavior changes, and eventually groups of consumers with common tastes and needs (i.e., market segments) arise. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 31) Which country is an MDC (more-developed country)? A) Brazil B) Russia C) Germany D) Argentina E) Vietnam Answer: C Explanation: Germany is a MDCs (more-developed countries). The United Nations classifies a country's stage of economic development on the basis of its level of industrialization. It groups countries into three categories: MDCs (more-developed countries), LDCs (less-developed countries), and LLDCs (least-developed countries). Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-01 The importance of time zones for trade relationships and marketing operations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

32) According to the U.S. Department of Commerce, Latin American and other emerging markets will account for ________ of the world's total growth in the next two decades and beyond. A) 20% B) 30% C) 50% D) 75% E) 90% Answer: D Explanation: Latin American and other emerging markets throughout the world will account for 75 percent of the world's total growth in the next two decades and beyond, according to U.S. Department of Commerce estimates. Difficulty: 1 Easy Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-02 The political and economic changes affecting global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 33) What is considered the single most important environmental element of a country to which the foreign marketer must adjust the marketing task? A) political stability B) economic level C) social norms D) literacy level E) cultural orientation Answer: B Explanation: The economic level of a country is the single most important environmental element to which the foreign marketer must adjust the marketing task. The stage of economic growth within a country affects the attitudes toward foreign business activity, the demand for goods, the distribution systems found within a country, and the entire marketing process. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

34) Dynamic economies differ from static economies in that dynamic economies A) need not match marketing efforts with the market needs and wants. B) have rapidly changing consumption patterns. C) have a highly predictable and loyal consumer base. D) define marketing as typically nothing more than a supply effort. E) do not require a marketer to be prepared for economic shifts and emerging markets. Answer: B Explanation: In a dynamic economy, consumption patterns change rapidly. Marketing constantly faces the challenge of detecting and providing for new levels of consumption, and marketing efforts must be matched with ever-changing market needs and wants. Difficulty: 2 Medium Topic: The Changing Nature of the Global Economy Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 35) Economic ________ refers to an increase in national production that is reflected by an increase in the average per capita gross domestic product or gross national income. A) repression B) duress C) equilibrium D) development E) sustainability Answer: D Explanation: Economic development is generally understood to mean an increase in national production reflected by an increase in the average per capita gross domestic product (GDP) or gross national income (GNI). Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

36) The ________ classifies a country's stage of economic development on the basis of its level of industrialization into three categories and the three categories are MDCs, LDCs, and LLDCs. A) U.S. Department of Commerce B) North Atlantic Treaty Organization C) International Organization for Standardization D) United Nations E) International Development Association Answer: D Explanation: The United Nations classifies a country's stage of economic development on the basis of its level of industrialization into three categories and the three categories are MDCs, LDCs, and LLDCs. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 37) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, in which category does an industrialized country with high per capita income fall? A) less-developed countries B) least-developed countries C) more-developed countries D) frontier markets E) pre-emerging markets Answer: C Explanation: Industrialized countries with high per capita incomes, such as Canada, England, France, Germany, Japan, and the United States fall into the category of more-developed countries. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

38) Which statement is true about MDCs (more-developed countries)? A) These countries are just entering world trade. B) The majority of their populations stay in rural areas. C) These countries have high per capita incomes. D) These countries have little world trade involvement. E) These countries have mainly agrarian economies. Answer: C Explanation: More-developed countries (MDCs) are industrialized countries with high per capita incomes. Examples include Canada, England, France, Germany, Japan, and the United States. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 39) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, Canada falls under the category of ________ countries. A) Third World B) least-developed C) more-developed D) less-developed E) pre-emerging Answer: C Explanation: Industrialized countries with high per capita incomes, such as Canada, England, France, Germany, Japan, and the United States are classified as MDCs (more-developed countries). Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

40) According to the United Nations' stages of economic development for classifying countries based on levels of industrialization, ________ countries consist of industrially developing countries just entering world trade with relatively low per capita incomes. A) first world B) least-developed C) less-developed D) Third World E) more-developed Answer: C Explanation: Less-developed countries (LDCs) are industrially developing countries just entering world trade and have relatively low per capita incomes. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 41) A country that is industrially underdeveloped, agrarian, has a subsistence society with rural populations, and has extremely low per capita income levels falls under the category of A) first world countries. B) least-developed countries. C) less-developed countries. D) newly industrialized countries. E) frontier markets. Answer: B Explanation: The least-developed countries (LLDCs) are industrially underdeveloped and agrarian. These countries have extremely low per capita income levels. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

42) The United Nations' classification of stages of economic development has been criticized primarily because A) many countries that are classified as LDCs are industrializing at a very rapid rate, while others are advancing at more traditional rates of economic development. B) countries classified as LLDCs are growing at a very rapid rate. C) it no longer takes into account social overhead capital as an indicator of economic development. D) it only focuses on the literacy level in a country. E) countries that are classified as LDCs are industrializing at a slow rate. Answer: A Explanation: The UN classification has been criticized because it no longer seems relevant in the rapidly industrializing world. Many countries that are classified as LDCs are industrializing at a very rapid rate, whereas others are advancing at more traditional rates of economic development. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 43) Most newly industrialized countries (NICs) have moved away from restrictive trade practices and instituted significant free market reforms. As a result, these countries have A) attracted both trade and foreign direct investment. B) become poor importers as well as exporters. C) experienced low gross national income. D) stepped up their protectionist policies. E) majorly given up on their domestic markets. Answer: A Explanation: Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs or MDCs are more typically referred to as newly industrialized countries (NICs). They have moved away from restrictive trade practices and instituted significant free market reforms; as a result, they attract both trade and foreign direct investment. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

44) Newly industrialized countries (NICs) differ from less-developed countries in that NICs A) include Canada, the United States, and Germany. B) attract insignificant or no foreign investment. C) have per capita incomes that are lower than other developing countries. D) have moved away from restrictive trade practices and instituted significant free market reforms. E) have shown slow industrialization and expansion of targeted industries. Answer: D Explanation: Newly industrialized countries (NICs) have moved away from restrictive trade practices and instituted significant free market reforms; as a result, they attract both trade and foreign direct investment. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 45) Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan are examples of ________ countries. A) least-developed B) Third World C) underdeveloped D) newly industrialized E) closed economy Answer: D Explanation: Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs or MDCs are more typically referred to as newly industrialized countries (NICs). Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan are some of the countries that fit this description. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

46) Which country was involved in the formation of the free trade group Mercosur? A) Australia B) China C) Argentina D) Russia E) Thailand Answer: C Explanation: Southern Cone Free Trade Area (Mercosur) is the free trade group formed by Argentina, Brazil, Paraguay, and Uruguay. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-04 The variety of stages of economic development among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 47) _________ is a free trade group that includes 200 million people, and was formed by Argentina, Brazil, Paraguay, and Uruguay. A) NAFTA B) Caricom C) Mercosur D) SACU E) DR-CAFTA Answer: C Explanation: Southern Cone Free Trade Area (Mercosur) Mercosur is a free trade group formed by Argentina, Brazil, Paraguay, and Uruguay. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-04 The variety of stages of economic development among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

48) When countries sell off state-owned enterprises and privatize them, it usually results in a(n) A) lack of accommodation of outside investors. B) decline in productivity throughout the private sector. C) increase in modernization by new investors. D) instant change in political leadership. E) continuing drain on future natural resources. Answer: C Explanation: Privatization releases immediate capital to invest in strategic areas and gives relief from a continuing drain on future national resources. Often when industries are privatized, the new investors modernize, thus creating new economic growth. Difficulty: 2 Medium Topic: Nationalization and Privatization of Business Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 49) What is true of privatization of state-owned enterprises? A) It leads to a decline in productivity throughout the private sector. B) It was done in order to stop the drain on national budgets due to inefficient state-owned enterprises. C) It blocks capital mobility to strategic areas. D) It leads to a change in political leadership. E) It acts as a setback to the process of modernization. Answer: B Explanation: Privatization releases immediate capital to invest in strategic areas and gives relief from a continuing drain on future national resources. Privatization of state-owned enterprises (SOEs) helped to prevent the drain on national budgets. Difficulty: 2 Medium Topic: Nationalization and Privatization of Business Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

50) What is a characteristic impact of privatization of state-owned enterprises? A) It normally has a negative effect on economic growth. B) It blocks investment of capital in strategic areas. C) It often leads to new economic growth. D) It results in a draining of the future national resources. E) It brings about a political shift in the country. Answer: C Explanation: Privatization released immediate capital to invest in strategic areas and gave relief from a continuing drain on future national resources. Often when industries are privatized, the new investors modernize, thus creating new economic growth. Difficulty: 2 Medium Topic: Nationalization and Privatization of Business Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 51) During the early market growth of many countries, the first large open market was A) Russia. B) the United States. C) Australia. D) Germany. E) the United Kingdom. Answer: B Explanation: During the early growth of many countries, the first large open market was the United States, later joined by Europe and now, as the fundamental principles of the World Trade Organization (WTO) are put into place, by much of the rest of the world. Difficulty: 1 Easy Topic: The Changing Nature of the Global Economy Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

52) A country's investment in information technology is a key to economic growth. Specifically, the Internet A) further increases the advantage of rich economies over the poor ones. B) increases market transaction costs. C) allows for innovative services but at a relatively higher cost. D) enables smaller firms in emerging economies to sell into a global market. E) decreases the economies of scale from vertical integration. Answer: D Explanation: Lower transaction costs enable small firms in Asia or Latin America to work together to develop a global reach. The Internet has enabled smaller firms in emerging economies can now sell into a global market. Difficulty: 2 Medium Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation 53) What is true about the activities of foreign investors in developing countries? A) Foreign investors are seen as vital partners in economic development. B) Today, most developing countries have more conservative attitudes toward foreign investments than before. C) Foreign firms are expropriated and charged with excessively high tariffs and quotas by all developing countries. D) Foreign businesses are generally not allowed to raise money by means of shares in developing countries. E) Foreign investment is banned in most developing countries. Answer: A Explanation: Today, foreign investors are seen as vital partners in economic development. Many countries have deregulated industry, opened their doors to foreign investment, lowered trade barriers, and begun privatizing state-owned enterprises SOEs. Difficulty: 2 Medium Topic: Trends in Foreign Direct Investment Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

54) What is an indicator of a country's economic development? A) population expansion B) expanding state ownership C) the country's infrastructure D) social reformation E) cultural diversity Answer: C Explanation: One indicator of economic development is the extent of social overhead capital, or infrastructure, within the economy. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 55) Paved roads, railroads, seaports, communication networks, and financial networks are examples of A) environmental resources. B) inventory. C) infrastructure. D) factors of production. E) freight claims. Answer: C Explanation: Infrastructure represents those types of capital goods that serve the activities of many industries. Included in a country's infrastructure are paved roads, railroads, seaports, communication networks, financial networks, and energy supplies and distribution—all necessary to support production and marketing. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

56) Economic planners are often more ________ oriented than marketing oriented. A) production B) advertising C) logistics D) theory E) distribution Answer: A Explanation: Economic planners frequently are more production oriented than marketing oriented and tend to ignore or regard distribution as an inferior economic activity. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 57) Economic planners are least likely to be concerned with the problems related to A) production. B) finance. C) capacity. D) distribution. E) investment. Answer: D Explanation: Economic planners frequently are more production oriented than marketing oriented and tend to ignore or regard distribution as an inferior economic activity. Given such attitudes, economic planners generally are more concerned with the problems of production, investment, and finance than the problems of efficiency of distribution. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

58) ________ is an economy's arbitrator between productive capacity and consumer demand. A) Warehousing B) Marketing C) Convergence D) Procurement E) Outsourcing Answer: B Explanation: Marketing is an economy's arbitrator between productive capacity and consumer demand. The marketing process is the critical element in effectively utilizing production resulting from economic growth; it can create a balance between higher production and higher consumption. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 59) The level of market development roughly parallels the stages of economic A) stagnation. B) duress. C) repression. D) equilibrium. E) development. Answer: E Explanation: The level of market development roughly parallels the stages of economic development. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

60) Estimating market potential in less-developed countries involves additional challenges, but most of the difficulty arises from the A) coexistence of three distinct kinds of markets in each country. B) dependence of the markets on the industrialized sectors. C) lower wage rates of the workforce. D) high fluctuation in the currency rate. E) higher concentration of population residing in the urban areas. Answer: A Explanation: Estimating market potential in less-developed countries involves additional challenges. Most of the difficulty arises from the coexistence of three distinct kinds of markets in each country: (1) the traditional rural/agricultural sector, (2) the modern urban/high-income sector, and (3) the often very large transitional sector usually represented by low-income urban slums. Difficulty: 2 Medium Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 61) The transitional sector differs from the modern urban sector in that the transitional sector A) is an exclusively agriculture-oriented sector. B) consists of population that works in the countryside. C) consists of an expanding Westernized middle class. D) represents the high-income urban slums. E) consists of population that moves from the country to the large cities. Answer: E Explanation: Directly juxtaposed to the modern sector, the transitional sector contains those moving from the country to the large cities. It is usually represented by low-income urban slums. Difficulty: 2 Medium Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

62) Which market sector has an expanding Westernized middle class? A) the traditional sector B) the modern sector C) the rural services sector D) the transitional sector E) the agricultural sector Answer: B Explanation: The modern sector is centered in the capital city and has jet airports, international hotels, new factories, and an expanding Westernized middle class. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 63) Developing countries with markets that are geographically large, have strong growth rates, are regional economic drivers, and represent sizable markets for a wide range of products have been identified by the U.S. Department of Commerce as ________ markets. A) frontier B) big emerging C) two-sided D) niche E) grey Answer: B Explanation: Big emerging markets share a number of important traits. They are all geographically large, have significant populations, represent sizable markets for a wide range of products, and have strong rates of growth or the potential for significant growth. Difficulty: 1 Easy Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

64) Country A is a developing country that has a significant population and represents a sizable market for a wide range of products. It has a strong growth rate and is considered a regional economic driver. Based on this information, Country A can be classified as a ________ market. A) grey B) big emerging C) two-sided D) frontier E) niche Answer: B Explanation: Country A would be identified as a big emerging market. Big emerging markets share a number of important traits. They are all geographically large, have significant populations, represent sizable markets for a wide range of products, and have strong rates of growth or the potential for significant growth. Difficulty: 2 Medium Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 65) Which country has been identified by the Department of Commerce as a BEM (big emerging market)? A) Philippines B) Egypt C) Venezuela D) Mexico E) Nicaragua Answer: D Explanation: India, China, Brazil, Mexico, Poland, Turkey, and South Africa are prominent examples of countries the Department of Commerce has identified as BEMs. Other countries such as Egypt, Venezuela, and Colombia may warrant inclusion in the near future. Difficulty: 1 Easy Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

66) The type of growth that is happening in BEMs today is analogous to what happened in A) Saudi Arabia in the 1800s. B) India during the rule of the British Empire. C) Russia after the fall of the Czar. D) Europe after World War II. E) Iraq between 1890 and 1990. Answer: D Explanation: Because many of these countries lack modern infrastructure, much of the expected growth will be in industrial sectors such as information technology, environmental technology, and financial services. What is occurring in the BEMs is analogous to the situation after World War II when tremendous demand was created during the reconstruction of Europe. Difficulty: 2 Medium Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 67) Which country is a part of the free trade area known as CFTA? A) France B) Uruguay C) the United States D) Argentina E) Brazil Answer: C Explanation: To support trade activity, the United States and Canada established the United States–Canada Free Trade Area (CFTA), designed to eliminate all trade barriers between the two countries. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

68) The three members of the North American Free Trade Agreement (NAFTA) are A) the United States, the United Kingdom, and France. B) the United States, Cuba, and Uruguay. C) Canada, China, and Japan. D) the United States, France, and Germany. E) Canada, Mexico, and the United States. Answer: E Explanation: The three members of NAFTA are Canada, Mexico, and the United States. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 69) The CFTA was designed to A) establish tariffs between the U.S. and Europe. B) create several independent commercial markets for goods and services. C) become a customs union like the European Community. D) involve both economic and political unions. E) eliminate tariffs and other trade barriers between the United States and Canada. Answer: E Explanation: The United States–Canada Free Trade Area (CFTA) was designed to eliminate all trade barriers between the two countries. The CFTA created a single, continental commercial market for all goods and most services. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

70) Which country announced that it would seek free trade with the United States shortly after the ratification of the United States–Canada Free Trade Area (CFTA)? A) Germany B) Australia C) Mexico D) The United Kingdom E) China Answer: C Explanation: Shortly after both countries had ratified the CFTA, Mexico announced that it would seek free trade with the United States. Ultimately, this led to the creation of the North American Free Trade Agreement (NAFTA). When NAFTA was ratified and became effective in 1994, a single market of 360 million people with a $6 trillion GNP emerged. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 71) ________ required the United States, Canada, and Mexico to remove all tariffs and trade barriers over 15 years, and beginning in 2008, all tariff barriers were officially dropped. A) Mercosur B) LAIA C) CARICOM D) NAFTA E) DR-CFTA Answer: D Explanation: NAFTA required the United States, Canada, and Mexico to remove all tariffs and trade barriers over 15 years, and beginning in 2008, all tariff barriers were officially dropped. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

72) What key provision of NAFTA restricts Japan from assembling autos in Mexico and avoiding U.S. or Canadian tariffs and quotas, unless the auto had a specific percentage of Mexican (i.e., North American) content? A) services B) standards C) rules of origin D) uniform customs procedures E) government procurement Answer: C Explanation: According to rules of origin, for goods to be traded duty free, they must contain substantial (62.5 percent) North American content. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 73) What is true about NAFTA? A) It allows the use of standards and technical regulations as obstacles to trade. B) It was ratified and became effective in the year 2000. C) It prohibits U.S. and Canadian financial institutions to open wholly owned subsidiaries in Mexico. D) Its provisions require goods to contain minimum of 10% North American content to be traded duty free. E) Its provisions require Canada, Mexico, and the United States to implement uniform customs procedures and regulations. Answer: E Explanation: Under NAFTA, Canada, Mexico, and the United States have agreed to implement uniform customs procedures and regulations. Most procedures governing rules-of-origin documentation, record keeping, and verification will be the same for all three NAFTA countries. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

74) NAFTA differs from Mercosur in that NAFTA A) was provided legal basis by the Treaty of Asunción. B) is the second-largest common-market agreement in the Americas after Mercosur. C) includes Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay. D) aims to address and improve all aspects of doing business within North America. E) aims to establish a common currency for its Latin American members. Answer: D Explanation: NAFTA is a comprehensive trade agreement that addresses, and in most cases improves, all aspects of doing business within North America. Mercosur (including Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay) is the second-largest common-market agreement in the Americas after NAFTA. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 75) Given the fact that NAFTA is now effective in the U.S., Mexico, and Canada, an American company that has its production plant in Sri Lanka will be willing to relocate its production plant to Mexico mostly because A) it will improve the image of its goods. B) Mexico has lower wages than Sri Lanka. C) it will enable the company to get an entirely western consumer base for its products. D) moving finished goods from Mexico to the United States is cheaper and faster than moving them from Sri Lanka. E) workers in Mexico are more skilled than those in Sri Lanka. Answer: D Explanation: Wages in Mexico are almost three times the monthly wages in Sri Lanka, but moving goods from Mexico to the United States is cheaper and faster than moving them from Sri Lanka. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-06 Marketings contribution to the growth and development of a country's economy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

76) What country is a member of the free trade agreement DR-CAFTA? A) Bahrain B) Bhutan C) Morocco D) Costa Rica E) Oman Answer: D Explanation: In August 2005, President George Bush signed into law a comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States. This free trade agreement is known as DR-CAFTA. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-07 The foundational market metrics of American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 77) Which is the comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States that includes a wide array of tariff reductions aimed at increasing trade and employment? A) DR-CAFTA B) NAFTA C) CFTA D) SAARC E) Mercosur Answer: A Explanation: In August 2005, President George Bush signed into law a comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States. The agreement includes a wide array of tariff reductions aimed at increasing trade and employment among the seven signatories. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-07 The foundational market metrics of American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

78) The success of the Caribbean Free Trade Association led to the creation of the A) Central American Integration System. B) Community of Latin American and Caribbean States. C) Caribbean Community and Common Market. D) Union of South American Nations. E) United Nations Economic Commission for Latin America and the Caribbean. Answer: C Explanation: The success of the Caribbean Free Trade Association led to the creation of the Caribbean Community and Common Market (CARICOM). CARICOM continues to seek stronger ties with other groups in Latin America and has signed a trade agreement with Cuba. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 79) CARICOM established the CSME (CARICOM Single Market and Economy) with the major goal of A) establishing central institutions similar to those of the European Union institutions. B) forming a political union. C) implementing a common currency for all member nations. D) increasing nontariff barriers. E) implementing uniform customs procedures. Answer: C Explanation: Caribbean Community and Common Market CARICOM has worked toward a single-market economy and in 2000 established the CSME (CARICOM Single Market and Economy) with the goal of a common currency for all members. The introduction of a common external tariff structure was a major step toward that goal. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

80) In the context of a political and economic revolution that has been taking place in Latin America, state ownership has resulted in A) inclusion of foreign and domestic private ownership. B) efficient state treasuries. C) efficient public companies. D) predictable regulatory environments. E) inefficient public companies. Answer: E Explanation: State ownership was once considered the ideal engine for economic growth. Instead of economic growth, however, they ended up with inflated public-sector bureaucracies, complicated and unpredictable regulatory environments, the outright exclusion of foreign and domestic private ownership, and inefficient public companies. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 81) What country is a member of the Latin American Integration Association (LAIA, aka ALADI)? A) Bahamas B) Cuba C) Nicaragua D) Costa Rica E) Honduras Answer: B Explanation: Cuba is a member of Latin American Integration Association. LAIA membership includes Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Paraguay, Panama, Peru, Uruguay, and Venezuela. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

82) Haiti is a member of A) CARICOM. B) NAFTA. C) CFTA. D) LAIA. E) Mercosur. Answer: A Explanation: Haiti is a member of CARICOM (Caribbean Community and Common Market). Difficulty: 1 Easy Topic: The Americas Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 83) What is the largest common-market agreement in the Americas? A) CFTA B) NAFTA C) Mercosur D) DR-CAFTA E) SAFTA Answer: B Explanation: NAFTA is the largest common-market agreement in the Americas. Mercosur is the second-largest common-market agreement in the Americas. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

84) What is the second-largest common-market agreement in the Americas, after NAFTA? A) CFTA B) TPP C) Mercosur D) DR-CAFTA E) SAFTA Answer: C Explanation: Mercosur (including Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay) is the second-largest common-market agreement in the Americas. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 85) Which of the following treaties provided the legal basis for Mercosur? A) Treaty of Verdun B) Treaty of Asunción C) Treaty of Westphalia D) Treaty of Versailles E) Treaty of Montevideo Answer: B Explanation: The Treaty of Asunción, which provided the legal basis for Mercosur, was signed in 1991 and formally inaugurated in 1995. The treaty calls for a common market that would eventually allow for the free movement of goods, capital, labor, and services among the member countries, with a uniform external tariff. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

86) What accounts for the lion's share of Mercosur exports to Europe? A) clothing and apparel B) telecommunication equipment C) consumer durables D) petroleum and minerals E) agricultural and agro-industrial products Answer: E Explanation: The advantages of the accord to Mercosur will mainly come from lifting trade barriers on agricultural and agro-industrial products, which account for the lion's share of Mercosur exports to Europe. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 87) What is true of state ownership in Latin America? A) Privatization of state-owned enterprises blocked the release of immediate capital to invest in strategic areas. B) State ownership is the most ideal engine for economic growth. C) Privatization of state-owned enterprises continually drained the future national resources. D) State ownership has resulted in complicated and unpredictable regulatory environments. E) State ownership has consistently resulted in the inclusion of foreign and domestic private ownership, and the formation of efficient public companies. Answer: D Explanation: In Latin America, state ownership was once considered the ideal engine for economic growth. Instead of economic growth, however, they ended up with inflated publicsector bureaucracies, complicated and unpredictable regulatory environments, the outright exclusion of foreign and domestic private ownership, and inefficient public companies. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

88) The long-term goal of the LAIA (Latin American Integration Association), better known by its Spanish acronym, ALADI, is to A) improve the literacy levels in member countries. B) reduce the child mortality rates in member countries. C) establish a Latin American common market. D) establish a common currency for all its member countries. E) standardize the industrial production in the member countries. Answer: C Explanation: The long-term goal of the LAIA, better known by its Spanish acronym, ALADI, is a gradual and progressive establishment of a Latin American common market. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 89) One way that LAIA differs from LAFTA, its predecessor, is A) the differential treatment of member countries according to their level of economic development. B) the inclusion of rules of origin. C) the exclusion of tariff barrier. D) the members are forbidden from establishing bilateral trade agreements among member countries. E) the introduction of a common currency for the member countries. Answer: A Explanation: One of the most important aspects of LAIA that differs from LAFTA, its predecessor, is the differential treatment of member countries according to their level of economic development. Difficulty: 2 Medium Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

90) More household money goes for ________ in emerging markets than in developed markets. A) housing B) durable goods C) food D) leisure E) education Answer: C Explanation: More household money goes for food in emerging markets than in developed markets, but the next category of high expenditures for emerging and developed countries alike is appliances and other durable goods. Difficulty: 1 Easy Topic: The Potential, Risks, and Challenges of Emerging Markets Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 91) Explain the importance of time zones for trade relationships and marketing operations. What are the three multinational market regions that comprise major trading blocs? Answer: Time zones make a difference. Jet lag is an important problem. Virtual meetings across time zones are more than just inconvenient; they can disrupt sleep and family life. Among three kinds of distances that international marketers must traverse—miles, time zones, and cultural distances—time zones have the greatest influence on the success of their commercial efforts abroad. Moreover, most countries also maintain good trade relationships with contiguous countries. Thus, we can also see an associated pattern of economic growth and global trade that will extend well into the 21st century. It consists of three multinational market regions that comprise major trading blocs: the Americas, Europe, and Asia. Further, the common time zones give the Europeans advantages in both Africa and the Middle East. Within each trading bloc are fully industrialized countries, as typified by the United States, Germany, and Japan; rapidly industrializing countries such as Brazil, Russia, and China that are close on the heels of the fully industrialized; and other countries that are achieving economic development but at more modest rates. Many American companies have organized their international operations according to these geographic or temporal constraints. Difficulty: 3 Hard Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-01 The importance of time zones for trade relationships and marketing operations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

92) Describe the political and economic changes affecting developing countries, including foreign investment, transition from socialist to market-driven economies, and trade policies. Answer: Not many years ago, large parts of the developing world were hostile to foreign investment and imposed severe regulatory barriers to foreign trade. But few nations are content with the economic status quo; now, more than ever, they seek economic growth, improved standards of living, and an opportunity for the good life as part of the global consumer world. The transition from socialist to market-driven economies, the liberalization of trade and investment policies in developing countries, the transfer of public-sector enterprises to the private sector, and the rapid development of regional market alliances are changing the way countries will trade and prosper in the 21st century. Argentina, Brazil, Mexico, China, South Korea, Poland, Turkey, India, and Vietnam are some of the countries undergoing impressive changes in their economies and are emerging as vast markets. These and other countries have an ever-expanding and changing demand for goods and services. As countries prosper and their people are exposed to new ideas and behavior patterns via global communications networks, old stereotypes, traditions, and habits are cast aside or tempered, and new patterns of consumer behavior emerge. Difficulty: 3 Hard Topic: The Changing Nature of the Global Economy Learning Objective: 09-02 The political and economic changes affecting global marketing. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 93) Explain the concept of economic development. Answer: Economic development is generally understood to mean an increase in national production reflected by an increase in the average per capita gross domestic product (GDP) or gross national income (GNI). Besides an increase in average per capita GNI or GDP, most interpretations of the concept also imply a widespread distribution of the increased income. Economic development, as commonly defined today, tends to mean rapid economic growth and increases in consumer demand—improvements achieved "in decades rather than centuries." Difficulty: 3 Hard Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

94) Describe the three categories used by the United Nations to classify a country's stage of economic development on the basis of its level of industrialization. Answer: The three categories in which the United Nations classifies a country's stage of economic development on the basis of its level of industrialization are: MDCs (more-developed countries). Industrialized countries with high per capital incomes, such as Canada, England, France, Germany, Japan, and the United States. LDCs (less-developed countries). Industrially developing countries just entering world trade, many of which are in Asia and Latin America, with relatively low per capita incomes. LLDCs (least-developed countries). Industrially underdeveloped, agrarian, subsistence societies with rural populations, extremely low per capita income levels, and little world trade involvement. Such LLDCs are found in Central Africa and parts of Asia. Violence and the potential for violence are often associated with LLDCs. Difficulty: 3 Hard Topic: Economic Development Learning Objective: 09-03 The connection between the economic level of a country and the marketing task. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) List and briefly describe five of the nine factors that existed during the economic growth of newly industrialized countries (NICs). Answer: The factors that promote the economic growth of NICs are as follows: Political stability in policies affecting their development. Economic and legal reforms - Poorly defined and/or weakly enforced contract and property rights are features the poorest countries have in common. Entrepreneurship - In all of these nations, free enterprise in the hands of the selfemployed was the seed of the new economic growth. Planning - A central plan with observable and measurable development goals linked to specific policies was in place. Outward orientation - Production for the domestic market and export markets with increases in efficiencies and continual differentiation of exports from competition was the focus. Factors of production - If deficient in the factors of production—land (raw materials), labor, capital, management, and technology—an environment existed where these factors could easily come from outside the country and be directed to development objectives. Industries targeted for growth - Strategically directed industrial and international trade policies were created to identify those sectors where opportunity existed. Key industries were encouraged to achieve better positions in world markets by directing resources into promising target sectors. Incentives to force a high domestic rate of savings and direct capital to update the infrastructure, transportation, housing, education, and training. Privatization of state-owned enterprises (SOEs) that had placed a drain on national budgets - Privatization released immediate capital to invest in strategic areas and gave relief from a continuing drain on future national resources. Often when industries are privatized, the new investors modernize, thus creating new economic growth. Difficulty: 3 Hard Topic: The Changing Nature of the Global Economy Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

96) Explain how the Internet impacts economic development in emerging economies. Answer: The Internet cuts transaction costs and reduces economies of scale from vertical integration. It could also reduce the economically optimal size for firms. Lower transaction costs enable small firms in Asia or Latin America to work together to develop a global reach. Smaller firms in emerging economies can now sell into a global market. The Internet accelerates the process of economic growth by speeding up the diffusion of new technologies to emerging economies. Unlike the decades required for many developing countries to benefit from railways, telephones, or electricity, the Internet is spreading rapidly throughout Latin America and the rest of the world. Information technology can jump-start national economies and allow them to leapfrog from high levels of illiteracy to computer literacy. Difficulty: 3 Hard Topic: Economic Development Learning Objective: 09-05 Growth factors and their role in economic development. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 97) Describe the origin and purpose of Mercosur and its role in improving trade associations among American nations. Answer: Mercosur includes Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay. It is the second-largest common-market agreement in the Americas after NAFTA. The Treaty of Asunción, which provided the legal basis for Mercosur, was signed in 1991 and formally inaugurated in 1995. The treaty calls for a common market that would eventually allow for the free movement of goods, capital, labor, and services among the member countries, with a uniform external tariff. Because Mercosur members were concerned about sacrificing sovereign control over taxes and other policy matters, the agreement envisioned no central institutions similar to those of the European Union institutions. Since its inception, Mercosur has become the most influential and successful free trade area in South America. With the addition of Bolivia and Chile in 1996, Mercosur became a market of 220 million people with a combined GDP of nearly $1 trillion and the third largest free trade area in the world. More recently Colombia and Ecuador have become associate members, with Venezuela to follow shortly; Mexico has observer status as well. Mercosur has demonstrated greater success than many observers expected. Difficulty: 3 Hard Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

98) Why was Caribbean Community and Common Market (CARICOM) created? What are its goals? Answer: The success of the Caribbean Free Trade Association led to the creation of the Caribbean Community and Common Market. CARICOM member countries continue in their efforts to achieve true regional integration. The group has worked toward a single-market economy and in 2000 established the CSME (CARICOM Single Market and Economy) with the goal of a common currency for all members. The introduction of a common external tariff structure was a major step toward that goal. CARICOM continues to seek stronger ties with other groups in Latin America and has signed a trade agreement with Cuba. Difficulty: 3 Hard Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 09-08 The growing importance of trading associations among American nations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 10 Europe, Africa, and the Middle East 1) Multinational market regions are those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers. 2) An important objective of the member countries of the United Nations is bringing about mutual economic development. 3) The WTO primary purpose is making trade more profitable for emerging economies. 4) Nations with complementary economic bases are most likely to encounter frictions in the development and operation of a common market unit. 5) The importance of political unity to fully achieve all the benefits of economic integration drove European countries to form the World Trade Organization (WTO). 6) The most basic level of economic integration and cooperation is the geographical local federation (GLF). 7) At the most general level, the WTO represents the most important and comprehensive trade agreement in history. 8) A free trade area (FTA) provides its members with a mass market without barriers to impede the flow of goods and services. 9) A customs union is the most fully integrated form of regional cooperation. 10) The blueprint for the European Union began with the Treaty of Rome in 1957. 11) A commonwealth of nations is an organization providing for the strongest possible economic integration relationship. 12) The European Union was created when the 12 nations of the European Community ratified the Maastricht Treaty. 13) The Commonwealth of Independent States (CIS) was formed by Britain because it did not want to join the European Economic Community (EEC). 14) Historically, standards have been used to effectively increase market access, such as the sale of German beer in Italy. 15) In line with its goal of enlargement, ten new countries joined the European Union in 2004 followed by Bulgaria and Romania in 2007. 16) The Council of Ministers of the European Union can enact into law all proposals involving changes in tax rates on products and services by majority vote. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) The decisions of the European Court of Justice are not final, but can be appealed in national courts. 18) In the Amsterdam Treaty, the European Union agreed to accommodate the changes brought about by the monetary union and the admission of new members. 19) All three Baltic states started off with the same legacy of efficient industry and Americanstyle capitalist economies. 20) Europe and Asia have a trade group that has emerged and persisted since the dissolution of the Soviet Union called the Commonwealth of Independent States. 21) The Commonwealth of Independent States is a loose economic and political alliance with open borders but no central government. 22) The first Soviet republics to declare independence were the Baltic states. 23) Economic growth among African countries has been on the downswing for the past several years. 24) The Southern African Development Community is the most advanced and viable of Africa's regional organizations. 25) Iran, Pakistan, and Turkey, formerly the Regional Cooperation for Development (RCD), have renamed their regional group the Economic Cooperation Organization (ECO). 26) The Arab states on the Persian Gulf, Egypt, and Morocco worked out an agreement on an Arab Free Trade Area, sometimes called the Greater Arab Free Trade Area (GAFTA). 27) The initial aim of a multinational market is to protect businesses that operate within its borders. 28) With the adoption of the euro, price differentials are much easier to spot, and EU consumers can search for the best bargains in brand-name products more easily. 29) Groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers are called A) multilateral economic associations. B) cartels. C) multinational market regions. D) trade associations. E) political and cultural associations.

30) Multinational market groups form A) a large organization that promotes harmony by mutual agreement to a common peace treaty. B) large markets that provide potentially significant opportunities for international business. C) a conglomerate that seeks to undertake foreign trading ventures as one company. D) a nonprofit entity that works together to aid the development of underdeveloped countries. E) regional trading blocs without trade restrictions internally and borders restricted from outsiders. 31) It was not until this single market was established that the United States, Japan, and other countries gave serious thought to creating other alliances. What is being referred to here? A) the European Commission B) the European Economic Community C) the Organization for Security and Co-operation in Europe D) the Asia-Pacific Economic Cooperation E) the European Community 32) The World Trade Organization is wholly dedicated to A) expanding capitalism. B) eliminating language barriers in trade. C) having free and open national borders. D) enforcing international anti-bribery laws. E) improving the efficiency of trade among nations. 33) Every type of economic union shares the development and enlargement of market opportunities as a basic orientation. What best describes the primary way market opportunities are enlarged by economic unions? A) preferential tariff treatment for participating members B) use of embargos to eliminate rival competition C) formulation of cartels D) quest for economic dominance through boycotts of rivals E) movement toward a common language as a means to overcoming economic hurdles 34) Nations with complementary economic bases are least likely to A) develop a distinctive monetary system. B) allow individual differences to be outweighed by the total benefit of economic integration. C) experience internal economic development. D) achieve enlargement of market opportunities through preferential tariff treatment. E) encounter frictions in the development and operation of a common market unit. 35) What is a requisite for the survival of any economic union? A) avoiding potentially significant opportunities for international business B) having agreements and mechanisms in place in order to settle economic disputes C) including into the union countries with diverse economies, distinctive monetary systems, developed agricultural bases, and different natural resources D) establishing of a comprehensive agriculture and economic policy E) ensuring biased treatment of goods produced within the union 3 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

36) What is a basic requisite for the development of a supranational market arrangement? A) political amenability among countries B) business strategy sharing C) adoption of common cultural practices D) protection of the market by exercising tariffs and boycotts E) a desire to maintain state sovereignty 37) With respect to the political factors that affect supranational markets, ________ is one of the most cherished possessions of any nation. A) a two-party system B) a three-party system C) state federalism D) state sovereignty E) a strong middle class 38) What is one of the multilateral free trade agreements signed by the United States? A) CETA B) NAFTA C) NATO D) MERCOSUR E) LAFTA 39) As Timothy examines markets that might match his company's investment requirements, he is particularly interested in the fact that the European Community has an extensive transportation network. This network seems to draw all the member nations closer together physically. What critical factor for ensuring an effective economic union is Timothy most likely examining when reviewing transportation networks? A) cultural factors B) trade factors C) political factors D) geographic proximity E) economic factors 40) Similarity of cultures can make or break an economic union. Although there is great cultural diversity in the European Union, key members share ________ and are commonly aware of being European. A) a common language B) a long-established Christian heritage C) a dislike for foreigners D) a strong affiliation to monarchy and feudalism E) a democratic background and heritage

41) One of the first factors that gave the European Union an edge over others in the process of becoming a common market was a A) similarity in agriculture and monetary policies. B) similarity in political systems. C) similarity in languages. D) well-developed transportation network. E) common affiliation toward democracy. 42) At the most general level, ________ represents the most important and comprehensive trade agreement in history. A) NAFTA B) the Amsterdam Treaty C) MERCOSUR D) the WTO E) ASEAN 43) The most basic economic integration and cooperation, in which governments agree to participate jointly to develop basic industries beneficial to each economy, is the A) political union. B) common market. C) regional cooperation for development (RCD). D) customs union. E) free trade area (FTA). 44) A ________ is an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers among partner countries while members maintain individual tariff schedules for external countries. A) restricted trade area B) noncooperation agreement C) regional cooperation for development D) tariff pact E) free trade area 45) A free trade area (FTA) provides its members with A) complete political integration. B) a mass market without trade barriers among partner countries. C) a regional cooperation for social development. D) a common market that eliminates all external tariffs. E) a market that offsets higher nontrade barriers with lower external tariff. 46) A ________ has reduced or eliminated internal tariffs and adds a common external tariff on products imported from countries outside the group. A) preferential trade area B) currency union C) regional cooperation for development D) customs union E) free trade area 5 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

47) A ________ is an intermediate step in the transition from a free trade area to a common market. A) political union B) currency union C) regional cooperation for development (RCD) D) customs union E) preferential trade area 48) What was a customs union before becoming a common market? A) NAFTA B) DR-CAFTA C) Israel-Mexico Free Trade Agreement D) the European Union E) South Asian Free Trade Area 49) A ________ agreement eliminates all tariffs and other restrictions on internal trade, adopts a set of common external tariffs, and removes all restrictions on the free flow of capital and labor among member nations. A) preferential trade agreement B) common market C) regional cooperation for development D) customs union E) free trade area 50) Which level of economic integration has no restrictions on internal trade and free flow of capital among member nations and lacks only political unity to become a political union? A) common market B) free trade area C) regional cooperation group D) customs union E) preferential trade agreement 51) The Treaty of ________ established the European Economic Community (EEC) in 1957 and called for common external tariffs and the gradual elimination of intramarket tariffs, quotas, and other trade barriers. A) Kent B) Paris C) Rome D) Cannes E) Maastricht

52) The most fully integrated form of regional cooperation is a A) political union. B) common market. C) regional cooperation for development (RCD). D) customs union. E) free trade area (FTA). 53) A ________ involves complete political and economic integration, either voluntary or enforced. A) political union B) common market C) regional cooperation for development (RCD) D) customs union E) free trade area (FTA) 54) Though now disbanded, what agreement was considered to be the most notable enforced political union of the last 40 years? A) NATO B) NAFTA C) MERCOSUR D) COMECON E) LAFTA 55) Britain and countries that were formerly part of the British Empire are an example of a ________ of nations. A) autarchy B) monocracy C) commonwealth D) proprietary colony E) trade association 56) The ________ Treaty created the European Union with 12 nations. A) Kent B) Paris C) Rome D) Cannes E) Maastricht 57) What is true of the Maastricht Treaty? A) It serves as a deterrent for the political unification of the European countries. B) It restricts movement of goods between the United Kingdom and France. C) It allows for the free movement of persons between the United States and Canada. D) It allows for the free movement of goods throughout the member states of the European Union. E) It is the first European treaty whose terms have been universally accepted. 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

58) What type of political union is mostly based on economic history and a sense of tradition? A) conglomerate B) community C) commonwealth D) proprietary colony E) trade association 59) Which treaty allows for the free movement of goods, persons, services, and capital throughout the member states of the European community? A) Rome Treaty B) Berlin Treaty C) Maastricht Treaty D) Barcelona Treaty E) Athens Treaty 60) Of all the multinational market groups, none has been more secure in its cooperation or more important economically than the A) Newly Independent States. B) Economic Community of West African States. C) Commonwealth of Independent States. D) European Union. E) Trans-Pacific Union. 61) Which institution has the responsibility to debate and decide which proposals of the Single European Act to accept as binding on European Union members? A) the European Commission B) the European Parliament C) the Council of Ministers D) the European Court of Justice E) the European Committee of the Regions 62) Which European Union institution originally had only a consultative role but can now amend and adopt Union legislation? A) the European Parliament B) the Council of Ministers C) the Court of Justice D) the European Commission E) the European Central Bank 63) The institutions of the European Union form a(n) ________ pattern. A) bilateral B) unitary C) federal D) provincial E) global 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

64) The European Commission, the Council of Ministers, the European Parliament, and the Court of Justice are institutions of the A) COMECON. B) European Free Trade Area. C) European Economic Area. D) European Union. E) Trans-Pacific Union. 65) The European ________ initiates policy and supervises its observance by member states, and it proposes and supervises execution of laws and policies. A) Parliament B) Committee of the Regions C) Commission D) Court of Auditors E) Court of Justice 66) The ________ is the decision-making body of the European Union that can enact into law all proposals by majority vote except for changes in tax rates on products and services, which require unanimous vote. A) United Nations B) World Trade Organization C) European Commission D) Commonwealth of Independent States E) Council of Ministers 67) The various legal instruments used by the European Union A) issue regulations that are binding against the member states if the national courts of the member states agree to the regulations. B) must confer with the United Nations before issuing directives against member states. C) direct all disputes involving the European Union law to the International Court of Justice. D) have the authority to issue regulations that bind the member states directly. E) require the approval of individual nations to address binding decisions against an enterprise of that nation. 68) Which EU institution drafted the Maastricht Treaty that was presented to the European Union member states for ratification? A) the United Nations B) the World Trade Organization C) the European Commission D) the Commonwealth Delineation E) the Council of Ministers

69) The parameters of the creation of a common currency for the European Union were established by A) the Economic and Monetary Union provision of the Maastricht Treaty. B) the Single Currency provision of the Treaty of Rome. C) the Enhanced Cooperation provision of the Treaty of Utrecht. D) the Economic Union provision of the Treaty of Vienna. E) the Free Trade provision of the Anglo-Irish Treaty. 70) Which EU institution is responsible for challenging any measures incompatible with the Treaty of Rome and for passing judgment, at the request of a national court, on the interpretation or validity of points of European Union Law? A) the International Court of Justice B) the European Court of Justice C) the International Criminal Court D) the European Common Judicial Council E) the European Security Council 71) Which country rejected the euro, causing a debate about the EU's future? A) Austria B) Greece C) Finland D) Denmark E) Spain 72) Which statement is true about the European Parliament? A) It has extensive budgetary powers that allow it to be involved in major EU expenditures. B) It serves as a purely consultative body. C) It is responsible for debating and deciding which proposals of the Single European Act to accept as binding on EU members. D) It initiates policy and supervises its observance by member states. E) It is responsible for challenging any measures incompatible with the Treaty of Rome. 73) The Economic and Monetary Union provision of the Maastricht Treaty established the parameters for the creation of the A) dollar. B) pound. C) rupee. D) ruble. E) euro.

74) The ________ increases the authority of the institutions of the European Union and is designed to accommodate the changes brought about by the monetary union and the admission of new members. A) Treaty of Rome B) Single European Act C) Maastricht Treaty D) Expansion Act E) Amsterdam Treaty 75) What long-term challenge is the European Union facing? A) eliminating all tariffs on internal trade amongst member nations B) establishing a common currency for the Union C) including Asia into the Union D) limiting the political aspects of the Union E) finding ways to contract the Union 76) With the expansion of the European Union, existing members fear A) retaliation by the Soviet Union against them. B) a flood of cheap labor into their countries. C) that OPEC will cut off supplies to countries supporting the expansion of the European Union. D) free movement of capital amongst the member nations. E) that they would need to close the borders between member nations. 77) One of the long-term challenges facing the European Union in the next 50 years is A) deciding about further enlargement. B) creation of a common currency. C) reducing the free flow of capital between its member nations. D) deciding on how to control the individualistic European population. E) establishing a court that would settle the disputes among member nations. 78) What is true of the European Court of Justice? A) It initiates policy and supervises its observance by member states. B) Its decisions require approval by the top three nations of the European Union. C) Its decisions are final and cannot be appealed in national courts. D) It primarily has a consultative role in interpreting the nuances of the EU law. E) It can amend and adopt Union legislation. 79) Eastern Europe and the Baltic states, satellite nations of the former Soviet Union, have moved steadily toward adopting aspects of A) capitalism. B) autocracy. C) Marxist–socialism. D) despotism. E) communism.

80) Eastern Europe and the Baltic states, satellite nations of the former Soviet Union, have moved steadily toward establishing postcommunist market reforms. As a result, A) the region is against establishing free markets. B) new business opportunities are emerging in this region. C) all of the eastern European countries can be viewed as one entity. D) all of these countries have the same level of cultural assimilation. E) all of these countries have had the same success in economic reform and growth. 81) The Czech Republic, Hungary, the Slovak Republic, and Poland have become members of the A) UNDP. B) OECD. C) ASEAN. D) LAIA. E) APEC. 82) Why is Estonia's economic growth since independence from the Soviet Union outpacing the other Baltic nations? A) It took up the ruble. B) It nationalized all companies and land. C) The state helped all its struggling banks. D) It adopted the freest trading regime of the three Baltic nations. E) It joined the European Union immediately after its independence in 1992. 83) Most eastern European countries are privatizing state-owned enterprises, establishing free market pricing systems, and A) introducing autarchic trade policies. B) increasing trade barriers. C) wrestling with inflation. D) making import controls stringent. E) switching to a socialistic economy. 84) One reason Yugoslavia has been facing internal strife is due to A) reunification with Slovenia. B) European Parliament sanctions. C) adoption of Marxist–socialist policies. D) rise of autocracy. E) ethnic divisions. 85) The first Soviet republics to declare independence from the Soviet Union were A) the Russian SFSR. B) the Ukrainian SSR. C) the Baltic states. D) the Falkland Islands. E) the Newly Independent States. 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

86) Which is the trade group that is part of Europe and Asia, has emerged and persisted since the dissolution of the Soviet Union, and is composed of all the republics except the Baltic states? A) the European Union East B) the Commonwealth of Independent States C) the Eastern Bloc Economic Area D) the European Free Trade Association E) the Euro-Soviet Union 87) What is a provision of the commonwealth agreement signed by the Commonwealth of Independent States? A) to reject the powers of the old regimes B) to keep the ruble but allow new currencies C) to create disjointed control of nuclear weapons D) to invalidate all Soviet foreign treaties and debt obligations E) to avoid creating a European Union–style free trade association 88) The Commonwealth of Independent States is A) a political alliance with a central government. B) an economic and political alliance with open borders but no central government. C) an economic and political alliance with closed borders and one central government. D) a federation of many states. E) a supranational organization similar to the old European community. 89) When the Soviet Union dissolved, the ________ emerged that had 12 members that agreed to a loose economic and political alliance with open borders but no central government. A) European Trade Pact B) Commonwealth of Independent States C) Eurasian Alliance D) Russian Confederation E) Post-Soviet Bloc 90) ECOWAS, SADC, and EAC are active regional cooperative groups in A) North America. B) Australia. C) Africa. D) Europe. E) Asia. 91) What has hampered the conferences held by the United Nations Economic Commission for Africa from bringing about economic integration? A) governmental inexperience B) depletion of natural resources C) excessive influx of products D) lack of beneficial funds E) excess of cheap labor 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

92) What makes the South African market an important base for serving nearby African markets that are too small to be considered individually? A) the rise of communism in South Africa B) the South African market's developed infrastructure C) the economic embargo imposed by the United Nations D) the existence of inward-looking trade and investment policies E) the South African government's nationalization initiative 93) South Africa is most likely to experience rapid economic growth in as few as 10 years owing to A) the rise of communism. B) its induction into the ASEAN. C) its industrial base. D) the economic embargo by the UN. E) the decoupling of small African markets from it. 94) What is the most advanced and viable of Africa's regional organizations? A) Economic Community of West African States B) African Development Bank C) Southern African Development Community D) Organization of African Unity E) Economic Community of Central African States 95) What is a reason for East Asia's economic success? A) the availability of an extraordinarily rich land B) the existence of a common currency C) the implementation of Marxist–socialist policies D) the rise of autocracy E) the emphasis placed on education and healthcare 96) ________ has the potential to become the newest BEM, but its development will depend on government action and external investment by other governments and multinational firms. A) South Africa B) Canada C) Japan D) Singapore E) Britain 97) What is a consequence of the creation of large mass markets? A) It will cripple businesses accustomed to mass production and mass distribution. B) It will increase the significance of small national markets. C) It will lead to decreased purchasing power. D) It will increase import tariffs worldwide by at least 70 percent. E) It will lead to an overall drop in international trade.

98) What has facilitated the adoption of the euro among EU countries? A) increased complexity of online marketing. B) the elimination of parallel imports. C) an increase in European import tariffs by 60 percent. D) easily recognizable price differentials. E) a decrease in the toughness of market competition in Europe. 99) Briefly explain the concept of a multinational market region, and explain why they are important today. 100) Successful economic union requires favorable economic, political, cultural, and geographic factors. Briefly explain how these four factors impact regional integration. 101) What is the purpose of the regional cooperation for development? 102) Compare and contrast the concepts of free trade area, customs union, common market, and political union. 103) What is a commonwealth? Discuss the features of this form of economic integration. 104) What was the intent of the Maastricht Treaty, and what has been its result? 105) Discuss the functions of each of the four institutions under the European Union. 106) Discuss the expansion of the European Union. What are some of the issues faced by existing members as a result of the expansion? 107) What countries make up the Commonwealth of Independent States? How does this group work? 108) Describe the opportunities offered by economic integration.

International Marketing, 18e (Cateora) Chapter 10 Europe, Africa, and the Middle East 1) Multinational market regions are those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers. Answer: TRUE Explanation: Multinational market regions are those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers. Difficulty: 1 Easy Topic: History and Implications Regional Economic Agreements Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) An important objective of the member countries of the United Nations is bringing about mutual economic development. Answer: TRUE Explanation: Part of the efforts of the 193 member countries in the United Nations includes mutual economic development. Difficulty: 1 Easy Topic: History and Implications Regional Economic Agreements Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) The WTO primary purpose is making trade more profitable for emerging economies. Answer: FALSE Explanation: The World Trade Organization, with its 164 members and over 20 observers, is wholly dedicated to making trade among nations more efficient. Difficulty: 1 Easy Topic: History and Implications Regional Economic Agreements Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) Nations with complementary economic bases are most likely to encounter frictions in the development and operation of a common market unit. Answer: FALSE Explanation: Nations with complementary economic bases are least likely to encounter frictions in the development and operation of a common market unit. Difficulty: 1 Easy Topic: History and Implications Regional Economic Agreements Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) The importance of political unity to fully achieve all the benefits of economic integration drove European countries to form the World Trade Organization (WTO). Answer: FALSE Explanation: The importance of political unity to fully achieve all the benefits of economic integration has driven European countries to form the Union (EU). Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) The most basic level of economic integration and cooperation is the geographical local federation (GLF). Answer: FALSE Explanation: The most basic level of economic integration and cooperation is the regional cooperation for development (RCD). Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) At the most general level, the WTO represents the most important and comprehensive trade agreement in history. Answer: TRUE Explanation: At the most general level, the World Trade Organization represents the most important and comprehensive trade agreement in history. However, beyond the WTO, multinational market groups take several other forms, varying significantly in the degree of cooperation, dependence, and interrelationship among participating nations. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) A free trade area (FTA) provides its members with a mass market without barriers to impede the flow of goods and services. Answer: TRUE Explanation: A free trade area provides its members with a mass market without barriers to impede the flow of goods and services. It is an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers among partner countries while members maintain individual tariff schedules for external countries. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) A customs union is the most fully integrated form of regional cooperation. Answer: FALSE Explanation: A political union is the most fully integrated form of regional cooperation. It involves complete political and economic integration, either voluntary or enforced. Whereas, a customs union enjoys the free trade area's reduced or eliminated internal tariffs and adds a common external tariff on products imported from countries outside the union. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) The blueprint for the European Union began with the Treaty of Rome in 1957. Answer: TRUE Explanation: The Treaty of Rome established the European Economic Community (EEC). The European Union is an extension of the EEC. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) A commonwealth of nations is an organization providing for the strongest possible economic integration relationship. Answer: FALSE Explanation: A commonwealth of nations is a voluntary organization providing for the loosest possible relationship that can be classified as economic integration. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) The European Union was created when the 12 nations of the European Community ratified the Maastricht Treaty. Answer: TRUE Explanation: The European Union was created upon ratification of the Maastricht Treaty by 12 nations of the European Community. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) The Commonwealth of Independent States (CIS) was formed by Britain because it did not want to join the European Economic Community (EEC). Answer: FALSE Explanation: The Commonwealth of Independent States (CIS) was formed by the republics of the former Soviet Union. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Historically, standards have been used to effectively increase market access, such as the sale of German beer in Italy. Answer: FALSE Explanation: Historically, standards have been used to effectively limit market access. Restrictive standards have kept competing products, whether from other European countries or elsewhere, out of their respective markets. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) In line with its goal of enlargement, ten new countries joined the European Union in 2004 followed by Bulgaria and Romania in 2007. Answer: TRUE Explanation: The process of enlargement was for a long time the most important item on the EU's agenda. Ten new countries were added in 2004, some ahead of schedule. Bulgaria and Romania entered as planned in 2007. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) The Council of Ministers of the European Union can enact into law all proposals involving changes in tax rates on products and services by majority vote. Answer: FALSE Explanation: The Council can enact into law all proposals by majority vote except for changes in tax rates on products and services, which require unanimous vote. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) The decisions of the European Court of Justice are not final, but can be appealed in national courts. Answer: FALSE Explanation: The European Court of Justice (ECJ) is the European Union's Supreme Court. It is responsible for challenging any measures incompatible with the Treaty of Rome and for passing judgment, at the request of a national court, on the interpretation or validity of points of European Union law. The court's decisions are final and cannot be appealed in national courts. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) In the Amsterdam Treaty, the European Union agreed to accommodate the changes brought about by the monetary union and the admission of new members. Answer: TRUE Explanation: The Amsterdam Treaty increases the authority of the institutions of the European Union and is designed to accommodate the changes brought about by the monetary union and the admission of new members. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) All three Baltic states started off with the same legacy of efficient industry and Americanstyle capitalist economies. Answer: FALSE Explanation: The Baltic states started off with roughly the same legacy of inefficient industry and Soviet-style command economies. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) Europe and Asia have a trade group that has emerged and persisted since the dissolution of the Soviet Union called the Commonwealth of Independent States. Answer: TRUE Explanation: Within the European region is the Commonwealth of Independent States. New and untested, it is a coalition of 12 former USSR republics. In 2009, Georgia resigned from the Commonwealth. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) The Commonwealth of Independent States is a loose economic and political alliance with open borders but no central government. Answer: TRUE Explanation: The CIS is a loose economic and political alliance with open borders but no central government. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) The first Soviet republics to declare independence were the Baltic states. Answer: TRUE Explanation: The series of events after the aborted coup against Mikhail Gorbachev led to the complete dissolution of the USSR. The first Soviet republics to declare independence were the Baltic states, which quickly gained recognition by several Western nations. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) Economic growth among African countries has been on the downswing for the past several years. Answer: FALSE Explanation: In part stimulated by increasing foreign direct investment, particularly from China for infrastructure projects, prospects for enterprise south of the Sahara are on the upswing. Despite global economic problems and local political and environmental disruptions, growth among African countries has been picking up nicely in the past few years. Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) The Southern African Development Community is the most advanced and viable of Africa's regional organizations. Answer: TRUE Explanation: The Southern African Development Community is the most advanced and viable of Africa's regional organizations. Its 15 members encompass a landmass of seven million square kilometers containing abundant natural resources and a population of more than 250 million. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) Iran, Pakistan, and Turkey, formerly the Regional Cooperation for Development (RCD), have renamed their regional group the Economic Cooperation Organization (ECO). Answer: TRUE Explanation: Iran, Pakistan, and Turkey, formerly the Regional Cooperation for Development (RCD), have renamed their regional group the Economic Cooperation Organization (ECO). Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) The Arab states on the Persian Gulf, Egypt, and Morocco worked out an agreement on an Arab Free Trade Area, sometimes called the Greater Arab Free Trade Area (GAFTA). Answer: TRUE Explanation: The Arab states on the Persian Gulf, Egypt, and Morocco worked out an agreement on an Arab Free Trade Area, sometimes called the Greater Arab Free Trade Area (GAFTA). Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) The initial aim of a multinational market is to protect businesses that operate within its borders. Answer: TRUE Explanation: The initial aim of a multinational market is to protect businesses that operate within its borders. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-05 Strategic implications for marketing in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) With the adoption of the euro, price differentials are much easier to spot, and EU consumers can search for the best bargains in brand-name products more easily. Answer: TRUE Explanation: With the adoption of the euro, price differentials are much easier to spot, and the consumer can search for the best bargains in brand-name products more easily. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-06 The size and nature of marketing opportunities in the European/African/Middle East regions. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) Groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers are called A) multilateral economic associations. B) cartels. C) multinational market regions. D) trade associations. E) political and cultural associations. Answer: C Explanation: Multinational market regions are those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers. Difficulty: 1 Easy Topic: History and Implications Regional Economic Agreements Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

32) The World Trade Organization is wholly dedicated to A) expanding capitalism. B) eliminating language barriers in trade. C) having free and open national borders. D) enforcing international anti-bribery laws. E) improving the efficiency of trade among nations. Answer: E Explanation: The World Trade Organization, with its 160 members and 24 observers, is wholly dedicated to making trade among nations more efficient. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 33) Every type of economic union shares the development and enlargement of market opportunities as a basic orientation. What best describes the primary way market opportunities are enlarged by economic unions? A) preferential tariff treatment for participating members B) use of embargos to eliminate rival competition C) formulation of cartels D) quest for economic dominance through boycotts of rivals E) movement toward a common language as a means to overcoming economic hurdles Answer: A Explanation: Usually, markets are enlarged through preferential tariff treatment for participating members, common tariff barriers against outsiders, or both. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

34) Nations with complementary economic bases are least likely to A) develop a distinctive monetary system. B) allow individual differences to be outweighed by the total benefit of economic integration. C) experience internal economic development. D) achieve enlargement of market opportunities through preferential tariff treatment. E) encounter frictions in the development and operation of a common market unit. Answer: E Explanation: Nations with complementary economic bases are least likely to encounter frictions in the development and operation of a common market unit. However, for an economic union to survive, it must have agreements and mechanisms in place to settle economic disputes. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 35) What is a requisite for the survival of any economic union? A) avoiding potentially significant opportunities for international business B) having agreements and mechanisms in place in order to settle economic disputes C) including into the union countries with diverse economies, distinctive monetary systems, developed agricultural bases, and different natural resources D) establishing of a comprehensive agriculture and economic policy E) ensuring biased treatment of goods produced within the union Answer: B Explanation: For an economic union to survive, it must have agreements and mechanisms in place to settle economic disputes. In addition, the total benefit of economic integration must outweigh individual differences that are sure to arise as member countries adjust to new trade relationships. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

36) What is a basic requisite for the development of a supranational market arrangement? A) political amenability among countries B) business strategy sharing C) adoption of common cultural practices D) protection of the market by exercising tariffs and boycotts E) a desire to maintain state sovereignty Answer: A Explanation: Political amenability among countries is a basic requisite for the development of a supranational market arrangement. Participating countries must have comparable aspirations and general compatibility before surrendering any part of their national sovereignty. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 37) With respect to the political factors that affect supranational markets, ________ is one of the most cherished possessions of any nation. A) a two-party system B) a three-party system C) state federalism D) state sovereignty E) a strong middle class Answer: D Explanation: State sovereignty is one of the most cherished possessions of any nation and is relinquished only for a promise of significant improvement of the national position through cooperation. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

38) What is one of the multilateral free trade agreements signed by the United States? A) CETA B) NAFTA C) NATO D) MERCOSUR E) LAFTA Answer: B Explanation: The United States has bilateral free trade agreements in progress and approved with several nations in addition to multilateral agreements such as NAFTA and DR-CAFTA (Dominican Republic, Central American Countries, and the U.S.). Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 39) As Timothy examines markets that might match his company's investment requirements, he is particularly interested in the fact that the European Community has an extensive transportation network. This network seems to draw all the member nations closer together physically. What critical factor for ensuring an effective economic union is Timothy most likely examining when reviewing transportation networks? A) cultural factors B) trade factors C) political factors D) geographic proximity E) economic factors Answer: D Explanation: Geographical closeness does facilitate the functioning of a common market. It is seen that transportation networks are likely to be interrelated and well developed when countries are close together. Therefore, Timothy is judging the effectiveness of the economic union by assessing the geographic proximity of the members of the union. Difficulty: 3 Hard Topic: Geographical Implications that Affect Trade Learning Objective: 10-01 The reasons for economic union. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

40) Similarity of cultures can make or break an economic union. Although there is great cultural diversity in the European Union, key members share ________ and are commonly aware of being European. A) a common language B) a long-established Christian heritage C) a dislike for foreigners D) a strong affiliation to monarchy and feudalism E) a democratic background and heritage Answer: B Explanation: Cultural similarity eases the shock of economic cooperation with other countries. The more similar the culture, the more likely an agreement is to succeed, because members understand the outlook and viewpoints of their colleagues. Although there is great cultural diversity in the European Union, key members share a long-established Christian heritage and are commonly aware of being European. Difficulty: 1 Easy Topic: The Nature of Cross-Cultural Risk Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 41) One of the first factors that gave the European Union an edge over others in the process of becoming a common market was a A) similarity in agriculture and monetary policies. B) similarity in political systems. C) similarity in languages. D) well-developed transportation network. E) common affiliation toward democracy. Answer: D Explanation: One of the first major strengths of the European Union was its transportation network; the opening of the tunnel between England and France further bound this common market. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-01 The reasons for economic union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

42) At the most general level, ________ represents the most important and comprehensive trade agreement in history. A) NAFTA B) the Amsterdam Treaty C) MERCOSUR D) the WTO E) ASEAN Answer: D Explanation: The World Trade Organization represents the most important and comprehensive trade agreement in history. Difficulty: 1 Easy Topic: The World Trading System, GATT, and the WTO Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 43) The most basic economic integration and cooperation, in which governments agree to participate jointly to develop basic industries beneficial to each economy, is the A) political union. B) common market. C) regional cooperation for development (RCD). D) customs union. E) free trade area (FTA). Answer: C Explanation: The most basic economic integration and cooperation is the regional cooperation for development (RCD). In the RCD arrangement, governments agree to participate jointly to develop basic industries beneficial to each economy. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

44) A ________ is an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers among partner countries while members maintain individual tariff schedules for external countries. A) restricted trade area B) noncooperation agreement C) regional cooperation for development D) tariff pact E) free trade area Answer: E Explanation: A free trade area is an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers among partner countries while members maintain individual tariff schedules for external countries. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 45) A free trade area (FTA) provides its members with A) complete political integration. B) a mass market without trade barriers among partner countries. C) a regional cooperation for social development. D) a common market that eliminates all external tariffs. E) a market that offsets higher nontrade barriers with lower external tariff. Answer: B Explanation: A free trade area provides its members with a mass market without barriers to impede the flow of goods and services among partner countries. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

46) A ________ has reduced or eliminated internal tariffs and adds a common external tariff on products imported from countries outside the group. A) preferential trade area B) currency union C) regional cooperation for development D) customs union E) free trade area Answer: D Explanation: A customs union enjoys the free trade area's reduced or eliminated internal tariffs and adds a common external tariff on products imported from countries outside the union. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 47) A ________ is an intermediate step in the transition from a free trade area to a common market. A) political union B) currency union C) regional cooperation for development (RCD) D) customs union E) preferential trade area Answer: D Explanation: The customs union is a logical stage of cooperation in the transition from an FTA to a common market. It enjoys the free trade area's reduced or eliminated internal tariffs and adds a common external tariff on products imported from countries outside the union. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

48) What was a customs union before becoming a common market? A) NAFTA B) DR-CAFTA C) Israel-Mexico Free Trade Agreement D) the European Union E) South Asian Free Trade Area Answer: D Explanation: A common market is a unified economy and lacks only political unity to become a political union. The European Union was a customs union before becoming a common market. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 49) A ________ agreement eliminates all tariffs and other restrictions on internal trade, adopts a set of common external tariffs, and removes all restrictions on the free flow of capital and labor among member nations. A) preferential trade agreement B) common market C) regional cooperation for development D) customs union E) free trade area Answer: B Explanation: A common market agreement eliminates all tariffs and other restrictions on internal trade, adopts a set of common external tariffs, and removes all restrictions on the free flow of capital and labor among member nations. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

50) Which level of economic integration has no restrictions on internal trade and free flow of capital among member nations and lacks only political unity to become a political union? A) common market B) free trade area C) regional cooperation group D) customs union E) preferential trade agreement Answer: A Explanation: A common market is a unified economy and lacks only political unity to become a political union. It eliminates all tariffs and other restrictions on internal trade, adopts a set of common external tariffs, and removes all restrictions on the free flow of capital and labor among member nations. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 51) The Treaty of ________ established the European Economic Community (EEC) in 1957 and called for common external tariffs and the gradual elimination of intramarket tariffs, quotas, and other trade barriers. A) Kent B) Paris C) Rome D) Cannes E) Maastricht Answer: C Explanation: The Treaty of Rome, which established the European Economic Community (EEC) in 1957, called for common external tariffs and the gradual elimination of intramarket tariffs, quotas, and other trade barriers. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

52) The most fully integrated form of regional cooperation is a A) political union. B) common market. C) regional cooperation for development (RCD). D) customs union. E) free trade area (FTA). Answer: A Explanation: A political union is the most fully integrated form of regional cooperation. It involves complete political and economic integration, either voluntary or enforced. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 53) A ________ involves complete political and economic integration, either voluntary or enforced. A) political union B) common market C) regional cooperation for development (RCD) D) customs union E) free trade area (FTA) Answer: A Explanation: Political union is the most fully integrated form of regional cooperation. It involves complete political and economic integration, either voluntary or enforced. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

54) Though now disbanded, what agreement was considered to be the most notable enforced political union of the last 40 years? A) NATO B) NAFTA C) MERCOSUR D) COMECON E) LAFTA Answer: D Explanation: The most notable enforced political union was the Council for Mutual Economic Assistance (COMECON), a centrally controlled group of countries organized by the Soviet Union. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 55) Britain and countries that were formerly part of the British Empire are an example of a ________ of nations. A) autarchy B) monocracy C) commonwealth D) proprietary colony E) trade association Answer: C Explanation: A commonwealth of nations is a voluntary organization providing for the loosest possible relationship that can be classified as economic integration. The British Commonwealth includes Britain and countries formerly part of the British Empire. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

56) The ________ Treaty created the European Union with 12 nations. A) Kent B) Paris C) Rome D) Cannes E) Maastricht Answer: E Explanation: The European Union was created when the 12 nations of the European Community ratified the Maastricht Treaty. The members committed themselves to economic and political integration. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 57) What is true of the Maastricht Treaty? A) It serves as a deterrent for the political unification of the European countries. B) It restricts movement of goods between the United Kingdom and France. C) It allows for the free movement of persons between the United States and Canada. D) It allows for the free movement of goods throughout the member states of the European Union. E) It is the first European treaty whose terms have been universally accepted. Answer: D Explanation: The Maastricht Treaty allows for the free movement of goods, persons, services, and capital throughout the member states; a common currency; common foreign and security policies, including defense; a common justice system; and cooperation between police and other authorities on crime, terrorism, and immigration issues. Difficulty: 2 Medium Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

58) What type of political union is mostly based on economic history and a sense of tradition? A) conglomerate B) community C) commonwealth D) proprietary colony E) trade association Answer: C Explanation: A commonwealth can best be described as the weakest of political unions and is mostly based on economic history and a sense of tradition. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 59) Which treaty allows for the free movement of goods, persons, services, and capital throughout the member states of the European community? A) Rome Treaty B) Berlin Treaty C) Maastricht Treaty D) Barcelona Treaty E) Athens Treaty Answer: C Explanation: The European Union was created when the 12 nations of the European Community ratified the Maastricht Treaty. The Maastricht Treaty allows for the free movement of goods, persons, services, and capital throughout the member states of the European community; a common currency; common foreign and security policies, including defense; a common justice system; and cooperation between police and other authorities on crime, terrorism, and immigration issues. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

60) Of all the multinational market groups, none has been more secure in its cooperation or more important economically than the A) Newly Independent States. B) Economic Community of West African States. C) Commonwealth of Independent States. D) European Union. E) Trans-Pacific Union. Answer: D Explanation: Of all the multinational market groups, the European Union is the most secure in its cooperation and the most important economically. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 61) Which institution has the responsibility to debate and decide which proposals of the Single European Act to accept as binding on European Union members? A) the European Commission B) the European Parliament C) the Council of Ministers D) the European Court of Justice E) the European Committee of the Regions Answer: C Explanation: The Council of Ministers is the decision-making body of the European Union; it is the Council's responsibility to debate and decide which proposals of the Single European Act to accept as binding on EU members. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

62) Which European Union institution originally had only a consultative role but can now amend and adopt Union legislation? A) the European Parliament B) the Council of Ministers C) the Court of Justice D) the European Commission E) the European Central Bank Answer: A Explanation: The European Parliament originally had only a consultative role that passed on most Union legislation. It can now amend and adopt legislation, though it does not have the power to initiate legislation. It also has extensive budgetary powers that allow it to be involved in major EU expenditures. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 63) The institutions of the European Union form a(n) ________ pattern. A) bilateral B) unitary C) federal D) provincial E) global Answer: C Explanation: The European Union's institutions form a federal pattern with executive, parliamentary, and judicial branches. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

64) The European Commission, the Council of Ministers, the European Parliament, and the Court of Justice are institutions of the A) COMECON. B) European Free Trade Area. C) European Economic Area. D) European Union. E) Trans-Pacific Union. Answer: D Explanation: The European Union's institutions form a federal pattern with executive, parliamentary, and judicial branches: the European Commission, the Council of Ministers, the European Parliament, and the Court of Justice, respectively. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 65) The European ________ initiates policy and supervises its observance by member states, and it proposes and supervises execution of laws and policies. A) Parliament B) Committee of the Regions C) Commission D) Court of Auditors E) Court of Justice Answer: C Explanation: The European Commission initiates policy and supervises its observance by member states, and it proposes and supervises execution of laws and policies. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

66) The ________ is the decision-making body of the European Union that can enact into law all proposals by majority vote except for changes in tax rates on products and services, which require unanimous vote. A) United Nations B) World Trade Organization C) European Commission D) Commonwealth of Independent States E) Council of Ministers Answer: E Explanation: The Council of Ministers is the decision-making body of the European Union; it is the Council's responsibility to debate and decide which proposals of the Single European Act to accept as binding on the members of European Union. The Council can enact into law all proposals by majority vote except for changes in tax rates on products and services, which require unanimous vote. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 67) The various legal instruments used by the European Union A) issue regulations that are binding against the member states if the national courts of the member states agree to the regulations. B) must confer with the United Nations before issuing directives against member states. C) direct all disputes involving the European Union law to the International Court of Justice. D) have the authority to issue regulations that bind the member states directly. E) require the approval of individual nations to address binding decisions against an enterprise of that nation. Answer: D Explanation: The European Union uses three legal instruments: (1) regulations binding the member states directly and having the same strength as national laws; (2) directives also binding the member states but allowing them to choose the means of execution; and (3) decisions addressed to a government, an enterprise, or an individual, binding the parties named. Over the years, the Union has gained an increasing amount of authority over its member states. Difficulty: 2 Medium Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

68) Which EU institution drafted the Maastricht Treaty that was presented to the European Union member states for ratification? A) the United Nations B) the World Trade Organization C) the European Commission D) the Commonwealth Delineation E) the Council of Ministers Answer: E Explanation: The Council of Ministers drafted the Maastricht Treaty, which was presented to member states for ratification. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 69) The parameters of the creation of a common currency for the European Union were established by A) the Economic and Monetary Union provision of the Maastricht Treaty. B) the Single Currency provision of the Treaty of Rome. C) the Enhanced Cooperation provision of the Treaty of Utrecht. D) the Economic Union provision of the Treaty of Vienna. E) the Free Trade provision of the Anglo-Irish Treaty. Answer: A Explanation: The EMU, a provision of the Maastricht Treaty, established the parameters of the creation of a common currency for the European Union, the euro, and established a timetable for its implementation. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

70) Which EU institution is responsible for challenging any measures incompatible with the Treaty of Rome and for passing judgment, at the request of a national court, on the interpretation or validity of points of European Union Law? A) the International Court of Justice B) the European Court of Justice C) the International Criminal Court D) the European Common Judicial Council E) the European Security Council Answer: B Explanation: The European Court of Justice (ECJ) is the European Union's Supreme Court. It is responsible for challenging any measures incompatible with the Treaty of Rome and for passing judgment, at the request of a national court, on the interpretation or validity of points of European Union law. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 71) Which country rejected the euro, causing a debate about the EU's future? A) Austria B) Greece C) Finland D) Denmark E) Spain Answer: D Explanation: Denmark voted in 2000 not to join the monetary union, leaving Britain and Sweden still undecided. Denmark's rejection of the euro caused a broader debate about the European Union's future. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

72) Which statement is true about the European Parliament? A) It has extensive budgetary powers that allow it to be involved in major EU expenditures. B) It serves as a purely consultative body. C) It is responsible for debating and deciding which proposals of the Single European Act to accept as binding on EU members. D) It initiates policy and supervises its observance by member states. E) It is responsible for challenging any measures incompatible with the Treaty of Rome. Answer: A Explanation: The European Parliament originally had only a consultative role that passed on most European Union legislation. It can now amend and adopt legislation, though it does not have the power to initiate legislation. It also has extensive budgetary powers that allow it to be involved in major EU expenditures. Difficulty: 2 Medium Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 73) The Economic and Monetary Union provision of the Maastricht Treaty established the parameters for the creation of the A) dollar. B) pound. C) rupee. D) ruble. E) euro. Answer: E Explanation: The EMU, a provision of the Maastricht Treaty, established the parameters for the creation of a common currency for the European Union, the euro. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

74) The ________ increases the authority of the institutions of the European Union and is designed to accommodate the changes brought about by the monetary union and the admission of new members. A) Treaty of Rome B) Single European Act C) Maastricht Treaty D) Expansion Act E) Amsterdam Treaty Answer: E Explanation: The Amsterdam Treaty increases the authority of the institutions of the European Union and is designed to accommodate the changes brought about by the monetary union and the admission of new members. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 75) What long-term challenge is the European Union facing? A) eliminating all tariffs on internal trade amongst member nations B) establishing a common currency for the Union C) including Asia into the Union D) limiting the political aspects of the Union E) finding ways to contract the Union Answer: D Explanation: The challenges facing the Union in the next 50 years appear to fall into three categories: (1) improving the Union's economic performance, (2) deciding how to limit the political aspects of union, and (3) deciding about further enlargement. The last problem may well disappear as both multilateral and bilateral agreements continue to multiply around the world and as the WTO continues to gain influence and traction in trade barrier reduction. Difficulty: 2 Medium Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

76) With the expansion of the European Union, existing members fear A) retaliation by the Soviet Union against them. B) a flood of cheap labor into their countries. C) that OPEC will cut off supplies to countries supporting the expansion of the European Union. D) free movement of capital amongst the member nations. E) that they would need to close the borders between member nations. Answer: B Explanation: The European Union is apprehensive about the infiltration of illegal immigrants from former Soviet states surging across poorly guarded borders of the newer and/or candidate states and making their way farther west within the European Union. Moreover, European Union fears a flood of cheap labor even if the borders are closed. Difficulty: 2 Medium Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 77) One of the long-term challenges facing the European Union in the next 50 years is A) deciding about further enlargement. B) creation of a common currency. C) reducing the free flow of capital between its member nations. D) deciding on how to control the individualistic European population. E) establishing a court that would settle the disputes among member nations. Answer: A Explanation: The long-term challenges facing the European Union in the next 50 years include (1) will Brexit result in further disintegration, (2) improving the Union's economic performance, (3) deciding how to limit the political aspects of union, and (4) deciding about further enlargement. Difficulty: 1 Easy Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

78) What is true of the European Court of Justice? A) It initiates policy and supervises its observance by member states. B) Its decisions require approval by the top three nations of the European Union. C) Its decisions are final and cannot be appealed in national courts. D) It primarily has a consultative role in interpreting the nuances of the EU law. E) It can amend and adopt Union legislation. Answer: C Explanation: The European Court of Justice (ECJ) is the European Union's Supreme Court. It is responsible for challenging any measures incompatible with the Treaty of Rome and for passing judgment, at the request of a national court, on the interpretation or validity of points of EU law. The court's decisions are final and cannot be appealed in national courts. Difficulty: 2 Medium Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 79) Eastern Europe and the Baltic states, satellite nations of the former Soviet Union, have moved steadily toward adopting aspects of A) capitalism. B) autocracy. C) Marxist–socialism. D) despotism. E) communism. Answer: A Explanation: Eastern Europe and the Baltic states are moving from the restrictions of a Marxist–socialist system to some version of free markets and capitalism. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

80) Eastern Europe and the Baltic states, satellite nations of the former Soviet Union, have moved steadily toward establishing postcommunist market reforms. As a result, A) the region is against establishing free markets. B) new business opportunities are emerging in this region. C) all of the eastern European countries can be viewed as one entity. D) all of these countries have the same level of cultural assimilation. E) all of these countries have had the same success in economic reform and growth. Answer: B Explanation: Eastern Europe and the Baltic states, satellite nations of the former Soviet Union, have moved steadily toward establishing postcommunist market reforms. New business opportunities are emerging almost daily, and the region is described as anywhere from chaotic with big risks to an exciting place with untold opportunities. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 81) The Czech Republic, Hungary, the Slovak Republic, and Poland have become members of the A) UNDP. B) OECD. C) ASEAN. D) LAIA. E) APEC. Answer: B Explanation: The Czech Republic, Hungary, the Slovak Republic, and Poland have become members of the OECD. Joining the OECD means they accept the obligations of the OECD to modernize their economies and to maintain sound macroeconomic policies and market-oriented structural reforms. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

82) Why is Estonia's economic growth since independence from the Soviet Union outpacing the other Baltic nations? A) It took up the ruble. B) It nationalized all companies and land. C) The state helped all its struggling banks. D) It adopted the freest trading regime of the three Baltic nations. E) It joined the European Union immediately after its independence in 1992. Answer: D Explanation: All three Baltic countries started off with roughly the same legacy of inefficient industry and Soviet-style command economies. Estonia quickly seized the lead by dropping the ruble, privatizing companies and land, letting struggling banks fail, and adopting the freest trading regime of the three countries. Its economic growth has handily outpaced Latvia's and Lithuania's. Difficulty: 2 Medium Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 83) Most eastern European countries are privatizing state-owned enterprises, establishing free market pricing systems, and A) introducing autarchic trade policies. B) increasing trade barriers. C) wrestling with inflation. D) making import controls stringent. E) switching to a socialistic economy. Answer: C Explanation: Most eastern European countries are privatizing state-owned enterprises, establishing free market pricing systems, relaxing import controls, and wrestling with inflation. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

84) One reason Yugoslavia has been facing internal strife is due to A) reunification with Slovenia. B) European Parliament sanctions. C) adoption of Marxist–socialist policies. D) rise of autocracy. E) ethnic divisions. Answer: E Explanation: Yugoslavia has been plagued with internal strife over ethnic divisions. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 85) The first Soviet republics to declare independence from the Soviet Union were A) the Russian SFSR. B) the Ukrainian SSR. C) the Baltic states. D) the Falkland Islands. E) the Newly Independent States. Answer: C Explanation: The first Soviet republics to declare independence were the Baltic states, which quickly gained recognition by several Western nations. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

86) Which is the trade group that is part of Europe and Asia, has emerged and persisted since the dissolution of the Soviet Union, and is composed of all the republics except the Baltic states? A) the European Union East B) the Commonwealth of Independent States C) the Eastern Bloc Economic Area D) the European Free Trade Association E) the Euro-Soviet Union Answer: B Explanation: Europe (and Asia) has one other trade group that has emerged and persisted since the dissolution of the Soviet Union: the Commonwealth of Independent States (CIS). The CIS is a loose economic and political alliance with open borders but no central government. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 87) What is a provision of the commonwealth agreement signed by the Commonwealth of Independent States? A) to reject the powers of the old regimes B) to keep the ruble but allow new currencies C) to create disjointed control of nuclear weapons D) to invalidate all Soviet foreign treaties and debt obligations E) to avoid creating a European Union–style free trade association Answer: B Explanation: The main provisions of the commonwealth agreement are to repeal all Soviet laws and assume the powers of the old regimes; launch radical economic reforms, including freeing most prices; keep the ruble but allow new currencies; establish a European Union–style free trade association; create joint control of nuclear weapons; and fulfill all Soviet foreign treaties and debt obligations. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

88) The Commonwealth of Independent States is A) a political alliance with a central government. B) an economic and political alliance with open borders but no central government. C) an economic and political alliance with closed borders and one central government. D) a federation of many states. E) a supranational organization similar to the old European community. Answer: B Explanation: The CIS is a loose economic and political alliance with open borders but no central government. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 89) When the Soviet Union dissolved, the ________ emerged that had 12 members that agreed to a loose economic and political alliance with open borders but no central government. A) European Trade Pact B) Commonwealth of Independent States C) Eurasian Alliance D) Russian Confederation E) Post-Soviet Bloc Answer: B Explanation: A trade group that emerged and persisted since the dissolution of the Soviet Union is the Commonwealth of Independent States (CIS). Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

90) ECOWAS, SADC, and EAC are active regional cooperative groups in A) North America. B) Australia. C) Africa. D) Europe. E) Asia. Answer: C Explanation: The Economic Community of West African States (ECOWAS), the Southern African Development Community (SADC), and the East African Community (EAC) are the three most active regional cooperative groups in Africa. Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 91) What has hampered the conferences held by the United Nations Economic Commission for Africa from bringing about economic integration? A) governmental inexperience B) depletion of natural resources C) excessive influx of products D) lack of beneficial funds E) excess of cheap labor Answer: A Explanation: The United Nations Economic Commission for Africa (ECA) has held numerous conferences but has been hampered by governmental inexperience, undeveloped resources, labor problems, and chronic product shortages. Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

92) What makes the South African market an important base for serving nearby African markets that are too small to be considered individually? A) the rise of communism in South Africa B) the South African market's developed infrastructure C) the economic embargo imposed by the United Nations D) the existence of inward-looking trade and investment policies E) the South African government's nationalization initiative Answer: B Explanation: The South African market has a developed infrastructure—airports, railways, highways, telecommunications—that makes it important as a base for serving nearby African markets too small to be considered individually but viable when coupled with South Africa. Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 93) South Africa is most likely to experience rapid economic growth in as few as 10 years owing to A) the rise of communism. B) its induction into the ASEAN. C) its industrial base. D) the economic embargo by the UN. E) the decoupling of small African markets from it. Answer: C Explanation: South Africa has an industrial base that will help propel it into rapid economic growth, with the possibility of doubling its GNP in as few as 10 years. Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

94) What is the most advanced and viable of Africa's regional organizations? A) Economic Community of West African States B) African Development Bank C) Southern African Development Community D) Organization of African Unity E) Economic Community of Central African States Answer: C Explanation: The Southern African Development Community is the most advanced and viable of Africa's regional organizations. Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 95) What is a reason for East Asia's economic success? A) the availability of an extraordinarily rich land B) the existence of a common currency C) the implementation of Marxist–socialist policies D) the rise of autocracy E) the emphasis placed on education and healthcare Answer: E Explanation: The formula for success in East Asia was an outward-oriented, market-based economic policy coupled with an emphasis on education and healthcare. Difficulty: 1 Easy Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

96) ________ has the potential to become the newest BEM, but its development will depend on government action and external investment by other governments and multinational firms. A) South Africa B) Canada C) Japan D) Singapore E) Britain Answer: A Explanation: South Africa has the potential to become the newest big emerging market (BEM), but its development will depend on government action and external investment by other governments and multinational firms. In varying degrees, foreign investors are leading the way by making sizable investments. Difficulty: 1 Easy Topic: Challenges Facing African, Middle Eastern, and South American Countries Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 97) What is a consequence of the creation of large mass markets? A) It will cripple businesses accustomed to mass production and mass distribution. B) It will increase the significance of small national markets. C) It will lead to decreased purchasing power. D) It will increase import tariffs worldwide by at least 70 percent. E) It will lead to an overall drop in international trade. Answer: B Explanation: Economic integration creates large mass markets. Many national markets, too small to bother with individually, take on new dimensions and significance when combined with markets from cooperating countries. Difficulty: 2 Medium Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-05 Strategic implications for marketing in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

98) What has facilitated the adoption of the euro among EU countries? A) increased complexity of online marketing. B) the elimination of parallel imports. C) an increase in European import tariffs by 60 percent. D) easily recognizable price differentials. E) a decrease in the toughness of market competition in Europe. Answer: D Explanation: Price standardization among country markets will be one of the necessary changes to avoid the problem of parallel imports. With the adoption of the euro, price differentials are much easier to spot, and the consumer can search for the best bargains in brand-name products more easily. Difficulty: 2 Medium Topic: The Eurocurrency Market Learning Objective: 10-06 The size and nature of marketing opportunities in the European/African/Middle East regions. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 99) Briefly explain the concept of a multinational market region, and explain why they are important today. Answer: Multinational market regions are those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers. They are the most important global trends today. Although organizational form varies widely among market regions, the universal goals of multinational cooperation are economic benefits for the participants and the associated peace between and within countries. Difficulty: 3 Hard Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-01 The reasons for economic union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

100) Successful economic union requires favorable economic, political, cultural, and geographic factors. Briefly explain how these four factors impact regional integration. Answer: The factors that facilitate the formation of a successful economic union include the following: Economic factors: Every type of economic union shares the development and enlargement of market opportunities as a basic orientation; usually, markets are enlarged through preferential tariff treatment for participating members, common tariff barriers against outsiders, or both. Enlarged, protected markets stimulate internal economic development by providing assured outlets and preferential treatment for goods produced within the customs union, and consumers benefit from lower internal tariff barriers among the participating countries. In many, but not all cases, external and internal barriers are reduced because of the greater economic security afforded to domestic producers by the enlarged market. Political factors: Political amenability among countries is another basic requisite for the development of a supranational market arrangement. Participating countries must have comparable aspirations and general compatibility before surrendering any part of their national sovereignty. State sovereignty is one of the most cherished possessions of any nation and is relinquished only for a promise of significant improvement of the national position through cooperation. Geographic and temporal proximity: Although geographic and temporal proximity are not absolutely imperative for cooperating members of a customs union, such closeness does facilitate the functioning of a common market. Transportation networks are likely to be interrelated and well developed when countries are close together. Issues of immigration, legal and illegal, also promote closer economic integration between close neighbors. Cultural factors: Generally, cultural similarity eases the shock of economic cooperation with other countries. The more similar the culture, the more likely an agreement is to succeed, because members understand the outlook and viewpoints of their colleagues. Difficulty: 3 Hard Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-01 The reasons for economic union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

101) What is the purpose of the regional cooperation for development? Answer: The regional cooperation for development (RCD) is the most basic economic integration and cooperation form. In the RCD arrangement, governments agree to participate jointly to develop basic industries beneficial to each economy. Each country makes an advance commitment to participate in the financing of a new joint venture and to purchase a specified share of the output of the venture. Difficulty: 3 Hard Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 102) Compare and contrast the concepts of free trade area, customs union, common market, and political union. Answer: A free trade area is an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers among partner countries while members maintain individual tariff schedules for external countries. A customs union enjoys the free trade area's reduced or eliminated internal tariffs and adds a common external tariff on products imported from countries outside the union. A common market agreement eliminates all tariffs and other restrictions on internal trade, adopts a set of common external tariffs, and removes all restrictions on the free flow of capital and labor among member nations. The political union is the most fully integrated form of regional cooperation. It involves complete political and economic integration. Difficulty: 3 Hard Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

103) What is a commonwealth? Discuss the features of this form of economic integration. Answer: A commonwealth of nations is a voluntary organization providing for the loosest possible relationship that can be classified as economic integration. The British Commonwealth includes Britain and countries formerly part of the British Empire. Some of its members still recognize the British monarch as their symbolic head, though Britain has no political authority over any commonwealth country. A commonwealth can best be described as the weakest of political unions and is mostly based on economic history and a sense of tradition. Heads of state meet every three years to discuss trade and political issues they jointly face, and compliance with any decisions or directives issued is voluntary. Difficulty: 3 Hard Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-02 Patterns of international cooperation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 104) What was the intent of the Maastricht Treaty, and what has been its result? Answer: After the ratification of the Maastricht Treaty, the members of the European Union committed themselves to economic and political integration. The treaty allows for the free movement of goods, persons, services, and capital throughout the member states; a common currency; common foreign and security policies, including defense; a common justice system; and cooperation between police and other authorities on crime, terrorism, and immigration issues. Each year the European Union members become more closely tied economically and politically. Now that the Economic and Monetary Union is in place and most participating members share a common currency, the European Union is headed toward political union as well. However, taxation is one of the areas where implementation lags and reform continues to be necessary. Difficulty: 3 Hard Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-02 Patterns of international cooperation.; 10-03 The evolution of the European Union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

105) Discuss the functions of each of the four institutions under the European Union. Answer: The European Union's institutions form a federal pattern with executive, parliamentary, and judicial branches: the European Commission, the Council of Ministers, the European Parliament, and the Court of Justice, respectively. The European Union uses three legal instruments: (1) regulations binding the member states directly and having the same strength as national laws; (2) directives also binding the member states but allowing them to choose the means of execution; and (3) decisions addressed to a government, an enterprise, or an individual, binding the parties named. The European Commission initiates policy and supervises its observance by member states. It also proposes and supervises execution of laws and policies. Commission members act only in the interest of the European Union, and their responsibilities are to ensure that the European Union rules and the principles of the common market are respected. The Council of Ministers is the decision-making body of the European Union; it is the Council's responsibility to debate and decide which proposals of the Single European Act to accept as binding on European Union members. The Council can enact into law all proposals by majority vote except for changes in tax rates on products and services, which require unanimous vote. The European Parliament originally had only a consultative role that passed on most Union legislation. It can now amend and adopt legislation, though it does not have the power to initiate legislation. It also has extensive budgetary powers that allow it to be involved in major European Union expenditures. The European Court of Justice (ECJ) is the European Union's Supreme Court. It is responsible for challenging any measures incompatible with the Treaty of Rome and for passing judgment, at the request of a national court, on the interpretation or validity of points of European Union law. The court's decisions are final and cannot be appealed in national courts. Difficulty: 3 Hard Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

106) Discuss the expansion of the European Union. What are some of the issues faced by existing members as a result of the expansion? Answer: The process of expansion has been the most important item on the European Union's agenda. Ten new countries were added in 2004. Bulgaria and Romania entered in 2007, as did Croatia in 2013, and talks with Turkey, Macedonia, Montenegro, Albania, Iceland, and Serbia are still in progress. Negotiations with Turkey have had their ups and downs, but the Muslim majority nation has economically benefited from its new openness. However, a broader preoccupation for the European Union is the prospect of illegal immigrants from former Soviet states surging across poorly guarded borders of the newer and/or candidate states and making their way farther west within the European Union. The European Union is demanding that borders be sealed, but the new and candidate states are reluctant to jeopardize relations with neighboring communities. Furthermore, the European Union fears a flood of cheap labor even if the borders are closed; it wants a long transition period before freedom of movement of labor, whereas the applicants say their citizens should be allowed to work anywhere in the European Union once they are members. Difficulty: 3 Hard Topic: Western Europe's Marketplace in the World Economy Learning Objective: 10-03 The evolution of the European Union. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 107) What countries make up the Commonwealth of Independent States? How does this group work? Answer: Europe (and Asia) has a trade group that has emerged and persisted since the dissolution of the Soviet Union: the Commonwealth of Independent States (CIS). Twelve republics excluding the Baltic States of the former USSR, collectively known as the Newly Independent States (NIS), regrouped into the Commonwealth of Independent States. The CIS is a loose economic and political alliance with open borders but no central government. The main provisions of the commonwealth agreement are to repeal all Soviet laws and assume the powers of the old regimes; launch radical economic reforms, including freeing most prices; keep the ruble but allow new currencies; establish a European Union–style free trade association; create joint control of nuclear weapons; and fulfill all Soviet foreign treaties and debt obligations. The three Slavic republics of Russia, Ukraine, and Belarus have interests and history in common, as do the five Central Asian republics. But the ties between these two core groups of the CIS are tenuous and stem mainly from their former Soviet membership. Difficulty: 3 Hard Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-04 Evolving patterns of trade as eastern Europe and the former Soviet states embrace free-market systems. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

108) Describe the opportunities offered by economic integration. Answer: Economic integration creates large mass markets. Many national markets take on new dimensions and significance when combined with markets from cooperating countries. Large markets are particularly important to businesses accustomed to mass production and mass distribution because of the economies of scale and marketing efficiencies that can be achieved. Most multinational groups have coordinated programs to foster economic growth as part of their cooperative efforts. Such programs work to the advantage of marketers by increasing purchasing power, improving regional infrastructure, and fostering economic development. Despite the problems that are sure to occur because of integration, the economic benefits from free trade can be enormous. Major savings will result from the billions of dollars now spent in developing different versions of products to meet a range of national standards. Difficulty: 3 Hard Topic: Overview of Regional Economic Integration and its Different Levels Learning Objective: 10-05 Strategic implications for marketing in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 11 The Asia Pacific Region 1) The term "The Greater China" refers to the information technology (IT) corridor in north China. 2) In the year 2009, Germany became the world's biggest exporter ahead of China. 3) The PNTR status given to China contributed much toward increasing the import barriers on American products and services. 4) In view of China's size, diversity, and political organization, it is not possible to have onegrowth strategy for China. 5) A major issue that China has to address in its path to economic growth is improving human rights. 6) China is now the biggest market for personal computers. 7) China's "one country, two systems" agreement with Hong Kong guarantees the latter a high degree of autonomy. 8) The Hong Kong dollar is freely convertible. 9) The Hong Kong SAR government stresses the predominant role of the public sector over the private sector. 10) The sector that was hit the hardest during the Japanese recession was the real estate sector. 11) According to analysts, Japan's long entrenched Liberal Democratic political party was one of the reasons for the Japanese crisis. 12) One of Japan's core advantages over other countries is its language; the syntax of the Japanese language is similar to that of certain programming languages. 13) The Japanese have an affinity for united effort. 14) Owing to the deeply corrupt system, most of the U.S. manufacturers in India are leaving for other countries or pulling their money back home. 15) The Four Asian Tigers are: China, Thailand, India, and North Korea. 16) The United States has granted NTR (normal trade relations) status to Vietnam. 17) Bottom-of-the-pyramid markets (BOPMs) are always defined by national borders. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

18) In recent years, the United States has emerged as Japan's single largest trading partner, surpassing the Southeast Asian countries. 19) The Asian financial crisis led to the creation of the ASEAN+3. 20) APEC is a body formed by the major governments of the Asian countries with the primary purpose of protecting their local industries against the market domination by their western counterparts. 21) Northeast China was the industrial and technological center of the country in the 1970s and 1980s. 22) The United States is now Japan's most important trading partner, even ahead of China. 23) Liaoning and Jilin provinces of China share borders with North Korea, and both provinces have substantial numbers of Korean minorities. 24) China's longest border is with Russia. 25) Tianjin is China's largest industrial city. 26) Hong Kong was designated as China's first Special Economic Zone. 27) At present, low value-added manufacturing in textiles and heavy equipment manufacturing industries account for the vast majority of Shanghai's industrial employment. 28) The Chinese central government spends almost 50 percent of its budget for the rural poor who amount to almost three-fourths of the Chinese population. 29) Humility and indirection are more emphasized in northern than in southern China. 30) As they were closest to foreign influences, negotiators in Taiwan are considered to be the most liberal. 31) What is the term used to refer to both the People's Republic of China (PRC) and the Republic of China (ROC) or Taiwan? A) Integrated China B) Yellow Route C) Neo China D) Mainland China E) Greater China

32) What has contributed to the decrease in the historical tension among countries in East Asia? A) ROC acquiring the UN membership B) rise of communism C) increase in direct trade D) American military involvement in peacekeeping E) ASEAN mandates overruling former hostilities between member nations 33) Aside from the United States, ________ is the most important single national market. A) United Arab Emirates B) Union of Soviet Socialist Republics C) People's Republic of China D) Dominican Republic E) French Southern Territories 34) China's astonishing growth rate has begun to slow recently; however, most analysts see fast growth continuing for China. All of this growth is primarily dependent, in part, on China's A) ability to deregulate industry. B) prevention of the privatization of its state-owned enterprises. C) preparedness to resist the capitalist wave. D) ability to put embargoes on foreign investment. E) ability to uphold its traditional legal system. 35) Two major events that occurred in 2000 had a profound effect on China's economy. One of these is the United States granting normal trade relations (NTR) to China on a permanent basis (PNTR). What is the other one? A) inclusion of state owned companies in NASDAQ B) admission to the World Trade Organization C) signing of the new ASEAN pact D) the handover of Hong Kong by the British to China E) inclusion of Hong Kong as a special administrative region (SAR) of China 36) The two most important steps China must take to ensure smooth economic growth are to A) decrease export barriers and promote indigenous technology. B) strengthen the hold of its communist party and promote innovative thinking. C) invest in more developing countries and change its education system. D) acquire membership in more regional trade blocs and increase embargoes. E) improve human rights and reform the legal system. 37) One of the reasons there is no one-growth strategy for China is A) the regions have no link to the central government. B) each region in China is at a different stage economically. C) the inability to prevent the privatization of its state-owned enterprises. D) each region within China is completely isolated from other regions. E) the complete absence of autonomy in the various regions of China.

38) IBM entered into a venture with the Chinese Railways Ministry that allowed IBM to set up a national network of IBM service centers in railway stations so that IBM could ship computer parts via the railroad around the country within 24 hours. This venture was dubbed the A) Blue Connect. B) China Express. C) China Blue. D) Blue Express. E) China Connect. 39) What is a cultural hurdle in the path of China becoming a vast market in the long run? A) caste system B) xenophobia C) excessive focus on human rights D) excessive bureaucracy E) excessive spending 40) What is the biggest threat to the fast growth China is experiencing? A) increased opening of the market to foreign investments B) trade isolation by other ASEAN countries C) losing the permanent normal trade relations (PNTR) status D) reformation of the traditional legal system E) economic volatility 41) Since its turnover to the People's Republic of China, Hong Kong A) has lost its autonomy. B) negotiates bilateral agreements and makes major economic decisions on its own. C) operates with no jurisdiction from the central government in Beijing over matters related to foreign affairs and defense of Hong Kong. D) has ceased to be freely convertible after its turnover to the People's Republic of China. E) openly opposes economic policies that stress the predominant role of the private sector. 42) What tenet does China follow to ensure that Hong Kong's exuberant capitalism is retained despite the communist leanings of mainland China? A) absolute plutocracy B) sovereignty of the provinces C) theocracy D) noninterventionist approach E) one country, two systems 43) What accurately represents the "three direct links" leading to the establishment of One China? A) transportation, trade, and communications B) culture, language, and religion C) history, language, and transportation D) federal bodies, education, and trade E) technology, natural resources, and people 4 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

44) What is one of the reasons behind the economic stagnation in Japan in the 1990s? A) the caste system B) inept political apparatus C) aggressive internal competition D) theocratic rule E) lack of natural resources 45) Political explanations of Japan's crisis during the 1990s identified two causes. One of them was the country's long entrenched Liberal Democratic political party. What is the other one? A) Japan's trade policies with the United States B) Japan's refusal to join Asian trade blocs C) the powerful influence of the royalty in political issues D) the hidebound Japanese bureaucracy E) the splintering of Japan's right-wing political parties 46) In the 1970s, Frank Gibney called Japan "The Fragile Superpower," which was confirmed with the economic crisis of the 1990s. In his new appraisal, Gibney writes that Japan has become the victim of A) social loafing. B) compensating errors. C) being penny-wise and pound-foolish. D) herd behavior. E) one-party sickness. 47) What was Japan's greatest hindrance to the development of software innovations appropriate for world markets? A) deeply rooted bureaucratic structure B) rise in global oil prices C) complex language D) growing fiscal deficit E) burgeoning population 48) What theory explains Japan's recovery from WWII as a result of the nation adopting a consensus goal for national recovery? A) the Cultural Causation theory B) the Power Shift theory C) the Third Way theory D) the Hybridity theory E) the Cultural Capital theory

49) A survey of U.S. manufacturers shows that 95 percent of respondents with Indian operations plan on expanding, and none say they are leaving, in spite of widespread corruption in the country. What is primarily behind this new trend? A) India's government machinery is one of the most efficient in the world. B) Living standards for expatriates in India are comparable to the world's best. C) India offers cheap qualified labor and a massive market. D) India's proximity to China makes sourcing of parts easier. E) There is a lack of competitiveness among local firms in India. 50) Which nation is one of the Four Asian Tigers? A) India B) Thailand C) South Korea D) Malaysia E) Sri Lanka 51) Which Asian country was the first to move from a status of developing country to a newly industrialized country? A) Japan B) Hong Kong C) South Korea D) Singapore E) Taiwan 52) The most rapidly growing economies in the Asia Pacific region during the 1980s and 1990s, Hong Kong, South Korea, Singapore, and Taiwan, are sometimes referred to as the A) Four Lions. B) Four Elephants. C) Four Dragons. D) Four Horses. E) Four Swans. 53) What is common among the Asian countries Hong Kong, South Korea, Singapore, and Taiwan? A) They were among the first countries in Asia to move from a status of developing countries to newly industrialized countries. B) They have a middle class numbering some 250 million, about the population of the United States. C) The exports in these countries are growing at a rate of 50 percent annually. D) They have faced a serious disadvantage in the information age due to their complex languages. E) They all have the custom of "baksheesh," a deeply ingrained system of bribery.

54) What country is at present the center of trade links with north China and the Asian republics of the former Soviet Union? A) Japan B) South Korea C) Malaysia D) Singapore E) India 55) C. K. Prahalad and associates introduced the concept of a global market, not necessarily defined by national borders but rather by the pockets of poverty across countries and consisting of 4 billion people across the globe with annual incomes of less than $1,200. They refer to these regions, concentrated in the LDCs and LLDCs, as ________ markets. A) subsistence B) third-world C) underdeveloped D) bottom-of-the-pyramid E) peripheral 56) According to C. K. Prahalad, what misconception leads international markets to ignore the bottom-of-the-pyramid markets? A) Products developed for more affluent consumers are not appropriate for BOPMs. B) Most BOPMs are geographically isolated and thus difficult to access. C) Protective policies make BOPMs difficult to penetrate. D) Exchange rate fluctuations make BOPMs very volatile. E) Language and cultural barriers make BOPMs unattractive and sometimes hostile. 57) C. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets—bottom-of-the-pyramid markets (BOPMs)—consisting of the 4 billion people across the globe with annual incomes of less than A) $400. B) $1,200. C) $ 2,500. D) $ 3,700. E) $ 4,200. 58) C. K. Prahalad has cited two primary misconceptions behind the international marketers ignoring the bottom-of-the-pyramid markets. One of the reasons is that the products and services developed for more affluent consumers are not appropriate for these markets. Which of the following is the other misconception? A) Unwillingness of consumers in the bottom-of-the-pyramid markets to buy international products. B) The lack of uniformity in bottom-of-the-pyramid markets. C) The heavy taxation system in bottom-of-the-pyramid markets allows little profit. D) Consumers in the bottom-of-the-pyramid markets lack both money and technology. E) Consumers in the bottom-of-the-pyramid markets are characterized by conservative traditions and culture. 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

59) What appears to be the best way to stimulate economic development and growth from within developing countries? A) imposing embargoes B) encouraging governmental regulations C) restricting immigration D) increasing tariffs on exports E) encouraging networked entrepreneurial activities 60) Grameen Bank is a private commercial enterprise in ________ that developed a program to supply phones to 300 villages. A) Bangladesh B) China C) Japan D) Sri Lanka E) South Korea 61) What is true of the standard of living of the eight most populous countries of the Asia/Pacific region? A) The Japanese rail system is one of the most underdeveloped in the world. B) In the Philippines, most people travel by train. C) As a result of communism, China and Vietnam place low emphasis on health. D) The Japanese healthcare system produces the longest lifespans in the world. E) Consumption patterns indicate that the Chinese place much lower emphasis on education compared with Indians. 62) ASEAN+3 is a forum for ASEAN ministers plus ministers from China, Japan, and A) Singapore. B) South Korea. C) Russia. D) Australia. E) Taiwan. 63) The primary multinational trade group in Asia is A) MERCOSUR. B) COMESA. C) CEFTA. D) SADC. E) ASEAN.

64) What helps account for the vigorous economic growth of the ASEAN countries and their transformation from cheap-labor havens to industrialized nations? A) the ASEAN governments' decision to shift their economies from manufacturing based to commodity based B) North Korea's emergence as a major provider of technology and capital necessary to upgrade manufacturing capability C) a bilateral trade agreement between the United States and Vietnam leading to the granting of NTR status to Vietnam D) Hong Kong becoming a special administrative region (SAR) of the People's Republic of China E) the ASEAN governments' commitment to deregulation, liberalization, and privatization of their economies 65) During the Asian financial crisis, the leading financial powers seemingly either declined to take part in the rescue operations, as the United States did in Thailand, or proposed unattainable solutions. The result was the creation of A) SADC. B) NAFTA. C) ASEAN+3. D) CEFTA. E) COMESA. 66) One target of ASEAN Vision 2020 is to A) implement fully and as rapidly as possible the ASEAN Free Trade Area. B) form the ASEAN+3 to deal with trade and monetary issues facing Asia. C) shift Asian economies from manufacturing based to commodity based. D) aid Japan's emergence as the major provider of technology and capital necessary to develop new industries. E) prevent the further privatization of state-owned industries. 67) The first meeting of the members of the ASEAN+3 was devoted to devising a system whereby the member countries could A) defend their currencies against future attack. B) improve the multilateral trade. C) keep inflation in check. D) acquire nuclear technology. E) improve agricultural production. 68) ________ is a unique forum that has evolved into the primary regional vehicle for promoting trade liberalization and economic cooperation, and includes all the major economies around the Pacific Rim, from Russia to Chile to Australia. A) NAFTA B) ASEAN C) ASEAN+3 D) SADC E) APEC 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

69) What is true of APEC? A) Russia is not a member of this group. B) It is opposed to open trade. C) Its members meet every six months. D) It promotes economic cooperation. E) It aims to increase barriers to investment. 70) Which region is considered the information technology (IT) corridor in north China? A) Beijing–Tianjin B) Heilongjiang C) Liaoning D) the Jilin River Delta E) Fujian 71) ________ contains Hong Kong, Macau, Guangzhou, and Shenzhen and is considered the world's manufacturing base for the IT industry. A) Northeast China B) The Yellow River Delta C) The Yangtze River Delta D) The Pearl River Delta E) Southwest China 72) The national language of China is standard ________, but more than 56 dialects and other languages are spoken across the country. A) Wu B) Min C) Cantonese D) Xiang E) Mandarin 73) What is most likely to cause the biggest problems for television and radio advertisers in China? A) low levels of television and radio penetration B) the rigid theocratic rule C) lack of common language D) the rigid adherence to traditional values E) lack of investment 74) The three contiguous provinces in Northeast China—________, Jilin, and Heilongjiang— have long represented a cohesive unit in terms of culture and the political economy. A) Gansu B) Shanxi C) Henan D) Liaoning E) Sichuan 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

75) The most important advantage of Northeast China that mainly contributed toward its being the industrial and technological center of the country in the 1970s and 1980s is A) its juxtaposition with China's most important industrial neighbors. B) the lack of economic diversity in this area. C) the existence of oil fields these areas. D) that it contains Hong Kong, Macau, Guangzhou, and Shenzhen. E) its authority to impose embargoes upon trading partners. 76) Liaoning province of Northeast China has the closest economic ties with A) Japan. B) South Korea. C) Russia. D) United Kingdom. E) North Korea. 77) Which province of China shares the closest economic ties with South Korea? A) Liaoning B) Jilin C) Heilongjiang D) Guangdong E) Hainan 78) Which province of China shares the closest economic ties with Russia? A) Liaoning B) Jilin C) Heilongjiang D) Guangdong E) Hainan 79) _______ is now Japan's most important trading partner. A) Malaysia B) The United States C) Bangladesh D) Bahrain E) China 80) ________ at the southern tip of the Liaodong Peninsula in China is the focus of bi-national relationships and has one of the world's largest and most modern port facilities. A) Dalian B) Jilin C) Heilongjiang D) Guangdong E) Hainan

81) The ________ region in China is the political and R&D center of China. The 75-mile corridor in this region hosts some 5,000 Chinese high-tech companies, and more than 1,000 international IT companies. A) The coastal Dalian city B) The Pearl River Delta C) The Yangtze River Delta D) Beijing–Tianjin E) Fujian 82) ________ is known as China's Silicon Valley. A) Liaoning B) Zhongguancun C) Jilin D) Guangzhou E) Heilongjiang 83) ________ is China's third largest industrial city after Shanghai and Beijing, and the fastest growing one. A) Wuhan B) Chengdu C) Qingdao D) Tianjin E) Kaohsiung 84) What is true of Tianjin in China? A) It is China's largest industrial city. B) It is China's fastest growing industrial city. C) It has the closest economic ties with Japan. D) It is referred to as "Little Moscow." E) It harbors the world's largest and most modern port facilities. 85) Half of Shanghai's GDP is derived from A) financial services industries. B) steel industries. C) electronic products. D) shipping sector. E) software industries. 86) ________ has replaced Nanjing as Jiangsu province's number one economy and foreign trade center. A) Wuhan B) Chengdu C) Qingdao D) Tianjin E) Suzhou 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

87) The ________ region in China includes three cities of over 5 million inhabitants (Hong Kong, Guangzhou, and Shenzhen); five cities with more than 1 million inhabitants (Zhuhai, Huizhou, Foshan, Zhongshan, and Dongguan); and a number of cities that each contain approximately half a million inhabitants, such as Macau. A) Shanghai B) Northeast China C) Yangtze River Delta D) The Greater Pearl River area E) Taiwan 88) What city has an advantage of bordering Hong Kong, using it as a trade platform to expand the global market? A) Shanghai B) Zhongshan C) Taiwan D) Beijing E) Shenzhen 89) ________, a boomtown bordering Hong Kong and a fishing village just 20 years ago, has replaced the provincial capital Guangzhou to lead the local economy. A) Dongguan B) Shenzhen C) Huizhou D) Foshan E) Zhongshan 90) What is the primary reason behind the inaccessibility of most of the 1.3 billion potential consumers in China? A) Most of them have little disposable income. B) The distribution network is poor or absent. C) They are mostly Communist party members who avoid purchasing imported goods. D) They are restricted to settlement zones where marketing is prohibited. E) They are unfamiliar with the English language. 91) What stereotype of businesspeople in the Northeast of China persists, especially by their southern neighbors? A) loud and argumentative B) cold and businesslike C) aggressive D) dishonest E) forthright

92) What trait is most closely associated with negotiators from the Beijing area? A) traditional thought pattern B) lack of creativity C) forthright D) shrewd E) aggressive 93) Shanghai negotiators are famous for their A) shrewdness. B) tendency to be closemouthed. C) low spending habits. D) lack of creativity. E) imperialist perspective. 94) Negotiators from the ________ region in China have been the closest to foreign influences, and are excellent traders and particularly interested in making short-term gains. A) Taiwan B) Yangtze River Delta C) Beijing D) Shanghai E) Pearl River Delta 95) The negotiators in the Pearl River Delta are reputed to be A) much more calculating than traders in Shanghai. B) relatively honest and forthright. C) very poor traders. D) more interested in making long-term gains. E) cut-off from foreign influences. 96) The __________ region of China is considered, by other Chinese, to be the most conservative both in terms of behavior and language. A) Hong Kong B) Mainland China C) Beijing D) Shanghai E) Taiwan 97) Which areas that come under "The Greater China"? What is the history of the relationship between these areas? 98) Explain the two major events of 2000 that had a major impact on China's economy. 99) What is the "one country, two systems" approach of China? How did it come about? 100) What political factors were behind the Japanese crisis of 1990? 101) Given the rampant corruption in India, describe the attitude of investors toward India. 14 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

102) What are the countries referred to as the Asian Tigers, and why are they referred to this way? 103) What are BOPMs? According to C. K. Prahalad, why have they been ignored by international marketers? 104) Discuss the economic growth of the member nations of ASEAN, including the four major events that led to their economic growth. 105) Analyze APEC's role in international trade. 106) Give a brief account of the four major regional economies of China. 107) How have multinational companies contributed toward the development of rural China?

International Marketing, 18e (Cateora) Chapter 11 The Asia Pacific Region 1) The term "The Greater China" refers to the information technology (IT) corridor in north China. Answer: FALSE Explanation: The term "The Greater China" refers to both the People's Republic of China (PRC) and the Republic of China (ROC) or Taiwan. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) In the year 2009, Germany became the world's biggest exporter ahead of China. Answer: FALSE Explanation: In the 21st century, China's successes have been astonishing; in 2009, China became the world's biggest exporter ahead of Germany and its aggressive marketing through infrastructure development, particularly in developing countries around the world, impresses as well. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) The PNTR status given to China contributed much toward increasing the import barriers on American products and services. Answer: FALSE Explanation: Two major events that occurred in 2000 are having a profound effect on China's economy: admission to the World Trade Organization and the United States granting normal trade relations (NTR) to China on a permanent basis (PNTR). The PNTR status and China's entry to the WTO cut import barriers previously imposed on American products and services. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) In view of China's size, diversity, and political organization, it is not possible to have onegrowth strategy for China. Answer: TRUE Explanation: Owing to China's size, diversity, and political organization, it can be more conveniently thought of as a group of regions rather than a single country. There is no onegrowth strategy for China. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) A major issue that China has to address in its path to economic growth is improving human rights. Answer: TRUE Explanation: China has two important steps to take if the road to economic growth is to be smooth: improving human rights and reforming the legal system. The human rights issue has been a sticking point with the United States because of the lack of religious freedom, the Tiananmen Square massacre in 1989, the jailing of dissidents, and China's treatment of Tibet. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) China is now the biggest market for personal computers. Answer: FALSE Explanation: China is now the second biggest market for personal computers, following only the United States. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation

7) China's "one country, two systems" agreement with Hong Kong guarantees the latter a high degree of autonomy. Answer: TRUE Explanation: After 155 years of British rule, Hong Kong reverted to China in 1997 when it became a special administrative region (SAR) of the People's Republic of China. The Basic Law of the Hong Kong special administrative region (SAR) forms the legal basis for China's "one country, two systems" agreement that guarantees Hong Kong a high degree of autonomy. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The Hong Kong dollar is freely convertible. Answer: TRUE Explanation: The Hong Kong dollar continues to be freely convertible, and foreign exchange, gold, and securities markets continue to operate as before. Hong Kong is a free society with legally protected rights. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) The Hong Kong SAR government stresses the predominant role of the public sector over the private sector. Answer: FALSE Explanation: The Hong Kong SAR government continues to pursue a generally noninterventionist approach to economic policy that stresses the predominant role of the private sector. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) The sector that was hit the hardest during the Japanese recession was the real estate sector. Answer: FALSE Explanation: During the Japanese recession, no sector was hit harder than Japan's lending institutions, especially its huge, world-class banks. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) According to analysts, Japan's long entrenched Liberal Democratic political party was one of the reasons for the Japanese crisis. Answer: TRUE Explanation: Analysts found two major political villains that led to Japan's crisis, the country's long entrenched Liberal Democratic political party and the hidebound Japanese bureaucracy. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) One of Japan's core advantages over other countries is its language; the syntax of the Japanese language is similar to that of certain programming languages. Answer: FALSE Explanation: Japan has serious disadvantage in the information age: its complex language. Not only did its three alphabet systems hinder software innovations appropriate for world markets, but the fundamental indirectness of the Japanese linguistic system hinders electronic information flows in general. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation

13) The Japanese have an affinity for united effort. Answer: TRUE Explanation: Perhaps more than any other society, the Japanese have an affinity for united effort. They seem inspired by common striving toward a common goal. Lack of one can present a problem. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Owing to the deeply corrupt system, most of the U.S. manufacturers in India are leaving for other countries or pulling their money back home. Answer: FALSE Explanation: Widespread corruption and a deeply ingrained system of bribery in India make every transaction complicated and expensive. Nevertheless, a survey of U.S. manufacturers shows that 95 percent of respondents with Indian operations plan on expanding, and none say they are leaving. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) The Four Asian Tigers are: China, Thailand, India, and North Korea. Answer: FALSE Explanation: The most rapidly growing economies in Asia during the 1980s and 1990s were the group sometimes referred to as the Four Asian Tigers (or Four Dragons): Hong Kong, South Korea, Singapore, and Taiwan. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) The United States has granted NTR (normal trade relations) status to Vietnam. Answer: TRUE Explanation: A bilateral trade agreement between the United States and Vietnam led to NTR status for Vietnam and will lower tariffs on Vietnamese exports to the United States from an average of 40 percent to less than 3 percent. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) Bottom-of-the-pyramid markets (BOPMs) are always defined by national borders. Answer: FALSE Explanation: C. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets—bottom-of-the-pyramid markets (BOPMs). These markets are not necessarily defined by national borders but rather by the pockets of poverty across countries. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-03 The importance of the bottom-of-the-pyramid markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) In recent years, the United States has emerged as Japan's single largest trading partner, surpassing the Southeast Asian countries. Answer: FALSE Explanation: In years past, the United States was Japan's single largest trading partner. However, now markets in China and Southeast Asia are increasingly more important in Japanese corporate strategy for trade and direct investment. Difficulty: 1 Easy Topic: Government Policies Affecting Trade Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) The Asian financial crisis led to the creation of the ASEAN+3. Answer: TRUE Explanation: One result of the Asian financial crisis of 1997 to 1998 was the creation of ASEAN+3 (ASEAN plus China, Japan, and South Korea) to deal with trade and monetary issues facing Asia. Difficulty: 1 Easy Topic: History and Implications Regional Economic Agreements Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) APEC is a body formed by the major governments of the Asian countries with the primary purpose of protecting their local industries against the market domination by their western counterparts. Answer: FALSE Explanation: Formed in 1989, APEC provides a formal structure for the major governments of the region, including the United States and Canada, to discuss their mutual interests in open trade and economic collaboration. APEC is a unique forum that has evolved into the primary regional vehicle for promoting trade liberalization and economic cooperation. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) Northeast China was the industrial and technological center of the country in the 1970s and 1980s. Answer: TRUE Explanation: Northeast China was the industrial and technological center of the country in the 1970s and 1980s. Then, large numbers of state-owned enterprises in the petrochemical, steel, and heavy industries dominated production in the old planned economy. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) The United States is now Japan's most important trading partner, even ahead of China. Answer: FALSE Explanation: Japanese investment has flowed into China since the 1980s, and China is now Japan's most important trading partner, even ahead of the United States. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) Liaoning and Jilin provinces of China share borders with North Korea, and both provinces have substantial numbers of Korean minorities. Answer: TRUE Explanation: Liaoning and Jilin provinces share borders with North Korea, and both provinces host substantial numbers of Korean minorities. Of the 2 million ethnic Koreans in the country, about 60 percent live in Jilin province. South Korea has taken advantage of this cultural bridge and focused its investments there, particularly since 2002. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 24) China's longest border is with Russia. Answer: TRUE Explanation: China's longest border is with Russia, some 4,600 miles. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) Tianjin is China's largest industrial city. Answer: FALSE Explanation: Tianjin is China's third largest industrial city after Shanghai and Beijing, but it is the fastest growing one. Primary industries include automotive, electronics, metals, and petrochemicals. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) Hong Kong was designated as China's first Special Economic Zone. Answer: FALSE Explanation: In 1980, Shenzhen was designated as China's first Special Economic Zone. Shenzhen, a boomtown bordering Hong Kong and a fishing village just 20 years ago, has replaced the provincial capital Guangzhou to lead the local economy. The permanent resident population in Shenzhen in 1980 was only 300,000. Today's population has reached 7 million, reflecting the significance and attractiveness of the city as a manufacturing and transportation base. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) At present, low value-added manufacturing in textiles and heavy equipment manufacturing industries account for the vast majority of Shanghai's industrial employment. Answer: FALSE Explanation: The traditional share of low value-added manufacturing in textiles and heavy equipment manufacturing industries has declined as many of them move west. Medium valueadded industries now account for the vast majority of Shanghai's industrial employment. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) The Chinese central government spends almost 50 percent of its budget for the rural poor who amount to almost three-fourths of the Chinese population. Answer: FALSE Explanation: The Chinese rural people usually receive about 10 percent of the central government budget. That amounts to less than $100 a head for rural roads, water, power supplies, schools, and hospitals. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 29) Humility and indirection are more emphasized in northern than in southern China. Answer: FALSE Explanation: Humility and indirection are more emphasized in southern than in northern China. Difficulty: 1 Easy Topic: Elements of Culture Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) As they were closest to foreign influences, negotiators in Taiwan are considered to be the most liberal. Answer: FALSE Explanation: Both the behavior and the language of the people of Taiwan are considered, by other Chinese, to be the most conservative. That is, neither Confucius's influence nor the Mandarin spoken has been mitigated by Communist philosophies and rule. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) What is the term used to refer to both the People's Republic of China (PRC) and the Republic of China (ROC) or Taiwan? A) Integrated China B) Yellow Route C) Neo China D) Mainland China E) Greater China Answer: E Explanation: The term "Greater China" refers to both the People's Republic of China (PRC) and the Republic of China (ROC) or Taiwan. The two separate political units divided in 1949, and each government claimed the other as its territory. The dispute has persisted to this day. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) What has contributed to the decrease in the historical tension among countries in East Asia? A) ROC acquiring the UN membership B) rise of communism C) increase in direct trade D) American military involvement in peacekeeping E) ASEAN mandates overruling former hostilities between member nations Answer: C Explanation: Over the years the relationship between People's Republic of China (PRC) and the Republic of China (ROC) has been both politically difficult and militarily dangerous. But in the 21st century, direct trade between the formerly hostile neighbors has increased dramatically, easing much of the historical tension in all of East Asia. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) Aside from the United States, ________ is the most important single national market. A) United Arab Emirates B) Union of Soviet Socialist Republics C) People's Republic of China D) Dominican Republic E) French Southern Territories Answer: C Explanation: Aside from the United States, there is no more important single national market than the People's Republic of China (PRC). China's dual economic system, embracing socialism along with many tenets of capitalism, produced an economic boom with expanded opportunity for foreign investment that has resulted in annual GNP growth averaging nearly 10 percent since 1970. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) China's astonishing growth rate has begun to slow recently; however, most analysts see fast growth continuing for China. All of this growth is primarily dependent, in part, on China's A) ability to deregulate industry. B) prevention of the privatization of its state-owned enterprises. C) preparedness to resist the capitalist wave. D) ability to put embargoes on foreign investment. E) ability to uphold its traditional legal system. Answer: A Explanation: China's astonishing growth rate has begun to slow recently, but most analysts see fast growth continuing for China. All of this growth is dependent on China's ability to deregulate industry, import modern technology, privatize overstaffed and inefficient state-owned enterprises (SOEs), and continue to attract foreign investment. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) Two major events that occurred in 2000 had a profound effect on China's economy. One of these is the United States granting normal trade relations (NTR) to China on a permanent basis (PNTR). What is the other one? A) inclusion of state owned companies in NASDAQ B) admission to the World Trade Organization C) signing of the new ASEAN pact D) the handover of Hong Kong by the British to China E) inclusion of Hong Kong as a special administrative region (SAR) of China Answer: B Explanation: Two major events that occurred in 2000 are having a profound effect on China's economy: admission to the World Trade Organization and the United States granting normal trade relations (NTR) to China on a permanent basis (PNTR). Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) The two most important steps China must take to ensure smooth economic growth are to A) decrease export barriers and promote indigenous technology. B) strengthen the hold of its communist party and promote innovative thinking. C) invest in more developing countries and change its education system. D) acquire membership in more regional trade blocs and increase embargoes. E) improve human rights and reform the legal system. Answer: E Explanation: China has two important steps to take if the road to economic growth is to be smooth: improve human rights and reform the legal system. The human rights issue has been a sticking point with the United States because of the lack of religious freedom, the Tiananmen Square massacre in 1989, the jailing of dissidents, and China's treatment of Tibet. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) One of the reasons there is no one-growth strategy for China is A) the regions have no link to the central government. B) each region in China is at a different stage economically. C) the inability to prevent the privatization of its state-owned enterprises. D) each region within China is completely isolated from other regions. E) the complete absence of autonomy in the various regions of China. Answer: B Explanation: Given China's size, diversity, and political organization, it can be more conveniently thought of as a group of regions rather than a single country. There is no onegrowth strategy for China. Each region is at a different stage economically and has its own link to other regions, as well as links to other parts of the world. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) IBM entered into a venture with the Chinese Railways Ministry that allowed IBM to set up a national network of IBM service centers in railway stations so that IBM could ship computer parts via the railroad around the country within 24 hours. This venture was dubbed the A) Blue Connect. B) China Express. C) China Blue. D) Blue Express. E) China Connect. Answer: D Explanation: After nearly a decade of frustration in trying to effectively market and service its products in China, IBM took a bold step and entered a venture with the Railways Ministry that allowed IBM to set up IBM service centers dubbed the "Blue Express." Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) What is a cultural hurdle in the path of China becoming a vast market in the long run? A) caste system B) xenophobia C) excessive focus on human rights D) excessive bureaucracy E) excessive spending Answer: B Explanation: In the long run, the economic strength of China will not be as an exporting machine but as a vast market, particularly if consumers there can overcome the cultural hurdles of thrift and xenophobia. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) What is the biggest threat to the fast growth China is experiencing? A) increased opening of the market to foreign investments B) trade isolation by other ASEAN countries C) losing the permanent normal trade relations (PNTR) status D) reformation of the traditional legal system E) economic volatility Answer: E Explanation: China is a relatively poor nation going through a painfully awkward transformation from a socialist market system to a hybrid socialist–free market system, not yet complete and with the rules of the game still being written. The biggest threat for China is the economic volatility that seems to accompany fast growth. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) Since its turnover to the People's Republic of China, Hong Kong A) has lost its autonomy. B) negotiates bilateral agreements and makes major economic decisions on its own. C) operates with no jurisdiction from the central government in Beijing over matters related to foreign affairs and defense of Hong Kong. D) has ceased to be freely convertible after its turnover to the People's Republic of China. E) openly opposes economic policies that stress the predominant role of the private sector. Answer: B Explanation: The Basic Law of the Hong Kong SAR forms the legal basis for China's "one country, two systems" agreement that guarantees Hong Kong a high degree of autonomy. The Hong Kong government negotiates bilateral agreements (which are then "confirmed" by Beijing) and makes major economic decisions on its own. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) What tenet does China follow to ensure that Hong Kong's exuberant capitalism is retained despite the communist leanings of mainland China? A) absolute plutocracy B) sovereignty of the provinces C) theocracy D) noninterventionist approach E) one country, two systems Answer: E Explanation: Many thought the territory's laissez-faire ways, exuberant capitalism, and gung-ho spirit would prove unbearable for Beijing's heavy-handed communist leaders. But except for changes in tone and emphasis, even opponents of communist rule concede that Beijing is honoring the "one country, two systems" arrangement. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) What accurately represents the "three direct links" leading to the establishment of One China? A) transportation, trade, and communications B) culture, language, and religion C) history, language, and transportation D) federal bodies, education, and trade E) technology, natural resources, and people Answer: A Explanation: It is best to wrap future talks on the One China debate inside a bundle of more concrete issues, such as establishing the "three direct links"—transportation, trade, and communications. The three direct links issue must be faced because each country has joined the WTO, and the rules insist that members communicate about trade disputes and other issues. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) What is one of the reasons behind the economic stagnation in Japan in the 1990s? A) the caste system B) inept political apparatus C) aggressive internal competition D) theocratic rule E) lack of natural resources Answer: B Explanation: Four explanatory themes have emerged for the persistent stagnation in Japan in the 1990s, each with a basis in observable fact, namely, Japan's (1) faulty economic policies, (2) inept political apparatus, (3) disadvantages due to global circumstances, and (4) cultural inhibitions. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) Political explanations of Japan's crisis during the 1990s identified two causes. One of them was the country's long entrenched Liberal Democratic political party. What is the other one? A) Japan's trade policies with the United States B) Japan's refusal to join Asian trade blocs C) the powerful influence of the royalty in political issues D) the hidebound Japanese bureaucracy E) the splintering of Japan's right-wing political parties Answer: D Explanation: Views of economists on Japan's crisis have not been the only ones heard. Political pundits also rose to the challenge. They found two major villains: the country's long entrenched Liberal Democratic political party and the hidebound Japanese bureaucracy. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) In the 1970s, Frank Gibney called Japan "The Fragile Superpower," which was confirmed with the economic crisis of the 1990s. In his new appraisal, Gibney writes that Japan has become the victim of A) social loafing. B) compensating errors. C) being penny-wise and pound-foolish. D) herd behavior. E) one-party sickness. Answer: E Explanation: In the 1970s, Frank Gibney wrote a seminal book on Japan. He called it "The Fragile Superpower." His insight into the possible future of Japan's then surging economy was confirmed when the 1990s brought on crisis conditions. In a new appraisal, Gibney has written that Japan became the victim of "one-party sickness," an ailment brought on by a 40-year hardening of political arteries. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) What was Japan's greatest hindrance to the development of software innovations appropriate for world markets? A) deeply rooted bureaucratic structure B) rise in global oil prices C) complex language D) growing fiscal deficit E) burgeoning population Answer: C Explanation: Japan has a serious disadvantage in the information age: its complex language. Not only did its three alphabet systems hinder software innovations appropriate for world markets, but the fundamental indirectness of the Japanese linguistic system hinders electronic information flows in general. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) What theory explains Japan's recovery from WWII as a result of the nation adopting a consensus goal for national recovery? A) the Cultural Causation theory B) the Power Shift theory C) the Third Way theory D) the Hybridity theory E) the Cultural Capital theory Answer: A Explanation: The Cultural Causation theory went something as follows: Immediately after World War II, a shattered Japanese nation arrived at a consensus goal for national recovery. That consensual goal provided the incentive for its spectacular progress, decade after decade. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) A survey of U.S. manufacturers shows that 95 percent of respondents with Indian operations plan on expanding, and none say they are leaving, in spite of widespread corruption in the country. What is primarily behind this new trend? A) India's government machinery is one of the most efficient in the world. B) Living standards for expatriates in India are comparable to the world's best. C) India offers cheap qualified labor and a massive market. D) India's proximity to China makes sourcing of parts easier. E) There is a lack of competitiveness among local firms in India. Answer: C Explanation: A survey of U.S. manufacturers shows that 95 percent of respondents with Indian operations plan on expanding, and none say they are leaving. They are hooked on the country's cheap, qualified labor and the potential of a massive market. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) Which nation is one of the Four Asian Tigers? A) India B) Thailand C) South Korea D) Malaysia E) Sri Lanka Answer: C Explanation: The most rapidly growing economies in this region during the 1980s and 1990s were the group sometimes referred to as the Four Asian Tigers (or Four Dragons): Hong Kong, South Korea, Singapore, and Taiwan. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) Which Asian country was the first to move from a status of developing country to a newly industrialized country? A) Japan B) Hong Kong C) South Korea D) Singapore E) Taiwan Answer: A Explanation: The "Four Asian Tigers," Hong Kong, South Korea, Singapore, and Taiwan often described as the "East Asian miracle," were the first countries in Asia, after Japan, to move from a status of developing countries to newly industrialized countries. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) The most rapidly growing economies in the Asia Pacific region during the 1980s and 1990s, Hong Kong, South Korea, Singapore, and Taiwan, are sometimes referred to as the A) Four Lions. B) Four Elephants. C) Four Dragons. D) Four Horses. E) Four Swans. Answer: C Explanation: The most rapidly growing economies in the Asia Pacific region during the 1980s and 1990s were sometimes referred to as the Four Asian Tigers or Four Dragons. These countries are Hong Kong, South Korea, Singapore, and Taiwan. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) What is common among the Asian countries Hong Kong, South Korea, Singapore, and Taiwan? A) They were among the first countries in Asia to move from a status of developing countries to newly industrialized countries. B) They have a middle class numbering some 250 million, about the population of the United States. C) The exports in these countries are growing at a rate of 50 percent annually. D) They have faced a serious disadvantage in the information age due to their complex languages. E) They all have the custom of "baksheesh," a deeply ingrained system of bribery. Answer: A Explanation: The most rapidly growing economies in this region during the 1980s and 1990s were the group sometimes referred to as the Four Asian Tigers (or Four Dragons): Hong Kong, South Korea, Singapore, and Taiwan. Often described as the "East Asian miracle," they were the first countries in Asia, after Japan, to move from a status of developing countries to newly industrialized countries. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) What country is at present the center of trade links with north China and the Asian republics of the former Soviet Union? A) Japan B) South Korea C) Malaysia D) Singapore E) India Answer: B Explanation: South Korea is the center of trade links with north China and the Asian republics of the former Soviet Union. South Korea's sphere of influence and trade extends to Guangdong and Fujian, two of the most productive Chinese Special Economic Zones, and it is becoming more important in interregional investment as well. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) C. K. Prahalad and associates introduced the concept of a global market, not necessarily defined by national borders but rather by the pockets of poverty across countries and consisting of 4 billion people across the globe with annual incomes of less than $1,200. They refer to these regions, concentrated in the LDCs and LLDCs, as ________ markets. A) subsistence B) third-world C) underdeveloped D) bottom-of-the-pyramid E) peripheral Answer: D Explanation: C. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets—bottom-of-the-pyramid markets (BOPMs)—consisting of the 4 billion people across the globe with annual incomes of less than $1,200. Difficulty: 1 Easy Topic: Environmental Analysis and Market Screening Learning Objective: 11-03 The importance of the bottom-of-the-pyramid markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) According to C. K. Prahalad, what misconception leads international markets to ignore the bottom-of-the-pyramid markets? A) Products developed for more affluent consumers are not appropriate for BOPMs. B) Most BOPMs are geographically isolated and thus difficult to access. C) Protective policies make BOPMs difficult to penetrate. D) Exchange rate fluctuations make BOPMs very volatile. E) Language and cultural barriers make BOPMs unattractive and sometimes hostile. Answer: A Explanation: Prahalad's basic point is that these consumers have been relatively ignored by international marketers because of misconceptions about their lack of resources (both money and technology) and the lack of appropriateness of products and services usually developed for more affluent consumers. Difficulty: 2 Medium Topic: Environmental Analysis and Market Screening Learning Objective: 11-03 The importance of the bottom-of-the-pyramid markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) C. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets—bottom-of-the-pyramid markets (BOPMs)—consisting of the 4 billion people across the globe with annual incomes of less than A) $400. B) $1,200. C) $ 2,500. D) $ 3,700. E) $ 4,200. Answer: B Explanation: C. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets—bottom-of-the-pyramid markets (BOPMs)—consisting of the 4 billion people across the globe with annual incomes of less than $1,200. Difficulty: 1 Easy Topic: Environmental Analysis and Market Screening Learning Objective: 11-03 The importance of the bottom-of-the-pyramid markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) C. K. Prahalad has cited two primary misconceptions behind the international marketers ignoring the bottom-of-the-pyramid markets. One of the reasons is that the products and services developed for more affluent consumers are not appropriate for these markets. Which of the following is the other misconception? A) Unwillingness of consumers in the bottom-of-the-pyramid markets to buy international products. B) The lack of uniformity in bottom-of-the-pyramid markets. C) The heavy taxation system in bottom-of-the-pyramid markets allows little profit. D) Consumers in the bottom-of-the-pyramid markets lack both money and technology. E) Consumers in the bottom-of-the-pyramid markets are characterized by conservative traditions and culture. Answer: D Explanation: Prahalad's basic point is that consumers in the bottom-of-the-pyramid markets have been relatively ignored by international marketers because of misconceptions about their lack of resources (both money and technology) and the lack of appropriateness of products and services usually developed for more affluent consumers. Difficulty: 2 Medium Topic: Environmental Analysis and Market Screening Learning Objective: 11-03 The importance of the bottom-of-the-pyramid markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) What appears to be the best way to stimulate economic development and growth from within developing countries? A) imposing embargoes B) encouraging governmental regulations C) restricting immigration D) increasing tariffs on exports E) encouraging networked entrepreneurial activities Answer: E Explanation: Entrepreneurial activities that are networked appear to be perhaps the best way to stimulate economic development and growth from within developing countries. And marketing is key. Difficulty: 2 Medium Topic: Asia's Marketplace in the World Economy Learning Objective: 11-03 The importance of the bottom-of-the-pyramid markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) Grameen Bank is a private commercial enterprise in ________ that developed a program to supply phones to 300 villages. A) Bangladesh B) China C) Japan D) Sri Lanka E) South Korea Answer: A Explanation: Grameen Bank, a private commercial enterprise in Bangladesh, developed a program to supply phones to 300 villages. There were only eight land phone lines for every 1,000 people in Bangladesh, one of the lowest phone-penetration rates in the world. The new network is nationwide, endeavoring to put every villager within two kilometers of a cellular phone. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 11-03 The importance of the bottom-of-the-pyramid markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) What is true of the standard of living of the eight most populous countries of the Asia/Pacific region? A) The Japanese rail system is one of the most underdeveloped in the world. B) In the Philippines, most people travel by train. C) As a result of communism, China and Vietnam place low emphasis on health. D) The Japanese healthcare system produces the longest lifespans in the world. E) Consumption patterns indicate that the Chinese place much lower emphasis on education compared with Indians. Answer: D Explanation: The general excellence of the Japanese healthcare system that produces the longest lifespans in the world is represented by the following statistics: In Japan, there are 2.3 doctors and 12.3 hospital beds per 1000 persons. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 11-04 The diversity across the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) ASEAN+3 is a forum for ASEAN ministers plus ministers from China, Japan, and A) Singapore. B) South Korea. C) Russia. D) Australia. E) Taiwan. Answer: B Explanation: ASEAN+3 is a forum for ASEAN ministers plus ministers from China, Japan, and South Korea. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

63) The primary multinational trade group in Asia is A) MERCOSUR. B) COMESA. C) CEFTA. D) SADC. E) ASEAN. Answer: E Explanation: The primary multinational trade group in Asia is ASEAN. Like all multinational market groups, ASEAN has experienced problems and false starts in attempting to unify the combined economies of its member nations. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) What helps account for the vigorous economic growth of the ASEAN countries and their transformation from cheap-labor havens to industrialized nations? A) the ASEAN governments' decision to shift their economies from manufacturing based to commodity based B) North Korea's emergence as a major provider of technology and capital necessary to upgrade manufacturing capability C) a bilateral trade agreement between the United States and Vietnam leading to the granting of NTR status to Vietnam D) Hong Kong becoming a special administrative region (SAR) of the People's Republic of China E) the ASEAN governments' commitment to deregulation, liberalization, and privatization of their economies Answer: E Explanation: Four major events account for the vigorous economic growth of the ASEAN countries and their transformation from cheap-labor havens to industrialized nations. One of them is the ASEAN governments' commitment to deregulation, liberalization, and privatization of their economies. Difficulty: 2 Medium Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) During the Asian financial crisis, the leading financial powers seemingly either declined to take part in the rescue operations, as the United States did in Thailand, or proposed unattainable solutions. The result was the creation of A) SADC. B) NAFTA. C) ASEAN+3. D) CEFTA. E) COMESA. Answer: C Explanation: During the Asian financial crisis of 1997 to 1998, most of East Asia felt that they were both let down and put upon by the West, which they felt created much of the problem by pulling out in the midst of the crisis. The leading financial powers seemingly either declined to take part in the rescue operations, as the United States did in Thailand, or proposed unattainable solutions. The result was the creation of ASEAN+3, consisting of the foreign and finance ministers of each country, which meets annually after ASEAN meetings. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) One target of ASEAN Vision 2020 is to A) implement fully and as rapidly as possible the ASEAN Free Trade Area. B) form the ASEAN+3 to deal with trade and monetary issues facing Asia. C) shift Asian economies from manufacturing based to commodity based. D) aid Japan's emergence as the major provider of technology and capital necessary to develop new industries. E) prevent the further privatization of state-owned industries. Answer: A Explanation: ASEAN Vision 2020 is the most outward-looking commitment to regional goals ever accepted by the group. Among the targets that will lead to further integration is the commitment to implementing fully and as rapidly as possible the ASEAN Free Trade Area. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) The first meeting of the members of the ASEAN+3 was devoted to devising a system whereby the member countries could A) defend their currencies against future attack. B) improve the multilateral trade. C) keep inflation in check. D) acquire nuclear technology. E) improve agricultural production. Answer: A Explanation: The first meeting of ASEAN+3 was devoted to devising a system whereby the member countries shared foreign exchange reserves to defend their currencies against future attack. Although they were only tentative, the members of ASEAN+3 also discussed creating a common market and even a single currency or, perhaps, a new Asian entity encompassing both Northeast and Southeast Asia. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) ________ is a unique forum that has evolved into the primary regional vehicle for promoting trade liberalization and economic cooperation, and includes all the major economies around the Pacific Rim, from Russia to Chile to Australia. A) NAFTA B) ASEAN C) ASEAN+3 D) SADC E) APEC Answer: E Explanation: APEC is a unique forum that has evolved into the primary regional vehicle for promoting trade liberalization and economic cooperation. APEC includes all the major economies around the Pacific Rim, from Russia to Chile to Australia, the most dynamic, fastest growing economies in the world. Difficulty: 1 Easy Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) What is true of APEC? A) Russia is not a member of this group. B) It is opposed to open trade. C) Its members meet every six months. D) It promotes economic cooperation. E) It aims to increase barriers to investment. Answer: D Explanation: APEC is a unique forum that has evolved into the primary regional vehicle for promoting trade liberalization and economic cooperation. APEC includes all the major economies around the Pacific Rim, from Russia to Chile to Australia, the most dynamic, fastest growing economies in the world. Difficulty: 2 Medium Topic: Economic and Political Arguments Surrounding Regional Economic Integration Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) Which region is considered the information technology (IT) corridor in north China? A) Beijing–Tianjin B) Heilongjiang C) Liaoning D) the Jilin River Delta E) Fujian Answer: A Explanation: The Beijing–Tianjin region is considered as the information technology (IT) corridor in north China. The 75-mile corridor between Beijing and its coastal cousin Tianjin hosts some 5,000 Chinese high-tech companies, among them Lenovo, and more than 1,000 international IT companies. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation

71) ________ contains Hong Kong, Macau, Guangzhou, and Shenzhen and is considered the world's manufacturing base for the IT industry. A) Northeast China B) The Yellow River Delta C) The Yangtze River Delta D) The Pearl River Delta E) Southwest China Answer: D Explanation: The Pearl River Delta contains Hong Kong, Macau, Guangzhou, and Shenzhen and is considered as the world's manufacturing base for the IT industry. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) The national language of China is standard ________, but more than 56 dialects and other languages are spoken across the country. A) Wu B) Min C) Cantonese D) Xiang E) Mandarin Answer: E Explanation: The national language of China is standard Mandarin, but more than 56 dialects and other languages are spoken across the country. Written Chinese can be read almost universally, but different dialects are almost always mutually indecipherable. Difficulty: 1 Easy Topic: How Language Affects Culture Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) What is most likely to cause the biggest problems for television and radio advertisers in China? A) low levels of television and radio penetration B) the rigid theocratic rule C) lack of common language D) the rigid adherence to traditional values E) lack of investment Answer: C Explanation: In China, lack of common language causes some problems for television and radio advertisers in the country that print media can usually avoid. Difficulty: 2 Medium Topic: How Language Affects Culture Learning Objective: 11-06 The diversity within China. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) The three contiguous provinces in Northeast China—________, Jilin, and Heilongjiang— have long represented a cohesive unit in terms of culture and the political economy. A) Gansu B) Shanxi C) Henan D) Liaoning E) Sichuan Answer: D Explanation: The three contiguous provinces in Northeast China—Liaoning (43.9 million persons), Jilin (27.5 million), and Heilongjiang (38.3 million)—have long represented a cohesive unit in terms of culture and the political economy. Difficulty: 1 Easy Topic: Economic and Business Implications of Cultural Change Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) The most important advantage of Northeast China that mainly contributed toward its being the industrial and technological center of the country in the 1970s and 1980s is A) its juxtaposition with China's most important industrial neighbors. B) the lack of economic diversity in this area. C) the existence of oil fields these areas. D) that it contains Hong Kong, Macau, Guangzhou, and Shenzhen. E) its authority to impose embargoes upon trading partners. Answer: A Explanation: Perhaps the most important advantage of Northeast China is its juxtaposition with China's most important industrial neighbors. For centuries, goods and ideas have flowed across those borders and continue to do so in the greatest quantities ever. Liaoning has the closest economic ties with Japan, Jilin with South Korea, and Heilongjiang with Russia. Difficulty: 2 Medium Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) Liaoning province of Northeast China has the closest economic ties with A) Japan. B) South Korea. C) Russia. D) United Kingdom. E) North Korea. Answer: A Explanation: The most important advantage of Northeast China is its juxtaposition with China's most important industrial neighbors. For centuries, goods and ideas have flowed across those borders and continue to do so in the greatest quantities ever. Liaoning has the closest economic ties with Japan, Jilin with South Korea, and Heilongjiang with Russia. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

77) Which province of China shares the closest economic ties with South Korea? A) Liaoning B) Jilin C) Heilongjiang D) Guangdong E) Hainan Answer: B Explanation: The most important advantage of Northeast China is its juxtaposition with China's most important industrial neighbors. For centuries, goods and ideas have flowed across those borders and continue to do so in the greatest quantities ever. Liaoning has the closest economic ties with Japan, Jilin with South Korea, and Heilongjiang with Russia. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) Which province of China shares the closest economic ties with Russia? A) Liaoning B) Jilin C) Heilongjiang D) Guangdong E) Hainan Answer: C Explanation: The most important advantage of Northeast China is its juxtaposition with China's most important industrial neighbors. For centuries, goods and ideas have flowed across those borders and continue to do so in the greatest quantities ever. Liaoning has the closest economic ties with Japan, Jilin with South Korea, and Heilongjiang with Russia. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) _______ is now Japan's most important trading partner. A) Malaysia B) The United States C) Bangladesh D) Bahrain E) China Answer: E Explanation: Japanese investment has flowed into China since the 1980s, and China is now Japan's most important trading partner, even ahead of the United States. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) ________ at the southern tip of the Liaodong Peninsula in China is the focus of bi-national relationships and has one of the world's largest and most modern port facilities. A) Dalian B) Jilin C) Heilongjiang D) Guangdong E) Hainan Answer: A Explanation: Dalian at the southern tip of the Liaodong Peninsula is the focus of bi-national relationships. The city has one of the world's largest and most modern port facilities (managed by a Singaporean company), it is only a four-hour flight from Japan, and its high-quality workforce and inexpensive real estate attract Japanese high-tech investments. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) The ________ region in China is the political and R&D center of China. The 75-mile corridor in this region hosts some 5,000 Chinese high-tech companies, and more than 1,000 international IT companies. A) The coastal Dalian city B) The Pearl River Delta C) The Yangtze River Delta D) Beijing–Tianjin E) Fujian Answer: D Explanation: The Beijing–Tianjin region is the political and R&D center of China. The 75-mile corridor between Beijing and its coastal cousin Tianjin hosts some 5,000 Chinese high-tech companies, and more than 1,000 international IT companies. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) ________ is known as China's Silicon Valley. A) Liaoning B) Zhongguancun C) Jilin D) Guangzhou E) Heilongjiang Answer: B Explanation: Zhongguancun is known as China's Silicon Valley. It is part of the Beijing– Tianjin region that is the political and R&D center of China. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) ________ is China's third largest industrial city after Shanghai and Beijing, and the fastest growing one. A) Wuhan B) Chengdu C) Qingdao D) Tianjin E) Kaohsiung Answer: D Explanation: Tianjin is China's third largest industrial city after Shanghai and Beijing, but it is also the fastest growing one. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) What is true of Tianjin in China? A) It is China's largest industrial city. B) It is China's fastest growing industrial city. C) It has the closest economic ties with Japan. D) It is referred to as "Little Moscow." E) It harbors the world's largest and most modern port facilities. Answer: B Explanation: Tianjin is China's third largest industrial city after Shanghai and Beijing, and it is also the fastest growing one. Primary industries include automotive, electronics, metals, and petrochemicals. New emphases also are being put on developing information technology, biotechnology, medicine, and green energies. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) Half of Shanghai's GDP is derived from A) financial services industries. B) steel industries. C) electronic products. D) shipping sector. E) software industries. Answer: A Explanation: China's sustained economic growth and accession to the WTO have aided Shanghai's position as a regional trade and financial center. Half of Shanghai's GDP derives from financial services industries, such as banking, retailing, finance, trade, insurance, and real estate development. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) ________ has replaced Nanjing as Jiangsu province's number one economy and foreign trade center. A) Wuhan B) Chengdu C) Qingdao D) Tianjin E) Suzhou Answer: E Explanation: Suzhou has replaced Nanjing, to become Jiangsu province's number one economy and foreign trade center. Suzhou is now ranked in the top 10 of the Chinese Cities Comprehensive Competitive Powers Ranking. Difficulty: 1 Easy Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) The ________ region in China includes three cities of over 5 million inhabitants (Hong Kong, Guangzhou, and Shenzhen); five cities with more than 1 million inhabitants (Zhuhai, Huizhou, Foshan, Zhongshan, and Dongguan); and a number of cities that each contain approximately half a million inhabitants, such as Macau. A) Shanghai B) Northeast China C) Yangtze River Delta D) The Greater Pearl River area E) Taiwan Answer: D Explanation: The Greater Pearl River area includes three cities of over 5 million inhabitants (Hong Kong, Guangzhou, and Shenzhen); five cities with more than 1 million inhabitants (Zhuhai, Huizhou, Foshan, Zhongshan, and Dongguan); and a number of cities that each contain approximately half a million inhabitants, such as Macau. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) What city has an advantage of bordering Hong Kong, using it as a trade platform to expand the global market? A) Shanghai B) Zhongshan C) Taiwan D) Beijing E) Shenzhen Answer: E Explanation: Proximity to Hong Kong, an international service center, is one of the advantages of Shenzhen. As a manufacturing base for a wide range of industries, Shenzhen can use Hong Kong as a trade platform to expand the global market. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) ________, a boomtown bordering Hong Kong and a fishing village just 20 years ago, has replaced the provincial capital Guangzhou to lead the local economy. A) Dongguan B) Shenzhen C) Huizhou D) Foshan E) Zhongshan Answer: B Explanation: Shenzhen, a boomtown bordering Hong Kong and a fishing village just 20 years ago, has replaced the provincial capital Guangzhou to lead the local economy. In 1980, Shenzhen was designated as China's first Special Economic Zone. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) What is the primary reason behind the inaccessibility of most of the 1.3 billion potential consumers in China? A) Most of them have little disposable income. B) The distribution network is poor or absent. C) They are mostly Communist party members who avoid purchasing imported goods. D) They are restricted to settlement zones where marketing is prohibited. E) They are unfamiliar with the English language. Answer: B Explanation: In China, most of the 1.3 billion potential consumers are not accessible because of a poor or nonexistent distribution network. No distribution and channel system exists to effectively distribute products, so companies must become resourceful to compensate for the poor infrastructure. Difficulty: 2 Medium Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) What stereotype of businesspeople in the Northeast of China persists, especially by their southern neighbors? A) loud and argumentative B) cold and businesslike C) aggressive D) dishonest E) forthright Answer: E Explanation: Forthrightness is the stereotype of businesspeople in the Northeast, mostly held by their southern neighbors. Negotiators from the three northeastern provinces above the Yangtze are industrious, competent businesspeople. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) What trait is most closely associated with negotiators from the Beijing area? A) traditional thought pattern B) lack of creativity C) forthright D) shrewd E) aggressive Answer: B Explanation: Negotiators from the Beijing area are known for their unusual (within China) bureaucratic sloth and imperialist perspective, both yielding a relative lack of creativity, that is, thinking outside the box. Because they often have defined the box in the first place, they are not used to thinking of ways to escape it. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) Shanghai negotiators are famous for their A) shrewdness. B) tendency to be closemouthed. C) low spending habits. D) lack of creativity. E) imperialist perspective. Answer: A Explanation: Negotiators from the Shanghai area are renowned in China for their shrewdness. They are outgoing, big talkers, and big spenders. They try to impress you in ways and to extents you won't see anywhere else in China. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) Negotiators from the ________ region in China have been the closest to foreign influences, and are excellent traders and particularly interested in making short-term gains. A) Taiwan B) Yangtze River Delta C) Beijing D) Shanghai E) Pearl River Delta Answer: E Explanation: Chinese in the south (The Pearl River Delta) have always been the closest to foreign influences, which has yielded their special forms of entrepreneurship and spontaneity. Negotiators are reputed to be relatively honest and forthright. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) The negotiators in the Pearl River Delta are reputed to be A) much more calculating than traders in Shanghai. B) relatively honest and forthright. C) very poor traders. D) more interested in making long-term gains. E) cut-off from foreign influences. Answer: B Explanation: Negotiators from the Pearl River Delta are reputed to be relatively honest and forthright. They are less calculating than folks in Shanghai. But they are excellent traders and particularly interested in making short-term gains. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) The __________ region of China is considered, by other Chinese, to be the most conservative both in terms of behavior and language. A) Hong Kong B) Mainland China C) Beijing D) Shanghai E) Taiwan Answer: E Explanation: Both the behavior and the language of the people of Taiwan are considered, by other Chinese, to be the most conservative. That is, neither Confucius's influence nor the Mandarin spoken has been mitigated by Communist philosophies and rule. Difficulty: 1 Easy Topic: Geographical Implications that Affect Trade Learning Objective: 11-06 The diversity within China. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) Which areas that come under "The Greater China"? What is the history of the relationship between these areas? Answer: The term "The Greater China" refers to both the People's Republic of China (PRC) and the Republic of China (ROC) or Taiwan. The two separate political units divided in 1949, and each government claimed the other as its territory. The dispute has persisted to this day. Although the ROC was one of the founding members of the United Nations in 1945, the PRC government was officially recognized with a seat on the U.N. Security Council in 1971. Over the years the relationship between the disputants has been both politically difficult and militarily dangerous. But in the 21st century, direct trade between the formerly hostile neighbors has increased dramatically, easing much of the historical tension in all of East Asia. Difficulty: 3 Hard Topic: Geographical Implications that Affect Trade Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) Explain the two major events of 2000 that had a major impact on China's economy. Answer: Two major events of 2000 that had a profound effect on China's economy are admission to the World Trade Organization and the United States granting normal trade relations (NTR) to China on a permanent basis (PNTR). The PNTR status and China's entry to the WTO cut import barriers previously imposed on American products and services. The United States is obligated to maintain the market access policies that it already applies to China, and has for over 30 years, and to make its normal trade relation status permanent. After years of procrastination, China has begun to comply with WTO provisions and made a wholehearted and irrevocable commitment to creating a market economy that is tied to the world at large. Difficulty: 3 Hard Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) What is the "one country, two systems" approach of China? How did it come about? Answer: After 155 years of British rule, Hong Kong reverted to China in 1997 when it became a special administrative region (SAR) of the People's Republic of China. The Basic Law of the Hong Kong SAR forms the legal basis for China's "one country, two systems" agreement that guarantees Hong Kong a high degree of autonomy. The Hong Kong government negotiates bilateral agreements (which are then "confirmed" by Beijing) and makes major economic decisions on its own. The central government in Beijing is responsible only for foreign affairs and defense of the SAR. The Hong Kong dollar continues to be freely convertible, and foreign exchange, gold, and securities markets continue to operate as before. Hong Kong is a free society with legally protected rights. The Hong Kong SAR government continues to pursue a generally noninterventionist approach to economic policy that stresses the predominant role of the private sector. The decision to let Hong Kong handle the crisis on its own is considered strong evidence that the relationship is working for the best for both sides, considering that China has so much riding on Hong Kong. Most business problems that have arisen stem from fundamental concepts such as clear rules and transparent dealings that are not understood the same way on the mainland as they are in Hong Kong. Many thought the territory's laissez-faire ways, exuberant capitalism, and gung-ho spirit would prove unbearable for Beijing's heavy-handed communist leaders. But except for changes in tone and emphasis, even opponents of communist rule concede that Beijing is honoring the "one country, two systems" arrangement. Difficulty: 3 Hard Topic: Asia's Marketplace in the World Economy Learning Objective: 11-01 The dynamic growth in the region. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

100) What political factors were behind the Japanese crisis of 1990? Answer: Analysts found two major villains that led to the Japanese crisis, the Country's long entrenched Liberal Democratic political party and the hidebound Japanese bureaucracy. Frank Gibney has written that Japan became the victim of "one-party sickness," an ailment brought on by a 40-year hardening of political arteries. Meanwhile, many observers thought politicians had to share blame with Japan's powerful bureaucracy. Many observers, both inside and outside Japan, had long since come to believe that the bureaucracy actually controlled its elected politicians. Of course, in a consensus-type society, it is not easy, particularly for outsiders, to tell where one institution's power leaves off and another's begins. In any event, to those who championed a political explanation of Japan's woes, these two national institutions were viewed as joint culprits. Meanwhile, other observers, particularly within Japan, were dissatisfied with either the economic or political explanations they were hearing. Difficulty: 3 Hard Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 101) Given the rampant corruption in India, describe the attitude of investors toward India. Answer: In India, widespread corruption and a deeply ingrained system of bribery make every transaction complicated and expensive. One noted authority on India declared that corrupt practices are not the quaint custom of "baksheesh" but pervasive, systematic, structured, and degraded corruption running from the bottom to the top of the political order. Nevertheless, a survey of U.S. manufacturers shows that 95 percent of respondents with Indian operations plan on expanding, and none say they are leaving. They are hooked on the country's cheap, qualified labor and the potential of a massive market. Difficulty: 3 Hard Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

102) What are the countries referred to as the Asian Tigers, and why are they referred to this way? Answer: The most rapidly growing economies in the Asia Pacific region during the 1980s and 1990s were the group sometimes referred to as the Four Asian Tigers (or Four Dragons): Hong Kong, South Korea, Singapore, and Taiwan. Often described as the "East Asian miracle," they were the first countries in Asia, after Japan, to move from a status of developing countries to newly industrialized countries. In addition, each has become a major influence in trade and development in the economies of the other countries within their spheres of influence. The Four Tigers are rapidly industrializing and extending their trading activity to other parts of Asia. Difficulty: 3 Hard Topic: Asia's Marketplace in the World Economy Learning Objective: 11-02 The importance and slow growth of Japan. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 103) What are BOPMs? According to C. K. Prahalad, why have they been ignored by international marketers? Answer: C. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets—bottom-of-the-pyramid markets (BOPMs)—consisting of the 4 billion people across the globe with annual incomes of less than $1,200. These markets are not necessarily defined by national borders but rather by the pockets of poverty across countries. These 4 billion consumers are, of course, concentrated in the LDCs and LLDCs, as defined in the U.N. classification scheme, particularly in South Asia and sub-Sahara Africa. Prahalad's basic point is that these consumers have been relatively ignored by international marketers because of misconceptions about their lack of resources, both in terms of money and technology, and the lack of appropriateness of products and services usually developed for more affluent consumers. Difficulty: 3 Hard Topic: Asia's Marketplace in the World Economy Learning Objective: 11-03 The importance of the bottom-of-the-pyramid markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

104) Discuss the economic growth of the member nations of ASEAN, including the four major events that led to their economic growth. Answer: The primary multinational trade group in Asia is ASEAN. Most of the early economic growth came from trade outside the ASEAN group. Similarities in the kinds of products they had to export, in their natural resources, and other national assets hampered earlier attempts at intraASEAN trade. Four major events account for the vigorous economic growth of the ASEAN countries and their transformation from cheap-labor havens to industrialized nations: (1) the ASEAN governments' commitment to deregulation, liberalization, and privatization of their economies; (2) the decision to shift their economies from commodity based to manufacturing based; (3) the decision to specialize in manufacturing components in which they have a comparative advantage (which created more diversity in their industrial output and increased opportunities for trade); and (4) Japan's emergence as a major provider of technology and capital necessary to upgrade manufacturing capability and develop new industries. Difficulty: 3 Hard Topic: History and Implications Regional Economic Agreements Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 105) Analyze APEC's role in international trade. Answer: Formed in 1989, APEC provides a formal structure for the major governments of the region, including the United States and Canada, to discuss their mutual interests in open trade and economic collaboration. APEC is a unique forum that has evolved into the primary regional vehicle for promoting trade liberalization and economic cooperation. APEC includes all the major economies around the Pacific Rim, from Russia to Chile to Australia, the most dynamic, fastest growing economies in the world. APEC has as its common goals a commitment to open trade, to increase economic collaboration, to sustain regional growth and development, to strengthen the multilateral trading system, and to reduce barriers to investment and trade without detriment to other economies. Representatives from APEC member nations meet annually to discuss issues confronting the group, to propose solutions to problems arising from the growing interdependence among their economies, and to continue their quest for ways to lower barriers to trade. Difficulty: 3 Hard Topic: History and Implications Regional Economic Agreements Learning Objective: 11-05 The interrelationships among countries in the region. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

106) Give a brief account of the four major regional economies of China. Answer: Today's China is divided into mutually competitive, complementary economic "warring states." Four regional economies stand out from the north to the south of the country, along the Pacific Coast: The traditional industrial heartland in Northeast China, with the coastal Dalian city as its hub among the three provinces of Liaoning, Jilin, and Heilongjiang. The Beijing–Tianjin information technology (IT) corridor in north China. The Yangtze River Delta, known as the Greater Shanghai area, with its emerging IT manufacturing center of Suzhou. The Pearl River Delta, containing Hong Kong, Macau, Guangzhou, and Shenzhen, as the world's manufacturing base for the IT industry. Difficulty: 3 Hard Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 107) How have multinational companies contributed toward the development of rural China? Answer: Rural China is the part of China that doesn't yet participate in the global economy. The average income for a Chongqing resident was about $16,000 in 2017, compared with rural neighbors at about 20% of that. But the government actually is not spending much in the area. Instead, we find multinational companies funding development. For example, BP has built a $200 million chemical plant in the area, Volvo has begun producing its small S40 series there, and Yamaha has a motorcycle plant nearby. Much, much more work needs to be done. But as wages rise along with the recent labor shortages along the east coast, the "market" will pull development westward. "How fast?" is the question of the day. Difficulty: 3 Hard Topic: Asia's Marketplace in the World Economy Learning Objective: 11-06 The diversity within China. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 12 Global Marketing Management: Planning and Organization 1) In the 1970s, the market segmentation argument in global marketing was framed as "global integration versus local responsiveness." 2) The most successful companies in the global marketplace today focus on country as the primary segmentation variable. 3) From the marketing perspective, the ideal market segment size, if customer satisfaction is the goal, is one. 4) Age and gender have been the most obvious international market segmentation variables, particularly for Americans. 5) Spreading the portfolio of markets served stabilizes revenues and operations for many global companies. 6) Tactical planning is essentially long term, incorporating generalized goals for an enterprise as a whole. 7) Strategic planning deals with products, capital, research, and the long- and short-term goals of a company, and is conducted at the highest levels of management. 8) In the context of planning for global markets, the planning process is a primary medium of organizational learning. 9) The first step in the international planning process is to adapt the marketing mix to target markets. 10) Incorrect decisions taken in Phase 2 of the international planning process lead to products inappropriate for the intended market or costly mistakes in pricing, advertising, and promotion. 11) In Phase 2 of the international planning process, the results of an analysis frequently indicate that the marketing mix would require such drastic adaptation that a decision not to enter a particular market is made. 12) Phase 3 of the international planning process involves developing a marketing plan and deciding budgets and profit expectations. 13) An international marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for a market. 14) The amount of equity required by a company to use different modes of entry in a new market affects the risk, return, and control that it will have in each mode. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

15) With indirect exporting, a company sells to a customer in another country without the use of any intermediaries or distributors. 16) A Belgium company sells its products to a large retailer in Belgium, who in turn sells the products all over Europe and Asia. This is an example of indirect exporting. 17) Exporting is a common market-entry approach for mature international companies with strong marketing and relational capabilities. 18) Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing. 19) In the context of foreign market entry, licensing is least suitable when capital is scarce. 20) With franchising, a franchiser provides a standard package of products, systems, and management services, and a franchisee provides market knowledge, capital, and personal involvement in management. 21) A strategic international alliance involves a business relationship established by two or more companies that cooperate out of mutual need and share risk in achieving a common objective. 22) Joint ventures are similar in structure and organization to minority holdings by a multinational company in a local firm. 23) The first step in building strategic international alliances is called dating. 24) An American company has just entered into an agreement with a German firm to create a separate legal entity. This new firm will be allowed to conduct business and actively compete in various European Union markets. This is a joint venture. 25) When U.S. companies face unfamiliar legal and cultural barriers in another country, it is preferable to buy an existing business than to enter into a joint venture. 26) Six high-technology companies joined forces to produce and market their products in Japan. By joining together, these companies were able to enter the Japanese market for the first time. This is an example of a consortium. 27) An Australian television manufacturer recently invested in a plant to build tuners in Mexico. This form of international business is aptly named international licensing. 28) Free trade areas that are tariff-free among members but have a common tariff for nonmembers create an opportunity that can be capitalized on by direct investment. 29) An advantage of a matrix organizational structure in international business is that it permits management to respond to the conflicts that arise among functional activity, product, and geography. 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

30) If a product is culturally sensitive, then decisions related to the product are more likely to be centralized. 31) Dell Corporation is a good example of mass customization because it A) maintains a large inventory of products. B) builds computers to order. C) markets to countries all over the word. D) provides one-to-one customer service support. E) uses local companies to build its computers. 32) With respect to global marketing management, the argument for market segmentation in the 1980s was framed as A) globalization versus localization. B) standardization versus adaptation. C) adaptation versus one-to-one marketing. D) globalization versus one-to-one marketing. E) standardization versus localization. 33) Company M was weighing whether it could be competitive if it standardized its products for the global market. It should consider three criteria: ease of control, flexibility, and A) global regularity. B) degree of adaptation. C) marketing capabilities. D) diversity. E) communication capabilities. 34) In the context of global marketing management, international marketers framed the argument toward market segmentation during the 1970s as A) global integration versus one-to-one marketing. B) standardization versus adaptation. C) adaptation versus one-to-one marketing. D) global integration versus local responsiveness. E) standardization versus local responsiveness. 35) Company G takes advantage of the Internet and flexible manufacturing to create products that vary depending on the market it is sold into. This demonstrates Company G's focus on A) localization. B) centralization. C) diversity. D) competition. E) standardization.

36) What is the crucial question facing international marketers today? A) What are the most efficient ways to segment markets? B) When is adaptation more relevant than customization? C) How can I better segment by country? D) How can I avoid segmenting on the basis of language, age, and income? E) How can I become more ethnocentric? 37) Which company has been known for its ability to adapt to local needs and wants in the international marketplace since its inception in 1866? A) Kodak B) General Foods C) R.J. Reynolds Tobacco D) Ralston Purina E) Nestlé 38) Alcoa sent line workers and managers to foreign locations to seek out new techniques and processes, and they brought them back to the home country to improve operations. This shows the benefits of A) hiring diversity. B) standardization. C) improvisation. D) global marketing. E) transfers of knowledge. 39) What statement is a feature of international corporate planning? A) It only addresses marketing and advertising questions. B) It specifically deals with a company's products, capital, and research. C) It predominantly deals with the tactical issues of marketing. D) It is essentially long term in nature. E) It refers to the plans that are made at the local level. 40) What statement relates to strategic planning? A) It is conducted at the lowest levels of management. B) It deals with a company's products, capital, and research. C) It excludes the research component of a company. D) It is designed to solely address marketing and advertising questions at the local level. E) It is most commonly referred to as market planning. 41) Tactical plans are A) designed to address questions that relate to advertising and marketing. B) associated with a company's products, capital, and research at a global level. C) conducted at the highest levels of management. D) unlike plans that are made at the local level. E) most commonly referred to as corporate plans.

42) Harry and his team draft a plan for their organization, HD Corp. They primarily establish the overall goals that HD should accomplish in the next 25 years. In this case, Harry and his team are most likely engaged in ________ planning. A) tactical B) market C) corporate D) strategic E) personnel 43) What type of planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company? A) market B) tactical C) single-use D) strategic E) personnel 44) Jared wants to know how to reach potential customers in small towns on the Spanish coast, so he should focus his planning on the ________ level. A) corporate B) strategic C) global D) tactical E) functional 45) The CEO and the board of directors at a large multinational company meet once a quarter to review the long- and short-term goals of the company and to make changes as required. They are engaged in ________ planning. A) corporate B) strategic C) global D) tactical E) functional 46) If a company focuses on market planning that involves specific actions and allocation of resources, the company is most likely implementing ________ planning. A) tactical B) strategic C) corporate D) operational E) synergistic

47) Why might the process of planning be as important as the plan itself? A) It involves everyone in the organization. B) It forces decision makers to examine all factors that affect the success of a marketing program. C) It is necessary to share all plans with shareholders annually. D) The process of planning is a standard course business schools. E) Decision makers face more challenges managing a domestic marketing program than a global one. 48) The first-time foreign marketer must decide what products to develop, in which markets, and A) the resources needed. B) the method of distribution. C) relevant foreign currency issues. D) the level of staffing needed. E) the method of entry. 49) What is the first phase in the international planning process? A) adapting the marketing mix to target markets B) developing the marketing plan C) matching company and country needs D) implementation and control E) defining market segments 50) Which aspect of international marketing is analyzed in the first phase of the international planning process? A) country's market potential B) product adaptation C) advertising D) situation analysis E) budget 51) During which activity of the international planning process would a marketing manager conduct situation analysis and make decisions involving objectives and goals, budgets, and action programs? A) adapting the marketing mix to target markets B) developing the marketing plan C) matching company and country needs D) implementation and control E) defining company objectives and resources 52) The primary goal of Phase 2 of the international planning process is to A) establish criteria for screening countries. B) determine the marketing mix. C) match company characteristics with country potential. D) perform a situation analysis. E) set budgets. 6 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

53) Phase 2 of the international planning process includes analysis of which factor? A) company character B) pricing C) situation analysis D) budgets E) standards 54) A consumer products company has already reviewed its objectives and capabilities, established the screening criteria for reviewing potential foreign markets, and examined a series of environmental factors for the markets in which it plans to operate. What should the company do next as it proceeds with the international planning process? A) Match the company to a country's needs. B) Evaluate the marketing mix to target markets. C) Modify the company's position to communication objectives. D) Develop a marketing plan. E) Implement and control information obtained in the initial examination. 55) What question should be answered in Phase 2 of the international marketing process? A) Are there identifiable market segments that allow for common marketing mix tactics across countries? B) Have objectives and goals been established? C) Have all budgets been determined within the constraints of resources? D) Are pre-existing channels of distribution in the new market mature enough to support the proposed expansion? E) Have responsibilities been established for implementation and control? 56) Phase 3 of the international planning process begins with A) creating a management performance guide. B) evaluating host-country constraints. C) conducting a situation analysis. D) evaluating home-country constraints. E) exploring the distribution options. 57) A company has just completed a marketing plan for entering eastern Europe. Included in this plan are budgets and sales and profit expectations. Which of the following phases of the international planning process has the company just completed? A) Phase 1 B) Phase 2 C) Phase 3 D) Phase 4 E) Phase 5

58) A company decided to expand its presence in northern Europe. Toward that end, it selected the countries where it would market its products. It also selected a mode of entry. It is now in the process of implementing specific plans. The company is currently in which phase of the international planning? A) Phase 1 B) Phase 2 C) Phase 3 D) Phase 4 E) Phase 5 59) A company is in the process of deciding the mode of entry it will use in Japan and China. The company is in which phase of the international planning process? A) preliminary analysis B) defining market segment C) developing the marketing plan D) implementation and control E) standardization of the marketing mix 60) Once a "go" decision has been made in Phase 3 of the international planning process, what is most likely to occur next? A) the objectives and goals phase B) the budget phase C) the action-program(s) phase D) the implementation and control phase E) the communication phase 61) Which subject is explored after developing information and selecting a country market in the international planning process? A) company character B) the constraints of home country C) geography D) host-country constraints E) the mode of entry 62) What is the last step in the international planning process? A) defining target markets and adapting the marketing mix accordingly B) matching company and country needs C) adapting the marketing mix according to market segments D) implementation and control E) developing the marketing plan

63) Which mode of foreign market entry requires the most amount of equity and therefore creates the greatest risk? A) exporting B) joint venture C) contractual agreement D) strategic alliance E) direct foreign investment 64) Which mode of foreign market entry offers the most control and the highest potential return for a company? A) exporting B) joint venture C) contractual agreement D) strategic alliance E) direct foreign investment 65) Hippos is a manufacturer of consumer goods. It intends to sell its products in Taiwan as it is looking to enter into Asian markets. It does not want to make any equity investment and prefers to minimize any risk of loss in the foreign market. It is also willing to settle for a low rate of return and little control. Which of the foreign market-entry strategies is Hippos most likely to pursue? A) direct foreign investment B) joint venture C) indirect exporting D) strategic alliance E) licensing 66) The foreign market entry mode of ________ requires no equity investment and thus has a low risk, low rate of return, and little control. A) licensing B) indirect exporting C) a strategic alliance D) a joint venture E) franchising 67) Mirros, a U.S. kitchenware distributor, sells its inventory twice a year to All Cooks, a kitchenware retailer in the United States. All Cooks, in turn, sells those products through its retail stores in Vietnam and Thailand. In which of the following entry modes is Mirros most likely engaged? A) franchising B) indirect exporting C) a consortium D) direct foreign investment E) a joint venture

68) What market strategy usually means that the company sells to a buyer (importer or distributor) in the home country, which in turn exports the product? A) franchising B) indirect exporting C) a consortium D) direct foreign investment E) a joint venture 69) Mirros, a U.S. kitchenware distributor, takes a selection of its inventory twice a year to Vietnam and sells it to a Vietnam-based kitchen retailer. The Vietnam company, in turn, sells those products through its retail stores in Vietnam and Thailand. In which of the alternative market-entry strategies is Mirros engaged? A) franchising B) licensing C) direct exporting D) a joint venture E) direct foreign investment 70) A direct sales force may be required in a foreign country, especially for A) big ticket industrial products. B) low-technology products. C) personal care products. D) nonmechanical goods. E) traditional hand-made goods. 71) In the context of foreign market entry, ________ are long-term, nonequity associations between a company and another in a foreign market. A) consortia B) exporting arrangements C) direct foreign investments D) contractual agreements E) joint ventures 72) The advantages of ________ are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse. A) consortia B) exporting arrangements C) strategic alliances D) licensing E) joint ventures

73) Cho wanted to sell her custom jewelry made in China to the U.S. market, but she didn't have a lot of capital to get started, nor did she know how to get around import restrictions. She decided to give an American company the rights to produce and sell her products for a fee and gave them patent rights. Cho was pursuing which entry method? A) consortia B) exporting arrangements C) strategic alliances D) licensing E) joint ventures 74) Which form of business relationship lets a company grant patent rights, trademark rights, and the rights to use technological processes to another company in a foreign country? A) licensing B) exporting arrangements C) joint ventures D) consortia E) strategic alliances 75) What is true of franchising? A) It provides an effective blending of skill decentralization and operational centralization. B) The franchisee provides market knowledge, capital, and personal involvement in management. C) Foreign laws and regulations are usually hostile toward franchising. D) It is an important form of horizontal market integration. E) The franchiser has little control on marketing of the products at the point of final sale. 76) Kwan wants to open a new business in his own country, Singapore. He has decided on a form of licensing that will provide him with a standard package of products, systems, and management services in order to sell fast food to local residents. What is the form of business Kwan has chosen? A) direct sales B) indirect exporting C) joint venture D) strategic alliance E) franchising 77) Why are foreign laws and regulations friendly toward franchising? A) It is an important form of horizontal market integration. B) It gives the franchiser little control on marketing of the products at the point of final sale. C) It tends to foster local ownership, operations, and employment. D) It provides an effective blending of skill decentralization and operational centralization. E) It provides to the franchiser market knowledge, capital, and personal involvement in management.

78) The key factors that influence success of franchising approaches are monitoring costs (based on physical and cultural distances), the principal's international experience, and A) the principal's financial investment in the business. B) the principal's marketing expertise. C) the brand equity in the new market. D) learning the competition. E) the level of involvement from the company. 79) In the context of foreign market entry, a ________ is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective without forming a separate legal entity. A) direct sales group B) consortium arrangement C) franchising arrangement D) strategic international alliance E) joint venture 80) What refers to two or more participating companies joining forces to create a separate legal entity to facilitate doing business in the international arena? A) indirect exporting B) franchise C) license arrangement D) joint venture E) direct investment agreement 81) What is a partnership called in which several companies have joined forces to create a separate legal entity to facilitate doing business in a country where none of the participants is currently active? A) a consortium B) a franchise pact C) a license arrangement D) indirect exporting E) direct foreign investment 82) A consortium differs from a joint venture in that a consortium A) usually operates in a country in which the participants are already active. B) typically involves a large number of participants. C) restricts the right to hold an equity position by its major partners. D) does not involve the creation of a separate legal entity. E) is formed mainly for executing short-term projects.

83) A small-scale apparel manufacturer in Florida collaborates with several other similar firms and they form a separate company in India. None of the participants in this collaboration has previously had active operations in the Indian market. The newly created firm manufactures apparel suited to the tastes and preferences of the Indian customers. Identify the type of foreign market-entry approach depicted in this scenario. A) a franchising agreement B) a consortium C) a licensing agreement D) direct exporting E) indirect exporting 84) Companies that have the ________ organizational structure generally experience rapid growth and have broad, diverse product lines. A) global product division B) pyramid C) hierarchical D) geographical division E) matrix organization 85) HealthStore Inc. provides a broad and diverse range of services for the healthcare industry. It also manufactures a variety of hospital equipment. It wants to experience rapid growth and intends to have an organizational structure to better face international competition. What organizational structure will suit HealthStore best? A) a global product division structure B) a geographical division structure C) a matrix structure D) a pyramid structure E) a hierarchical structure 86) Which organizational structure is the most extensive of those commonly adopted by companies seeking to compete globally? A) transnational structure B) geographical division structure C) region-specific structure D) global product division structure E) matrix structure 87) Describe three benefits of marketing to diverse customers with global marketing operations. 88) Compare and contrast corporate, strategic, and tactical planning. 89) Describe the four phases of the international planning process. 90) A company has a choice of four different modes of foreign market entry. Briefly describe each of these modes, and explain when each would be the best option. 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

3) From the marketing perspective, the ideal market segment size, if customer satisfaction is the goal, is one. Answer: TRUE Explanation: As the information explosion allows marketers to segment markets ever more finely, it is only the manufacturing and/or finance managers in companies who argue for standardization for the sake of economies of scale. From the marketing perspective, customization is always best. The ideal market segment size, if customer satisfaction is the goal, is one. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 4) Age and gender have been the most obvious international market segmentation variables, particularly for Americans. Answer: FALSE Explanation: Country has been the most obvious segmentation variable, particularly for Americans. But as better communication systems continue to dissolve national borders, other dimensions of global markets are growing in salience. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Spreading the portfolio of markets served stabilizes revenues and operations for many global companies. Answer: TRUE Explanation: Spreading the portfolio of markets served brings important stability of revenues and operations to many global companies. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

6) Tactical planning is essentially long term, incorporating generalized goals for an enterprise as a whole. Answer: FALSE Explanation: International corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole. Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 7) Strategic planning deals with products, capital, research, and the long- and short-term goals of a company, and is conducted at the highest levels of management. Answer: TRUE Explanation: Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) In the context of planning for global markets, the planning process is a primary medium of organizational learning. Answer: TRUE Explanation: The planning process is a primary medium of organizational learning. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

9) The first step in the international planning process is to adapt the marketing mix to target markets. Answer: FALSE Explanation: A critical first step in the international planning process is deciding in which existing country market to make a market investment. The results of Phase 1 provide the marketer with the basic information necessary to do a variety of things including determining which part of the marketing mix can be standardized and which part of and how the marketing mix must be adapted to meet local market needs. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 10) Incorrect decisions taken in Phase 2 of the international planning process lead to products inappropriate for the intended market or costly mistakes in pricing, advertising, and promotion. Answer: TRUE Explanation: A more detailed examination of the components of the marketing mix is the purpose of Phase 2 of the international planning process. Incorrect decisions at this point lead to products inappropriate for the intended market or costly mistakes in pricing, advertising, and promotion. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) In Phase 2 of the international planning process, the results of an analysis frequently indicate that the marketing mix would require such drastic adaptation that a decision not to enter a particular market is made. Answer: TRUE Explanation: Frequently, the results of the analysis in Phase 2 of the international planning process indicate that the marketing mix will require such drastic adaptation that a decision not to enter a particular market is made. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

12) Phase 3 of the international planning process involves developing a marketing plan and deciding budgets and profit expectations. Answer: TRUE Explanation: In phase 3 of the international planning process, a marketing plan is developed for the target market—whether it is a single country or a global market set. The specific plan establishes what is to be done, by whom, how it is to be done, and when. Included are budgets and sales and profit expectations. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 13) An international marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for a market. Answer: TRUE Explanation: In the context of the international planning process, the marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for a market. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) The amount of equity required by a company to use different modes of entry in a new market affects the risk, return, and control that it will have in each mode. Answer: TRUE Explanation: The amount of equity required by a company to use different modes of entry in a new market affects the risk, return, and control that it will have in each mode. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

15) With indirect exporting, a company sells to a customer in another country without the use of any intermediaries or distributors. Answer: FALSE Explanation: Indirect exporting usually means that a company sells to a buyer (importer or distributor) in the home country, which in turn exports the product. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 16) A Belgium company sells its products to a large retailer in Belgium, who in turn sells the products all over Europe and Asia. This is an example of indirect exporting. Answer: TRUE Explanation: This is an example of indirect exporting, which usually means that the company sells to a buyer (importer or distributor) in the home country, which in turn exports the product. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 17) Exporting is a common market-entry approach for mature international companies with strong marketing and relational capabilities. Answer: TRUE Explanation: Exporting is a common market-entry approach for mature international companies with strong marketing and relational capabilities. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

18) Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing. Answer: TRUE Explanation: Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 19) In the context of foreign market entry, licensing is least suitable when capital is scarce. Answer: FALSE Explanation: The advantages of licensing are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) With franchising, a franchiser provides a standard package of products, systems, and management services, and a franchisee provides market knowledge, capital, and personal involvement in management. Answer: TRUE Explanation: Franchising is a rapidly growing form of licensing in which a franchiser provides a standard package of products, systems, and management services, and a franchisee provides market knowledge, capital, and personal involvement in management. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

21) A strategic international alliance involves a business relationship established by two or more companies that cooperate out of mutual need and share risk in achieving a common objective. Answer: TRUE Explanation: A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. Difficulty: 1 Easy Topic: Advantages and Disadvantages of Strategic Alliances, Collaborative Arrangements and Acquisitions Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 22) Joint ventures are similar in structure and organization to minority holdings by a multinational company in a local firm. Answer: FALSE Explanation: A joint venture is different from other types of strategic alliances or collaborative relationships in that a joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity. Joint ventures are different from minority holdings by an MNC in a local firm. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) The first step in building strategic international alliances is called dating. Answer: TRUE Explanation: The first step in building strategic international alliances (SIA) is called dating. A SIA is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. Difficulty: 1 Easy Topic: Advantages and Disadvantages of Strategic Alliances, Collaborative Arrangements and Acquisitions Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

24) An American company has just entered into an agreement with a German firm to create a separate legal entity. This new firm will be allowed to conduct business and actively compete in various European Union markets. This is a joint venture. Answer: TRUE Explanation: In this case, the creation of a separate legal entity by the American company and the German firm is an example of a joint venture. A joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 25) When U.S. companies face unfamiliar legal and cultural barriers in another country, it is preferable to buy an existing business than to enter into a joint venture. Answer: FALSE Explanation: International joint ventures provide a way to enter markets that pose legal and cultural barriers that is less risky than acquisition of an existing company. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) Six high-technology companies joined forces to produce and market their products in Japan. By joining together, these companies were able to enter the Japanese market for the first time. This is an example of a consortium. Answer: TRUE Explanation: In this case, the arrangement by the high-technology companies to produce and market their products together in the Japanese market is an example of a consortium. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

27) An Australian television manufacturer recently invested in a plant to build tuners in Mexico. This form of international business is aptly named international licensing. Answer: FALSE Explanation: In this case, the Australian television manufacturer is engaged in direct foreign investment. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 28) Free trade areas that are tariff-free among members but have a common tariff for nonmembers create an opportunity that can be capitalized on by direct investment. Answer: TRUE Explanation: The growth of free trade areas that are tariff-free among members but have a common tariff for nonmembers creates an opportunity that can be capitalized on by direct investment. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) An advantage of a matrix organizational structure in international business is that it permits management to respond to the conflicts that arise among functional activity, product, and geography. Answer: TRUE Explanation: A matrix structure permits management to respond to the conflicts that arise among functional activity, product, and geography. Difficulty: 1 Easy Topic: Overview of Organizational Structure and Design Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

30) If a product is culturally sensitive, then decisions related to the product are more likely to be centralized. Answer: FALSE Explanation: If a product is culturally sensitive, the decisions are more likely to be decentralized. Difficulty: 1 Easy Topic: Overview of Organizational Structure and Design Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 31) Dell Corporation is a good example of mass customization because it A) maintains a large inventory of products. B) builds computers to order. C) markets to countries all over the word. D) provides one-to-one customer service support. E) uses local companies to build its computers. Answer: B Explanation: A good example of "mass customization" is Dell Computer Corporation, which maintains no inventory and builds each computer to order. The trend back toward localization is caused by the efficiencies of customization made possible by the Internet and increasingly flexible manufacturing processes. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

32) With respect to global marketing management, the argument for market segmentation in the 1980s was framed as A) globalization versus localization. B) standardization versus adaptation. C) adaptation versus one-to-one marketing. D) globalization versus one-to-one marketing. E) standardization versus localization. Answer: A Explanation: In the 1970s, the market segmentation argument was framed as "standardization versus adaptation." In the 1980s, it was "globalization versus localization," and in the 1990s, it was "global integration versus local responsiveness." Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 33) Company M was weighing whether it could be competitive if it standardized its products for the global market. It should consider three criteria: ease of control, flexibility, and A) global regularity. B) degree of adaptation. C) marketing capabilities. D) diversity. E) communication capabilities. Answer: A Explanation: Three criteria drive the decision of whether or not to standardize: tractability (ease of control), flexibility, and global "regularity," or uniform demand in widely dispersed markets. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

34) In the context of global marketing management, international marketers framed the argument toward market segmentation during the 1970s as A) global integration versus one-to-one marketing. B) standardization versus adaptation. C) adaptation versus one-to-one marketing. D) global integration versus local responsiveness. E) standardization versus local responsiveness. Answer: B Explanation: In the 1970s, the market segmentation argument was framed as "standardization versus adaptation." In the 1980s, it was "globalization versus localization," and in the 1990s, it was "global integration versus local responsiveness." Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 35) Company G takes advantage of the Internet and flexible manufacturing to create products that vary depending on the market it is sold into. This demonstrates Company G's focus on A) localization. B) centralization. C) diversity. D) competition. E) standardization. Answer: A Explanation: The trend toward localization, or producing customized products for specific local markets, is partly caused by the efficiencies of customization made possible by the Internet and increasingly flexible manufacturing processes. Difficulty: 2 Medium Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

36) What is the crucial question facing international marketers today? A) What are the most efficient ways to segment markets? B) When is adaptation more relevant than customization? C) How can I better segment by country? D) How can I avoid segmenting on the basis of language, age, and income? E) How can I become more ethnocentric? Answer: A Explanation: In the 21st century, standardization versus adaptation is simply not the right question to ask. Rather, the crucial question facing international marketers is what are the most efficient ways to segment markets? Country has been the most obvious segmentation variable, particularly for Americans. But as better communication systems continue to dissolve national borders, other dimensions of global markets are growing in salience. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 37) Which company has been known for its ability to adapt to local needs and wants in the international marketplace since its inception in 1866? A) Kodak B) General Foods C) R.J. Reynolds Tobacco D) Ralston Purina E) Nestlé Answer: E Explanation: Nestlé has been international almost from its start in 1866 as a maker of infant formula. Its overall strategy is: (1) think and plan long term, (2) decentralize, (3) stick to what you know, and (4) adapt to local tastes. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

38) Alcoa sent line workers and managers to foreign locations to seek out new techniques and processes, and they brought them back to the home country to improve operations. This shows the benefits of A) hiring diversity. B) standardization. C) improvisation. D) global marketing. E) transfers of knowledge. Answer: E Explanation: At Alcoa, line workers were sent to the Japanese plant to learn techniques, which were then transferred to the U.S. operations. Because of the benefits of such transfers of knowledge, Alcoa has changed its practice of sending managers overseas to "keep an eye on things" to sending line workers and managers to foreign locations to seek out new techniques and processes. Difficulty: 1 Easy Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 39) What statement is a feature of international corporate planning? A) It only addresses marketing and advertising questions. B) It specifically deals with a company's products, capital, and research. C) It predominantly deals with the tactical issues of marketing. D) It is essentially long term in nature. E) It refers to the plans that are made at the local level. Answer: D Explanation: International corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole. Difficulty: 2 Medium Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

40) What statement relates to strategic planning? A) It is conducted at the lowest levels of management. B) It deals with a company's products, capital, and research. C) It excludes the research component of a company. D) It is designed to solely address marketing and advertising questions at the local level. E) It is most commonly referred to as market planning. Answer: B Explanation: Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company. Difficulty: 2 Medium Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 41) Tactical plans are A) designed to address questions that relate to advertising and marketing. B) associated with a company's products, capital, and research at a global level. C) conducted at the highest levels of management. D) unlike plans that are made at the local level. E) most commonly referred to as corporate plans. Answer: A Explanation: Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions. Difficulty: 2 Medium Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

42) Harry and his team draft a plan for their organization, HD Corp. They primarily establish the overall goals that HD should accomplish in the next 25 years. In this case, Harry and his team are most likely engaged in ________ planning. A) tactical B) market C) corporate D) strategic E) personnel Answer: C Explanation: In this case, Harry and his team are most likely engaged in corporate planning. International corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole. Difficulty: 2 Medium Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 43) What type of planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company? A) market B) tactical C) single-use D) strategic E) personnel Answer: D Explanation: Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

44) Jared wants to know how to reach potential customers in small towns on the Spanish coast, so he should focus his planning on the ________ level. A) corporate B) strategic C) global D) tactical E) functional Answer: D Explanation: Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions. Difficulty: 2 Medium Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 45) The CEO and the board of directors at a large multinational company meet once a quarter to review the long- and short-term goals of the company and to make changes as required. They are engaged in ________ planning. A) corporate B) strategic C) global D) tactical E) functional Answer: B Explanation: Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of the company. Difficulty: 2 Medium Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

46) If a company focuses on market planning that involves specific actions and allocation of resources, the company is most likely implementing ________ planning. A) tactical B) strategic C) corporate D) operational E) synergistic Answer: A Explanation: Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 47) Why might the process of planning be as important as the plan itself? A) It involves everyone in the organization. B) It forces decision makers to examine all factors that affect the success of a marketing program. C) It is necessary to share all plans with shareholders annually. D) The process of planning is a standard course business schools. E) Decision makers face more challenges managing a domestic marketing program than a global one. Answer: B Explanation: The process of planning may be as important as the plan itself because it forces decision makers to examine all factors that affect the success of a marketing program and involves those who will be responsible for its implementation. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

48) The first-time foreign marketer must decide what products to develop, in which markets, and A) the resources needed. B) the method of distribution. C) relevant foreign currency issues. D) the level of staffing needed. E) the method of entry. Answer: A Explanation: Whether a company is marketing in several countries or is entering a foreign market for the first time, planning is essential to success. The first-time foreign marketer must decide what products to develop, in which markets, and with what level of resource commitment. Difficulty: 2 Medium Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 49) What is the first phase in the international planning process? A) adapting the marketing mix to target markets B) developing the marketing plan C) matching company and country needs D) implementation and control E) defining market segments Answer: C Explanation: Whether a company is new to international marketing or heavily involved, an evaluation of potential markets is the first step in the planning process. A critical first step in the international planning process is deciding in which existing country market to make a market investment. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

50) Which aspect of international marketing is analyzed in the first phase of the international planning process? A) country's market potential B) product adaptation C) advertising D) situation analysis E) budget Answer: A Explanation: A critical first step in the international planning process is deciding in which existing country market to make a market investment. A company's strengths and weaknesses, including the characteristics of its home country, products, philosophies, modes of operation, and objectives must be matched with a country's constraining factors and market potential. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 51) During which activity of the international planning process would a marketing manager conduct situation analysis and make decisions involving objectives and goals, budgets, and action programs? A) adapting the marketing mix to target markets B) developing the marketing plan C) matching company and country needs D) implementation and control E) defining company objectives and resources Answer: B Explanation: Phase 3 of the international planning process involves developing the marketing plan. At this stage, a marketing manager conducts situation analysis and makes decisions regarding objectives and goals, strategy and tactics, mode of entry, budgets, and action programs. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

52) The primary goal of Phase 2 of the international planning process is to A) establish criteria for screening countries. B) determine the marketing mix. C) match company characteristics with country potential. D) perform a situation analysis. E) set budgets. Answer: B Explanation: The primary goal of Phase 2 of the international planning process is to decide on a marketing mix adjusted to the cultural constraints imposed by the uncontrollable elements of the environment that effectively achieves corporate objectives and goals. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 53) Phase 2 of the international planning process includes analysis of which factor? A) company character B) pricing C) situation analysis D) budgets E) standards Answer: B Explanation: The primary goal of Phase 2 is to decide on a marketing mix—product, price, promotion, and distribution—adjusted to the cultural constraints imposed by the uncontrollable elements of the environment that effectively achieves corporate objectives and goals. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

54) A consumer products company has already reviewed its objectives and capabilities, established the screening criteria for reviewing potential foreign markets, and examined a series of environmental factors for the markets in which it plans to operate. What should the company do next as it proceeds with the international planning process? A) Match the company to a country's needs. B) Evaluate the marketing mix to target markets. C) Modify the company's position to communication objectives. D) Develop a marketing plan. E) Implement and control information obtained in the initial examination. Answer: B Explanation: Once target markets are selected, the marketing mix must be evaluated in light of the data generated in Phase 1 of the international planning process. The primary goal is to decide on a marketing mix adjusted to the cultural constraints imposed by the uncontrollable elements of the environment that effectively achieves corporate objectives and goals. Difficulty: 3 Hard Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 55) What question should be answered in Phase 2 of the international marketing process? A) Are there identifiable market segments that allow for common marketing mix tactics across countries? B) Have objectives and goals been established? C) Have all budgets been determined within the constraints of resources? D) Are pre-existing channels of distribution in the new market mature enough to support the proposed expansion? E) Have responsibilities been established for implementation and control? Answer: A Explanation: The answers to three major questions are generated in Phase 2 of the international marketing process: a) Are there identifiable market segments that allow for common marketing mix tactics across countries? b) Which cultural/environmental adaptations are necessary for successful acceptance of the marketing mix? c) Will adaptation costs allow profitable market entry? Difficulty: 2 Medium Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

56) Phase 3 of the international planning process begins with A) creating a management performance guide. B) evaluating host-country constraints. C) conducting a situation analysis. D) evaluating home-country constraints. E) exploring the distribution options. Answer: C Explanation: In Phase 3 of the planning process, a marketing plan is developed for the target market—whether it is a single country or a global market set. The marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for the market. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 57) A company has just completed a marketing plan for entering eastern Europe. Included in this plan are budgets and sales and profit expectations. Which of the following phases of the international planning process has the company just completed? A) Phase 1 B) Phase 2 C) Phase 3 D) Phase 4 E) Phase 5 Answer: C Explanation: In Phase 3 of the international planning process, a marketing plan is developed for the target market—whether it is a single country or a global market set. The marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for the market. Difficulty: 3 Hard Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

58) A company decided to expand its presence in northern Europe. Toward that end, it selected the countries where it would market its products. It also selected a mode of entry. It is now in the process of implementing specific plans. The company is currently in which phase of the international planning? A) Phase 1 B) Phase 2 C) Phase 3 D) Phase 4 E) Phase 5 Answer: D Explanation: In this case, the company is in Phase 4 of the international planning process. A "go" decision in Phase 3 triggers Phase 4 of the international planning process. Phase 4 involves implementation of specific plans and anticipation of successful marketing. Difficulty: 3 Hard Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 59) A company is in the process of deciding the mode of entry it will use in Japan and China. The company is in which phase of the international planning process? A) preliminary analysis B) defining market segment C) developing the marketing plan D) implementation and control E) standardization of the marketing mix Answer: C Explanation: In this scenario, the company is currently in Phase 3 of the international planning process. In this phase, a marketing plan is developed for the target market—whether it is a single country or a global market set. The marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for the market. Difficulty: 3 Hard Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

60) Once a "go" decision has been made in Phase 3 of the international planning process, what is most likely to occur next? A) the objectives and goals phase B) the budget phase C) the action-program(s) phase D) the implementation and control phase E) the communication phase Answer: D Explanation: A "go" decision in Phase 3 of the international planning process triggers implementation of specific plans and anticipation of successful marketing. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 61) Which subject is explored after developing information and selecting a country market in the international planning process? A) company character B) the constraints of home country C) geography D) host-country constraints E) the mode of entry Answer: E Explanation: With the information developed in the international planning process and a country market selected, the decision regarding the entry mode can be made. The choice of mode of entry is one of the more critical decisions for a firm because the choice will define the firm's operations and affect all future decisions in that market. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

62) What is the last step in the international planning process? A) defining target markets and adapting the marketing mix accordingly B) matching company and country needs C) adapting the marketing mix according to market segments D) implementation and control E) developing the marketing plan Answer: D Explanation: All marketing plans require coordination and control during the period of implementation. Implementation and control constitute the last step in the international planning process. Difficulty: 1 Easy Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 63) Which mode of foreign market entry requires the most amount of equity and therefore creates the greatest risk? A) exporting B) joint venture C) contractual agreement D) strategic alliance E) direct foreign investment Answer: E Explanation: Direct foreign investment requires the most equity of the four modes of foreign market entry and creates the greatest risk while offering the most control and the potential highest return. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

64) Which mode of foreign market entry offers the most control and the highest potential return for a company? A) exporting B) joint venture C) contractual agreement D) strategic alliance E) direct foreign investment Answer: E Explanation: Direct foreign investment requires the most equity of the four modes of foreign market entry and creates the greatest risk while offering the most control and the potential highest return. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 65) Hippos is a manufacturer of consumer goods. It intends to sell its products in Taiwan as it is looking to enter into Asian markets. It does not want to make any equity investment and prefers to minimize any risk of loss in the foreign market. It is also willing to settle for a low rate of return and little control. Which of the foreign market-entry strategies is Hippos most likely to pursue? A) direct foreign investment B) joint venture C) indirect exporting D) strategic alliance E) licensing Answer: C Explanation: In this case, Hippos is most likely to pursue indirect exporting. The amount of equity required by a company to use different modes affects the risk, return, and control that it will have in each mode. Indirect exporting requires no equity investment and thus has a low risk, low rate of return, and little control. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

66) The foreign market entry mode of ________ requires no equity investment and thus has a low risk, low rate of return, and little control. A) licensing B) indirect exporting C) a strategic alliance D) a joint venture E) franchising Answer: B Explanation: The amount of equity required by the company to use different modes affects the risk, return, and control that it will have in each mode. Indirect exporting requires no equity investment and thus has a low risk, low rate of return, and little control. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 67) Mirros, a U.S. kitchenware distributor, sells its inventory twice a year to All Cooks, a kitchenware retailer in the United States. All Cooks, in turn, sells those products through its retail stores in Vietnam and Thailand. In which of the following entry modes is Mirros most likely engaged? A) franchising B) indirect exporting C) a consortium D) direct foreign investment E) a joint venture Answer: B Explanation: Mirros is engaged in indirect exporting. Indirect exporting usually means that a company sells to a buyer (importer or distributor) in the home country, which in turn exports the product. Difficulty: 3 Hard Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

68) What market strategy usually means that the company sells to a buyer (importer or distributor) in the home country, which in turn exports the product? A) franchising B) indirect exporting C) a consortium D) direct foreign investment E) a joint venture Answer: B Explanation: Indirect exporting usually means that the company sells to a buyer (importer or distributor) in the home country, which in turn exports the product. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 69) Mirros, a U.S. kitchenware distributor, takes a selection of its inventory twice a year to Vietnam and sells it to a Vietnam-based kitchen retailer. The Vietnam company, in turn, sells those products through its retail stores in Vietnam and Thailand. In which of the alternative market-entry strategies is Mirros engaged? A) franchising B) licensing C) direct exporting D) a joint venture E) direct foreign investment Answer: C Explanation: In this scenario, Mirros is engaged in direct exporting. With direct exporting, a company sells to a customer in another country. This method is the most common approach employed by companies taking their first international step because the risks of financial loss can be minimized. Difficulty: 3 Hard Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

70) A direct sales force may be required in a foreign country, especially for A) big ticket industrial products. B) low-technology products. C) personal care products. D) nonmechanical goods. E) traditional hand-made goods. Answer: A Explanation: Particularly for high-technology and big ticket industrial products, a direct sales force may be required in a foreign country. This requirement may mean establishing an office with local and/or expatriate managers and staff, depending, of course, on the size of the market and potential sales revenues. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 71) In the context of foreign market entry, ________ are long-term, nonequity associations between a company and another in a foreign market. A) consortia B) exporting arrangements C) direct foreign investments D) contractual agreements E) joint ventures Answer: D Explanation: Contractual agreements are long-term, nonequity associations between a company and another in a foreign market. Contractual agreements generally involve the transfer of technology, processes, trademarks, and/or human skills. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

72) The advantages of ________ are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse. A) consortia B) exporting arrangements C) strategic alliances D) licensing E) joint ventures Answer: D Explanation: The advantages of licensing are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 73) Cho wanted to sell her custom jewelry made in China to the U.S. market, but she didn't have a lot of capital to get started, nor did she know how to get around import restrictions. She decided to give an American company the rights to produce and sell her products for a fee and gave them patent rights. Cho was pursuing which entry method? A) consortia B) exporting arrangements C) strategic alliances D) licensing E) joint ventures Answer: D Explanation: A means of establishing a foothold in foreign markets without large capital outlays is licensing. Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing. The advantages of licensing are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse. Difficulty: 3 Hard Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

74) Which form of business relationship lets a company grant patent rights, trademark rights, and the rights to use technological processes to another company in a foreign country? A) licensing B) exporting arrangements C) joint ventures D) consortia E) strategic alliances Answer: A Explanation: Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 75) What is true of franchising? A) It provides an effective blending of skill decentralization and operational centralization. B) The franchisee provides market knowledge, capital, and personal involvement in management. C) Foreign laws and regulations are usually hostile toward franchising. D) It is an important form of horizontal market integration. E) The franchiser has little control on marketing of the products at the point of final sale. Answer: B Explanation: Franchising is a rapidly growing form of licensing in which the franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

76) Kwan wants to open a new business in his own country, Singapore. He has decided on a form of licensing that will provide him with a standard package of products, systems, and management services in order to sell fast food to local residents. What is the form of business Kwan has chosen? A) direct sales B) indirect exporting C) joint venture D) strategic alliance E) franchising Answer: E Explanation: In this case, Kwan has chosen to conduct his business through franchising. Franchising is a rapidly growing form of licensing in which the franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 77) Why are foreign laws and regulations friendly toward franchising? A) It is an important form of horizontal market integration. B) It gives the franchiser little control on marketing of the products at the point of final sale. C) It tends to foster local ownership, operations, and employment. D) It provides an effective blending of skill decentralization and operational centralization. E) It provides to the franchiser market knowledge, capital, and personal involvement in management. Answer: C Explanation: Foreign laws and regulations are friendly toward franchising because it tends to foster local ownership, operations, and employment. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

78) The key factors that influence success of franchising approaches are monitoring costs (based on physical and cultural distances), the principal's international experience, and A) the principal's financial investment in the business. B) the principal's marketing expertise. C) the brand equity in the new market. D) learning the competition. E) the level of involvement from the company. Answer: C Explanation: The key factors that influence success of franchising approaches are monitoring costs (based on physical and cultural distances), the principal's international experience, and the brand equity in the new market. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 79) In the context of foreign market entry, a ________ is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective without forming a separate legal entity. A) direct sales group B) consortium arrangement C) franchising arrangement D) strategic international alliance E) joint venture Answer: D Explanation: A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. Difficulty: 1 Easy Topic: Advantages and Disadvantages of Strategic Alliances, Collaborative Arrangements and Acquisitions Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

80) What refers to two or more participating companies joining forces to create a separate legal entity to facilitate doing business in the international arena? A) indirect exporting B) franchise C) license arrangement D) joint venture E) direct investment agreement Answer: D Explanation: A joint venture is different from other types of strategic alliances or collaborative relationships in that a joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 81) What is a partnership called in which several companies have joined forces to create a separate legal entity to facilitate doing business in a country where none of the participants is currently active? A) a consortium B) a franchise pact C) a license arrangement D) indirect exporting E) direct foreign investment Answer: A Explanation: Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants are currently active. Difficulty: 1 Easy Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

82) A consortium differs from a joint venture in that a consortium A) usually operates in a country in which the participants are already active. B) typically involves a large number of participants. C) restricts the right to hold an equity position by its major partners. D) does not involve the creation of a separate legal entity. E) is formed mainly for executing short-term projects. Answer: B Explanation: Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants is currently active. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 83) A small-scale apparel manufacturer in Florida collaborates with several other similar firms and they form a separate company in India. None of the participants in this collaboration has previously had active operations in the Indian market. The newly created firm manufactures apparel suited to the tastes and preferences of the Indian customers. Identify the type of foreign market-entry approach depicted in this scenario. A) a franchising agreement B) a consortium C) a licensing agreement D) direct exporting E) indirect exporting Answer: B Explanation: In this case, the firms have formed a consortium. Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants is currently active. Consortia are developed to pool financial and managerial resources and to lessen risks. Difficulty: 3 Hard Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

84) Companies that have the ________ organizational structure generally experience rapid growth and have broad, diverse product lines. A) global product division B) pyramid C) hierarchical D) geographical division E) matrix organization Answer: A Explanation: Companies that adopt the global product division structure are generally experiencing rapid growth and have broad, diverse product lines. Companies are usually structured around one of three alternatives: (1) global product divisions; (2) geographical divisions; or (3) a matrix organization. Difficulty: 1 Easy Topic: Overview of Organizational Structure and Design Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 85) HealthStore Inc. provides a broad and diverse range of services for the healthcare industry. It also manufactures a variety of hospital equipment. It wants to experience rapid growth and intends to have an organizational structure to better face international competition. What organizational structure will suit HealthStore best? A) a global product division structure B) a geographical division structure C) a matrix structure D) a pyramid structure E) a hierarchical structure Answer: A Explanation: In this case, a global product division structure will best suit HealthStore Inc. Companies that adopt the global product division structure are generally experiencing rapid growth and have broad, diverse product lines. Companies are usually structured around one of three alternatives: (1) global product divisions; (2) geographical divisions; or (3) a matrix organization. Difficulty: 3 Hard Topic: Overview of Organizational Structure and Design Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

86) Which organizational structure is the most extensive of those commonly adopted by companies seeking to compete globally? A) transnational structure B) geographical division structure C) region-specific structure D) global product division structure E) matrix structure Answer: E Explanation: The matrix form—the most extensive of the three organizational structures—is popular with companies as they reorganize for global competition. Companies are usually structured around one of three alternatives: (1) global product divisions; (2) geographical divisions; or (3) a matrix organization. Difficulty: 1 Easy Topic: Overview of Organizational Structure and Design Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 87) Describe three benefits of marketing to diverse customers with global marketing operations. Answer: When large international market segments can be identified, economies of scale in production and marketing can bring important competitive advantage for multinational companies. Global marketing facilitates a transfer of experience and know-how across countries through improved coordination and integration of marketing activities. It also ensures access to the toughest customers. Such demanding customers help companies develop highest quality products and services. Moreover, diversity of markets served carries with it additional financial benefits. Spreading the portfolio of markets served brings important stability of revenues and operations to many global companies. Difficulty: 3 Hard Topic: The Role of the Marketing Mix in International Marketing Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

88) Compare and contrast corporate, strategic, and tactical planning. Answer: Corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole. Strategic planning is conducted at the highest levels of management and deals with products, capital, and research, and the long- and short-term goals of a company. Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions. Difficulty: 3 Hard Topic: The Global Strategic Planning Process Learning Objective: 12-01 How global marketing management differs from international marketing management. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) Describe the four phases of the international planning process. Answer: The four phases are: (a) Phase 1—Preliminary analysis and screening (matching company/country needs). A critical first step in the international planning process is deciding in which existing country market to make a market investment. Research has shown three entry criteria to be most useful: analyses of institutional context, cultural context, and transaction costs. The next step is to establish screening criteria against which prospective countries can be evaluated. Once evaluation criteria are set, a complete analysis of the environment within which a company plans to operate is made. With the analysis in Phase 1 completed, the decision maker faces the more specific task of selecting country target markets and segments, identifying problems and opportunities in these markets, and beginning the process of creating marketing programs. (b) Phase 2—Defining target markets and adapting the marketing mix accordingly. A more detailed examination of the components of the marketing mix is the purpose of Phase 2. The primary goal of Phase 2 is to decide on a marketing mix adjusted to the cultural constraints imposed by the uncontrollable elements of the environment that effectively achieves corporate objectives and goals. Frequently, the results of the analysis in Phase 2 indicate that the marketing mix will require such drastic adaptation that a decision not to enter a particular market is made. Based on the results in Phase 2, a second screening of countries may take place, with some countries dropped from further consideration. The next phase in the planning process is the development of a marketing plan. (c) Phase 3—Developing the marketing plan. At this stage of the planning process, a marketing plan is developed for the target market—whether it is a single country or a global market set. The marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for the market. (d) Phase 4—Implementation and control. A "go" decision in Phase 3 triggers implementation of specific plans and anticipation of successful marketing. However, the planning process does not end at this point. All marketing plans require coordination and control during the period of implementation. Many businesses do not control marketing plans as thoroughly as they could, even though continuous monitoring and control could increase their success. Difficulty: 3 Hard Topic: The Global Strategic Planning Process Learning Objective: 12-02 The need for planning to achieve company goals. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

90) A company has a choice of four different modes of foreign market entry. Briefly describe each of these modes, and explain when each would be the best option. Answer: The modes of foreign entry are exporting, contractual agreements, strategic alliances, and direct foreign investment. Exporting can be either direct or indirect. With direct exporting, a company sells to a customer in another country. Indirect exporting usually means that the company sells to a buyer (importer or distributor) in the home country, which in turn exports the product. Exporting is a common approach for mature international companies with strong marketing and relational capabilities. The Internet is becoming increasingly important as a foreign market entry method. Contractual agreements are long-term, nonequity associations between a company and another in a foreign market. Contractual agreements generally involve the transfer of technology, processes, trademarks, and/or human skills. In short, they serve as a means of transfer of knowledge rather than equity. Research has shown that when legal systems differ substantially across partners' countries, informal aspects of business relationships will be more important. Two examples are franchising and licensing. A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. Strategic international alliances are sought as a way to shore up weaknesses and increase competitive strengths—that is, complementarity is key. Many companies also are entering SIAs to be in a strategic position to be competitive and to benefit from the expected growth in international markets. The fourth means of foreign market development and entry is direct foreign investment, that is, investment within a foreign country. Companies may invest locally to capitalize on low-cost labor, to avoid high import taxes, to reduce the high costs of transportation to market, to gain access to raw materials and technology, or as a means of gaining market entry. The growth of free trade areas that are tariff-free among members but have a common tariff for nonmembers creates an opportunity that can be capitalized on by direct investment. Difficulty: 3 Hard Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) Describe the two basic contractual agreements that most companies follow in their attempt to enter a foreign market: licensing and franchising. Illustrate a situation in which each type of agreement would be appropriate. Students' answers will vary. Answer: Contractual agreements generally involve the transfer of technology, processes, trademarks, or human skills. The two basic forms of contractual agreements are licensing and franchising. Licensing is associated with patent rights, trademark rights, and the rights to use technological processes in foreign markets. It is a favorite strategy for small- and medium-sized companies. Franchising is a rapidly growing form of licensing in which the franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management. Difficulty: 3 Hard Topic: Factors Influencing Entry Modes Learning Objective: 12-03 The important factors for each alternative market-entry strategy. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Briefly explain a strategic international alliance (SIA). Answer: A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. SIAs are sought as a way to shore up weaknesses and increase competitive strengths. Firms enter into SIAs for several reasons: opportunities for rapid expansion into new markets, access to new technology, more efficient production and innovation, reduced marketing costs, strategic competitive moves, and access to additional sources of products and capital. Studies have demonstrated that affiliations with prominent financial institutions makes potential partners more attractive and resource deployment stability enhances alliance performance. Finally, evidence suggests that SIAs often contribute nicely to profits. Difficulty: 3 Hard Topic: Advantages and Disadvantages of Strategic Alliances, Collaborative Arrangements and Acquisitions Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) Explain the difference between joint ventures and consortia. Answer: Joint ventures are partnerships of two or more participating companies that join forces to create a separate legal entity. Consortia are similar to joint ventures but have two distinguishing characteristics: (a) they typically involve a large number of participants and (b) they frequently operate in a country or market in which none of the participants is currently active. Difficulty: 2 Medium Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) You have just been hired as a consultant by Physical Mobility to advise the company on how to enter the European market. You have decided that direct foreign investment would be the best mode for Physical Mobility to follow. Write a one-paragraph memo that outlines the benefits of direct foreign investment in this scenario. Answer: Students' answers may vary. Direct foreign investment is investment within a foreign country. Companies may invest locally to capitalize on low-cost labor, to avoid high import taxes, to reduce the high costs of transportation to market, to gain access to raw materials and technology, or as a means of gaining market entry. Firms may either invest in or buy local companies or establish new operations facilities. The local firms enjoy important benefits aside from the investments themselves, such as substantial technology transfers and the capability to export to a more diversified customer base. Difficulty: 3 Hard Topic: Factors Influencing Entry Modes Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

95) Assume that you are a consultant for a telecom giant based in the United States that wishes to create a joint venture with a Chinese electronics company. The joint venture is expected to enter and compete in the eastern European market. Suggest an organizational structure that would be most suitable for this joint venture. Also, comment on why the structure might be a good one to use. Answer: Students' answers will vary, but should demonstrate understanding of the three organizational structures: global product divisions, geographical divisions, and matrix organizations. Students could select any of the three options; however, the text suggests that the matrix form is popular with companies as they reorganize for global competition. A matrix structure permits management to respond to the conflicts that arise between functional activity, product, and geography. Since the new venture will be a joint venture, the matrix structure should encourage sharing of experience, resources, expertise, technology, and information among global business units. At its core is better decision making, in which multiple points of view affecting functional activity, product, and geography are examined and shared. Difficulty: 3 Hard Topic: Overview of Organizational Structure and Design Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 96) An infinite number of organizational patterns for the headquarters' activities of multinational firms exist, but most fit into one of three categories. Describe these categories and the advantages and disadvantages of each. Answer: The three categories are centralized, regionalized, or decentralized organizations. The fact that all of the systems are used indicates that each has certain advantages and disadvantages. The chief advantages of centralization are the availability of experts at one location, the ability to exercise a high degree of control on both the planning and implementation phases, and the centralization of all records and information. Some companies effect extreme decentralization by selecting competent local managers and giving them full responsibility for national or regional operations. In many cases, whether a company's formal organizational structure is centralized or decentralized, the informal organization reflects some aspect of all organizational systems. Difficulty: 3 Hard Topic: Overview of Organizational Structure and Design Learning Objective: 12-04 The increasing importance of international strategic alliances. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 13 Products and Services for Consumers 1) Global competition has put more power in the hands of the seller. 2) The cost and quality of the product are among the most important criteria by which purchases are made. 3) Consumer perceptions of a quality product often have more to do with market-perceived quality than performance quality. 4) When there are alternative products in a market, all of which meet performance quality standards, the product chosen is the one that meets market-perceived quality attributes. 5) The decision to standardize or adapt a product is less important in delivering quality than price. 6) The term product homogenization is used to describe the changes mandated by local product and service standards. 7) Green marketing is the term frequently used to identify a marketer's efforts to reduce its dependency on U.S. dollars as the standard for international exchange. 8) The European Commission (EC) mandate requires a product to be evaluated on all significant environmental effects throughout its life cycle, from manufacturing to disposal. 9) An important first step in adapting a product to a foreign market is to determine the costbenefit as perceived by the intended market. 10) Adaptation of the nonphysical features of a product should be avoided when adapting the product to a new culture. 11) From a sociological point of view, any idea perceived as new by a group of people is an innovation. 12) According to Everett Rogers, the element of time differentiates elements in the diffusion of new ideas from other types of communication research. 13) One of the three variables that affect the rate of diffusion of a product is the perceived attributes of product innovation. 14) One variable that affects the rate of diffusion of a product is the actual attributes of the innovation. 15) In general, the rate of diffusion of a product is negatively related to its relative advantage. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

16) Product diffusion or acceptance is more rapid when product perceptions are similar to current cultural values. 17) The packaging component of the Product Component Model consists of the physical product—the platform that contains the essential technology—and all its design and functional features. 18) One of the core components in the Product Component Model is the product platform. 19) According to the Product Component Model, the instructions for using the product and the warranty of the product are included under the packaging component. 20) One of the consistencies that marketers can look forward to when marketing products abroad is that almost all labeling laws worldwide are essentially the same. 21) In countries with low literacy rates, the pictures and symbols on products are taken literally as instructions and information. 22) The support services component of the product component model contains such items as repair and maintenance and availability of spare parts. 23) Services such as insurance and dry cleaning typically are classified as tangible. 24) Services are distinguished from products on the basis of their durability, homogeneity, and separability. 25) The majority of services enter foreign markets by licensing, franchising, or direct investment. 26) Cultural barriers play a bigger role in services than in merchandise trade. 27) In the context of global marketing, a product's country of origin does not affect its brand's image significantly. 28) Brand image is at the very core of business identity and strategy. 29) Products from developing countries have the highest quality image. 30) Effective advertising and proper positioning of products can help brands to improve a lessthan-positive country stereotype. 31) What impact has global competition had on business activities in the international marketplace? A) It has shifted the focus from a consumer's market to a seller's market. B) It has increased product life cycles. C) It has put more power in the hands of the customer. D) It has reduced the competitive spirit of most businesses in a marketplace. E) It has limited the choices of the consumers. 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

32) What is one of the top two criteria for global market consumers when making purchase decisions? A) appearance B) size C) technology D) quality E) service 33) What are the two dimensions that define the quality of a product or service? A) consumer choice quality and process quality B) market-perceived quality and performance quality C) product quality and market quality D) actual quality and assumed quality E) absolute quality and relative quality 34) Product ________ is the term used to describe the changes mandated by local product and service standards. A) localization B) protectionism C) disapprobation D) dilution E) homologation 35) Exercise Away Products found out it needed to shorten the legs of its treadmills sold in China owing to the height of the average Chinese person. By doing this, Exercise Away Products has achieved A) product homologation. B) global product standardization. C) product dilution. D) product obsolescence. E) product disapprobation. 36) A European chocolate manufacturer received several complaints from customers about the quality of its products when it began selling them in a tropical country. The firm had to repackage its chocolate bars with an extra plastic wrapper to protect it from the heat and dust. Which factor in the local market is most likely to have dictated the company's product adaptation in this scenario? A) legal requirements B) economic requirements C) political requirements D) climatic requirements E) technological requirements

37) Bragster Bar, a brand of energy bars in Canada, sells its bars singly or in packs of two in South Asian markets instead of their regular multiple-item packaging that contains 10 or 20 bars. What requirement of the local market most likely influenced Bragster Bar's packaging decision? A) legal B) political C) economic D) technological E) cultural 38) Downward Dog Wines had to market its products with a different name in a foreign market as it was mandatory to translate the name into the local language. Which factor has most likely influenced the compulsory change of Downward Dog's product name in the foreign market in this scenario? A) legal requirement B) climatic requirement C) technological requirement D) monetary requirement E) economic requirement 39) A U.S. cosmetics company had to increase the SPF value of its sunscreen lotions marketed in the Middle East to provide more protection against UV radiation. Which requirement dictated the product adaptation? A) legal B) cultural C) economic D) climatic E) political 40) A television manufacturer in South Korea had to simplify its televisions before introducing them to the Nigerian markets, as the country lacked the skills to repair the product in case of a malfunction. The local salesforce also did not have the sufficient knowledge about the installation of the product. The requirement that is influencing product adaptation in this scenario is A) legal B) climatic C) political D) cultural E) technological

41) A women's clothing company based in Singapore had to modify its clothes before introducing them in Iran, as it needed to meet the needs of the women who are generally expected to cover themselves completely as per societal norms. To adapt its clothes to Iranian markets, the company used opaque material and provided accessories like scarves. Which requirement has dictated the product adaptation? A) legal B) cultural C) technological D) economic E) climatic 42) What is the definition of green marketing? A) It refers to word-of-mouth marketing, where a company develops customers who become voluntary advocates of a product. B) It refers to inbound marketing used on websites in the form of a banner, text, or graphic. C) It refers to the type of marketing that takes place on the Internet, where all the marketing resources and assets are transferred online. D) It is used to identify concerns with the environmental consequences of a variety of marketing activities. E) It refers to nontraditional or stealth marketing campaigns. 43) PG Autos introduces a new technology in its cars to improve their mileage and reduce carbon emissions. It also takes measures to improve its production facilities in order to reduce its carbon footprint. Actual introduction of green measures to meet the government guidelines rather than just through advertising and marketing shows that PG Autos engages in ________ marketing. A) permission B) recycle C) green D) black E) greenwash 44) Which country or group of countries has been at the forefront of the "green movement"? A) The United States B) Japan C) Europe D) OPEC countries E) NAFTA countries 45) As part of the "green movement," the European Commission has passed legislation to control all kinds of packaging waste throughout the European Union. Two critical issues that affect product development are the control of the packaging component of solid waste and A) the prevalence of similar environmental standards across different member countries. B) consumer demand for environmentally friendly products. C) higher government subsidies for greener technologies. D) the continuous availability of alternative energy resources for production. E) the proven efficient management of inventory of conventional energy products. 5 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

46) What is a physical attribute of a motorcycle that is essential for its primary function? A) color B) price C) mobility D) design E) popularity 47) An important first step in adapting a product to a foreign market is to determine the A) degree of newness of the product as perceived by the intended market. B) personal ethics of individuals in the target market. C) regional political parties present in the domestic market. D) language problem of the intended market. E) product's compliancy to irrational beliefs of its potential foreign consumers. 48) From a sociological viewpoint, any idea perceived as new by a group of people is considered as A) a creation B) an adaptation C) a declension D) a tradition E) an innovation 49) Innovation spreads by the process of A) diffusion. B) filtering. C) dissolution. D) flighting. E) liquidation. 50) According to Everett Rogers, the goals of the diffusion researcher and the marketer are to shorten the time lag between A) the dispatch of the product from the company and the time it takes to reach the customer. B) the time that a budget is determined and the time needed for the funds to reach the communication channels. C) initial investment and the profits obtained from those investments. D) introduction of an idea or product and its widespread adoption. E) introduction of an idea or product and when revisions can be made. 51) What is one of the extraneous variables that affects the rate of diffusion of an object? A) the absolute marginal value of the innovation relative to the old B) the actual attributes of the innovation C) the climatic conditions in which the market is located D) the method used to communicate the idea E) the degree of actual novelty of the innovation

52) Phineas is comparing the innovation characteristics of his company's water filters with those that are already being marketed in the local market. He believes there is lot of potential for his filters as they are functionally more advanced, have a longer life, and can also be marketed at a more competitive price than those of other sellers in the local market. The innovation characteristic of Phineas's product that will help in wide acceptance of his product in the local market is its A) compatibility. B) complexity. C) trialability. D) relative advantage E) observability. 53) In terms of innovation characteristics, a product is said to be compatible if A) it provides greater value to the manufacturers than to the consumers. B) the degree of social repercussions associated with it is high. C) its benefits can be communicated easily. D) it has a higher degree of complexity compared with its counterparts'. E) it complies with the accepted behavior, values, and norms of the local market. 54) Karyn, who is interested in marketing her company's diet products in Asia, studies the acceptable behavior, norms, and values in Asian markets as they relate to her product. In other words, Karyn is studying her product's ________ in the Asian markets. A) observability B) compatibility C) dissidence D) trialability E) complexity 55) A company focusing its efforts on making its new innovation more user-friendly than before is working on the _______ of the product. A) compatibility B) trialability C) complexity D) discordancy E) observability 56) Maya was happy that she did not have to read the instruction manual to determine how to turn on her new camera, snap a digital picture, and export the picture to her computer. The signs (symbols) on the camera body made it very clear what she was to do to achieve digital photography success. What characteristic of Maya's "new product" makes it easy for her to begin her digital experience? A) high partibility B) low susceptibility C) low complexity D) high trialability E) low compatibility 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

57) An American company wants to launch a new product in Madrid. Freda asks her product manager to distribute some samples to potential customers there so that she can gauge the consumer preferences there before introducing the product. Freda is attempting to reduce the degree of economic and/or social risk, also known as ________, associated with product use. A) compatibility B) relative advantage C) complexity D) trialability E) observability 58) A product's ________ refers to the ease with which its benefits can be communicated to the customers. A) relative advantage B) compatibility C) complexity D) trialability E) observability 59) AllClean develops promotional materials and product demonstrations to clearly and easily communicate the benefits of its cleaning products. In this scenario, AllClean is attempting to enhance the ________ of its products. A) relative advantage B) compatibility C) complexity D) trialability E) observability 60) In general, the rate of acceptance or resistance of the market to a product is negatively related to A) relative advantage. B) compatibility. C) trialability. D) complexity. E) observability. 61) What factor is mainly responsible for a perceptual bias when interpreting the characteristics of a product? A) too much product information B) a shorter distribution channel C) a market analyst's self-reference criterion D) a low number of product competitors E) authoritative product information of the market analyst

62) The success achieved by firms when they take their inventions to market is referred to as A) conversion-ability. B) liquidation. C) formation-ability. D) homologation. E) consultation. 63) The product platform, design features, and functional features are all found in the ________ component of the physical product according to the Product Component Model. A) core B) support C) packaging D) supplementary E) auxiliary 64) Sarj, a specialist in product design, is responsible for a product's functional design. With respect to the Product Component Model, in which component category would Sarj's talents most likely be used? A) core B) support services C) packaging D) invisible E) auxiliary 65) If a company wished to alter a product's platform so that the product could be manufactured in a variety of forms to meet local differences in five different foreign markets, the component of the Product Component Model that is most likely to be under consideration is A) support services. B) packaging. C) delivery. D) ancillary. E) core. 66) Appliances-a-Rama, an Indian company that manufactures kitchen appliances, alters the design of its ranges to suit the needs of its Japanese consumers. The Japanese prefer compact and efficient appliances to fit their small kitchens. According to the Product Component Model, which product component is being addressed? A) packaging B) invisible C) core D) ancillary E) support services

67) When a company alters the price of its product to compete with local companies in the international market, it is focusing on the ________ component of the product, according to the Product Component Model. A) core B) support C) design D) maintenance E) packaging 68) A Canadian computer company had difficulties when it first entered the Japanese market. Some of its computers were returned unused after customers found the wrapping on the instruction manual damaged. Though this would probably be an insignificant problem in Canada, it was certainly a cause of concern in quality-conscious Japan. Which component of the Product Component Model should the company concentrate on to fix this problem? A) core B) support services C) packaging D) functional E) design 69) A Brazilian food company had to change the labeling on its products to meet the specifications regarding vegetarian and nonvegetarian foods set by the government in the Taiwan market. It also had to mention the ingredients in Taiwanese to provide clarity to local customers. The component of the product that is affected is the ________ component. A) support services B) packaging C) functional D) design E) core 70) Eugene bought a new watch in January, and by March it stopped keeping time accurately. The warranty was still valid, so he sent it back to the manufacturer for repair. According to the Product Component Model, this demonstrates the ________ component of the product. A) core B) support services C) packaging D) functional E) styling

71) Since the consumer is automatically angry with the manufacturer when something goes wrong with the vehicle, repair and maintenance has become a concern of the various automobile manufacturers. In which component of the Product Component Model would the management need to make improvements if problems such as this are to be solved? A) core B) functional C) packaging D) support services E) price 72) A South Korean electronics company had to add detailed instructions about the repair and replacement of its product to make it easier for the local consumers to maintain it. Which element of the Product Component Model relates to this issue? A) support services B) design C) core D) packaging E) functional 73) The washing machines marketed by Talcho failed in Asian markets as those countries lacked the skills necessary to repair and maintain Talcho's products. Also, the washing machine parts available in local markets were not compatible with these machines. This product failure is most likely to be a result of lack of attention by the company to the ________ component of the product. A) marketing B) price C) packaging D) support services E) style 74) Dry cleaning, hair styling, and hotel accommodations have intrinsic value resulting from a process, a performance, or an occurrence that only exists while it is being created. Which characteristic of services is being referred to here? A) intangibility B) separability C) liquidity D) homogeneity E) durability 75) Because a service is individually produced and is virtually unique, the service is said to have A) liquidity. B) coherence. C) inseparability. D) heterogeneity. E) tangibility. 11 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

76) Dr. Thomas is a dentist practicing in Chicago. During a four-day stretch in March, it snowed so heavily that not a single patient was able to visit him. Since none of the appointments took place, he did not make any money in those four days, even though his normal expenses remained. In this scenario, which characteristic of services most likely affected Dr. Thomas' business? A) tangibility B) feasibility C) durability D) homogeneity E) perishability 77) A characteristic of a service is that it is ________, since it cannot be stored and must be consumed simultaneously with its creation. A) durable B) feasible C) indelible D) tangible E) perishable 78) Levon, a hairstylist at a salon in Portland, styles his customers in various ways. His work looks different on different people even though he has styled all of them. This unique character of a service that is unique for every customer as it is individually produced is referred to as A) tangibility. B) separability. C) durability. D) heterogeneity. E) divisibility. 79) What is the largest services export of the United States, ranking behind only capital goods and industrial supplies when all exports are counted? A) automobile services B) international tourism C) banking services D) research and development E) education services 80) How do the vast majority of services enter a foreign market? A) importing and exporting B) smuggling and pirating C) licensing, franchising, or direct investment D) through brokers E) through diaspora population

81) Which barrier faced by consumer service marketers is in force when a foreign market applies a tariff on the service that is operating there? A) trade protectionism B) lack of transborder data flows restrictions C) protection of intellectual property D) religious requirements for adaptation E) language translation barriers 82) Blue Lobster considered opening restaurants in China. However, the restaurant's labor union felt that since accepting tips by wait staff is considered in bad taste in China, they would face considerable income loss. Therefore, they demanded to know how employees would be compensated for this since a great portion of a typical wait staff person's compensation comes in the form of tips. Which barrier does a consumer services marketer face in this illustration? A) protectionism B) controls on transborder data flows C) protection of intellectual property D) cultural requirements for adaptation E) language translation barriers 83) An insurance firm based in California had difficulty expanding its operations to Asian markets as most of the target countries had strict regulations on sharing details about their customers with the home office. The company had to obtain approval from its customers before sharing their personal information with its U.S. office. Which barrier is most likely to have affected the services of the insurance firm? A) protectionism B) control on transborder data flows C) protection of intellectual property D) cultural requirements for adaptation E) language translation barriers 84) A name, term, sign, symbol, design, or combination used worldwide to identify goods or services of one seller and to differentiate them from those of competitors is called a A) copyright. B) product mark. C) global brand. D) brand's equity position. E) trademark. 85) A manufacturer of toiletries and cleaning products uses the name Home Helper, for most products in their international markets. The name has created a universal appeal for its products as customers identify their products with the name; hence, Home Helper can be regarded as a ________ brand. A) retailer's B) shelf C) store D) global E) dual 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

86) The ________ effect refers to the possibility that the place of manufacture may affect product or brand image. A) doppler B) polar C) transfer D) misinformation E) country-of-origin 87) A shoe manufacturer in the Philippines shipped its entire production to San Francisco and then brought it back to the Philippines to market it as "Made in the U.S." The manufacturer believed that people would prefer buying products made in the U.S. rather than those domestically produced. The factor that is influencing the perception of the customers in the given scenario is called the ________ effect. A) doppler B) comparative advantage C) country-of-origin D) mass E) placebo 88) Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge "best." Which item would most likely not fit in the "best" stereotype scheme? A) English tea B) Indian cars C) French perfume D) Chinese silk E) Jamaican rum 89) In Russia, products are divided into two categories—"ours" and "imported." This is an example of A) an autarky. B) ethnocentrism. C) theocentrism. D) feudalism. E) a closed economy. 90) Kroger grocery stores stock many food items that are sold under the brand name Simple Truth®, which is sold exclusively in Kroger stores. This is an example of a ________ brand. A) global B) private C) specialty D) market. E) retail

91) How has the increased presence of global competition changed business strategies in the marketplace? 92) Compare and contrast the two ways consumers determine a product's quality. 93) In the context of product adaptation, what is product homologation? 94) What are the five factors that influence product adaptation in new markets? 95) What is green marketing? How does it affect product development? 96) Everett Rogers noted that four crucial elements affect the diffusion of new ideas. What are those elements? 97) Describe the five characteristics of an innovation that assist in determining the rate of acceptance or resistance of the market to a product. 98) What are the four barriers faced by consumer services marketers when they enter the global market? 99) Define the term global brand. How are global brands important? 100) Define country-of-origin effect. How can a company overcome this effect?

International Marketing, 18e (Cateora) Chapter 13 Products and Services for Consumers 1) Global competition has put more power in the hands of the seller. Answer: FALSE Explanation: Global competition has shifted the power in the marketplace from a sellers' to a customers' market, and the latter have more choices because more companies are competing for their attention. More competition and more choices put more power in the hands of the customer, and that of course drives the need for quality. Difficulty: 1 Easy Topic: How Resources and Capabilities Influence Competitive Dynamics Learning Objective: 13-01 The importance of offering a product suitable for the intended market. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) The cost and quality of the product are among the most important criteria by which purchases are made. Answer: TRUE Explanation: In most global markets, the cost and quality of a product are among the most important criteria by which purchases are made. For consumer and industrial products alike, the reason often given for preferring one brand over another is better quality at a competitive price. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-01 The importance of offering a product suitable for the intended market. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Consumer perceptions of a quality product often have more to do with market-perceived quality than performance quality. Answer: TRUE Explanation: Quality can be defined on two dimensions: market-perceived quality and performance quality. Both are important concepts, but consumer perceptions of a quality product often have more to do with market-perceived quality than performance quality. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-02 The importance of quality and how quality is defined. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

4) When there are alternative products in a market, all of which meet performance quality standards, the product chosen is the one that meets market-perceived quality attributes. Answer: TRUE Explanation: In a competitive marketplace in which the market provides choices, most consumers expect performance quality to be a given. When there are alternative products, all of which meet performance quality standards, the product chosen is the one that meets marketperceived quality attributes. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-02 The importance of quality and how quality is defined. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) The decision to standardize or adapt a product is less important in delivering quality than price. Answer: FALSE Explanation: Quality is not just desirable, but essential for success in today's competitive global market, and the decision to standardize or adapt a product is crucial in delivering quality. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-02 The importance of quality and how quality is defined. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) The term product homogenization is used to describe the changes mandated by local product and service standards. Answer: FALSE Explanation: In many countries, the term product homologation is used to describe the changes mandated by local product and service standards. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) Green marketing is the term frequently used to identify a marketer's efforts to reduce its dependency on U.S. dollars as the standard for international exchange. Answer: FALSE Explanation: Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing activities. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The European Commission (EC) mandate requires a product to be evaluated on all significant environmental effects throughout its life cycle, from manufacturing to disposal. Answer: TRUE Explanation: The European Commission issued guidelines for ecolabeling that became operational in 1992. Under the directive, a product is evaluated on all significant environmental effects throughout its life cycle, from manufacturing to disposal—a cradle-to-grave approach. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) An important first step in adapting a product to a foreign market is to determine the costbenefit as perceived by the intended market. Answer: FALSE Explanation: An important first step in adapting a product to a foreign market is to determine the degree of newness as perceived by the intended market. How people react to newness and how new a product is to a market must be understood. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) Adaptation of the nonphysical features of a product should be avoided when adapting the product to a new culture. Answer: FALSE Explanation: The meaning and value imputed to the psychological attributes of a product can vary among cultures and are perceived as negative or positive. To maximize the bundle of satisfactions received and to create positive product attributes rather than negative ones, adaptation of the nonphysical features of a product may be necessary. Difficulty: 1 Easy Topic: Economic and Business Implications of Cultural Change Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) From a sociological point of view, any idea perceived as new by a group of people is an innovation. Answer: TRUE Explanation: From a sociological viewpoint, any idea perceived as new by a group of people is an innovation. Whether or not a group accepts an innovation, and the time it takes to do so, depends on the product's characteristics. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) According to Everett Rogers, the element of time differentiates elements in the diffusion of new ideas from other types of communication research. Answer: TRUE Explanation: Everett Rogers noted that "crucial elements in the diffusion of new ideas are an innovation, which is communicated through certain channels, over time, among the members of a social system." Rogers continued with the statement that it is the element of time that differentiates diffusion from other types of communications research. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 4 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

13) One of the three variables that affect the rate of diffusion of a product is the perceived attributes of product innovation. Answer: TRUE Explanation: At least three extraneous variables affect the rate of diffusion of an object: the degree of perceived newness, the perceived attributes of the innovation, and the method used to communicate the idea. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) One variable that affects the rate of diffusion of a product is the actual attributes of the innovation. Answer: FALSE Explanation: At least three extraneous variables affect the rate of diffusion of an object: the degree of perceived newness, the perceived attributes of the innovation, and the method used to communicate the idea. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) In general, the rate of diffusion of a product is negatively related to its relative advantage. Answer: FALSE Explanation: The rate of diffusion of a product can be postulated as positively related to relative advantage, compatibility, trialability, and observability but negatively related to complexity. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) Product diffusion or acceptance is more rapid when product perceptions are similar to current cultural values. Answer: TRUE Explanation: The more congruent product perceptions are with current cultural values, the less resistance there will be and the more rapid product diffusion or acceptance will be. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) The packaging component of the Product Component Model consists of the physical product—the platform that contains the essential technology—and all its design and functional features. Answer: FALSE Explanation: The core component consists of the physical product—the platform that contains the essential technology—and all its design and functional features. The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product's package. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) One of the core components in the Product Component Model is the product platform. Answer: TRUE Explanation: The core component of the Product Component Model includes the product platform that contains the essential technology and all its design and functional features. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) According to the Product Component Model, the instructions for using the product and the warranty of the product are included under the packaging component. Answer: FALSE Explanation: The support services component includes repair and maintenance, instructions, installation, warranties, deliveries, and the availability of spare parts. The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product's package. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) One of the consistencies that marketers can look forward to when marketing products abroad is that almost all labeling laws worldwide are essentially the same. Answer: FALSE Explanation: Labeling laws vary from country to country and do not seem to follow any predictable pattern. Labeling laws create a special problem for companies selling products in various markets with different labeling laws and small initial demand in each. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) In countries with low literacy rates, the pictures and symbols on products are taken literally as instructions and information. Answer: TRUE Explanation: It is easy to forget that in low-literacy countries, pictures and symbols are taken literally as instructions and information. Care must be taken to ensure that corporate trademarks and other parts of the packaging component do not have unacceptable symbolic meanings. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) The support services component of the product component model contains such items as repair and maintenance and availability of spare parts. Answer: TRUE Explanation: The support services component includes repair and maintenance, instructions, installation, warranties, deliveries, and the availability of spare parts. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) Services such as insurance and dry cleaning typically are classified as tangible. Answer: FALSE Explanation: Products are often classified as tangible, whereas services are intangible. Automobiles, computers, and furniture are examples of products that have a physical presence; insurance, dry cleaning, hotel accommodations, and airline passenger or freight service, in contrast, are intangible. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) Services are distinguished from products on the basis of their durability, homogeneity, and separability. Answer: FALSE Explanation: Services are distinguished from products by four characteristics—intangibility, inseparability, heterogeneity, and perishability. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) The majority of services enter foreign markets by licensing, franchising, or direct investment. Answer: TRUE Explanation: The vast majority of services (some 85 percent) enter foreign markets by licensing, franchising, or direct investment. Difficulty: 1 Easy Topic: Different Modes for Entering Foreign Markets Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) Cultural barriers play a bigger role in services than in merchandise trade. Answer: TRUE Explanation: Because trade in services frequently involves people-to-people contact, culture plays a much bigger role in services than in merchandise trade. Managing a global services workforce is certainly no simple task. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) In the context of global marketing, a product's country of origin does not affect its brand's image significantly. Answer: FALSE Explanation: A company competing in global markets today manufactures products worldwide; when the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand images. The country, the type of product, and the image of the company and its brands all influence whether the country of origin will engender a positive or negative reaction. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) Brand image is at the very core of business identity and strategy. Answer: TRUE Explanation: Brand image is at the very core of business identity and strategy. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) Products from developing countries have the highest quality image. Answer: FALSE Explanation: Countries are also often stereotyped on the basis of whether they are industrialized, in the process of industrializing, or developing. Industrialized countries have the highest quality image, and products from developing countries generally encounter bias. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-05 Country-of-origin effects on product image. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) Effective advertising and proper positioning of products can help brands to improve a lessthan-positive country stereotype. Answer: TRUE Explanation: Brands effectively advertised and products properly positioned can help ameliorate a less-than-positive country stereotype. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-05 Country-of-origin effects on product image. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) What impact has global competition had on business activities in the international marketplace? A) It has shifted the focus from a consumer's market to a seller's market. B) It has increased product life cycles. C) It has put more power in the hands of the customer. D) It has reduced the competitive spirit of most businesses in a marketplace. E) It has limited the choices of the consumers. Answer: C Explanation: The power in the marketplace is shifting from a sellers' to a customers' market, and the latter have more choices because more companies are competing for their attention. More competition and more choices put more power in the hands of the customer, and that of course drives the need for quality. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-01 The importance of offering a product suitable for the intended market. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) What is one of the top two criteria for global market consumers when making purchase decisions? A) appearance B) size C) technology D) quality E) service Answer: D Explanation: In most global markets, the cost and quality of a product are among the most important criteria by which purchases are made. For consumer and industrial products alike, the reason often given for preferring one brand over another is better quality at a competitive price. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-01 The importance of offering a product suitable for the intended market. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) What are the two dimensions that define the quality of a product or service? A) consumer choice quality and process quality B) market-perceived quality and performance quality C) product quality and market quality D) actual quality and assumed quality E) absolute quality and relative quality Answer: B Explanation: Quality can be defined on two dimensions: market-perceived quality and performance quality. Consumer perception of a product's quality often has more to do with market-perceived quality than performance quality. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-02 The importance of quality and how quality is defined. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) Product ________ is the term used to describe the changes mandated by local product and service standards. A) localization B) protectionism C) disapprobation D) dilution E) homologation Answer: E Explanation: A product may have to change in a number of ways to meet the physical or mandatory requirements of a new market, ranging from simple package changes to total redesign of the physical core product. The term used to describe the changes mandated by local product and service standards is product homologation. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) Exercise Away Products found out it needed to shorten the legs of its treadmills sold in China owing to the height of the average Chinese person. By doing this, Exercise Away Products has achieved A) product homologation. B) global product standardization. C) product dilution. D) product obsolescence. E) product disapprobation. Answer: A Explanation: By shortening the legs of its treadmills manufactured for Chinese consumers, Exercise Away Products has achieved product homologation. A product may have to change in a number of ways to meet the physical or mandatory requirements of a new market, ranging from simple package changes to total redesign of the physical core product; this is known as product homologation. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 36) A European chocolate manufacturer received several complaints from customers about the quality of its products when it began selling them in a tropical country. The firm had to repackage its chocolate bars with an extra plastic wrapper to protect it from the heat and dust. Which factor in the local market is most likely to have dictated the company's product adaptation in this scenario? A) legal requirements B) economic requirements C) political requirements D) climatic requirements E) technological requirements Answer: D Explanation: By adapting the packaging of its products to protect them from extreme heat and dust, the company has been influenced by the climatic requirements of the tropical country. Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

37) Bragster Bar, a brand of energy bars in Canada, sells its bars singly or in packs of two in South Asian markets instead of their regular multiple-item packaging that contains 10 or 20 bars. What requirement of the local market most likely influenced Bragster Bar's packaging decision? A) legal B) political C) economic D) technological E) cultural Answer: C Explanation: By reducing the number of units per package, Bragster Bar has adapted its product based on the economic requirements of its South Asian market. The less economically developed a market is, the greater degree of change a product may need for acceptance. To make a purchase more affordable in low-income countries, the number of units per package may have to be reduced from the typical quantities offered in high-income countries. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 38) Downward Dog Wines had to market its products with a different name in a foreign market as it was mandatory to translate the name into the local language. Which factor has most likely influenced the compulsory change of Downward Dog's product name in the foreign market in this scenario? A) legal requirement B) climatic requirement C) technological requirement D) monetary requirement E) economic requirement Answer: A Explanation: The mandatory laws of the foreign market led Downward Dog Wines to change its name there. Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

39) A U.S. cosmetics company had to increase the SPF value of its sunscreen lotions marketed in the Middle East to provide more protection against UV radiation. Which requirement dictated the product adaptation? A) legal B) cultural C) economic D) climatic E) political Answer: D Explanation: The climatic requirements of the Middle East nations dictated that Adore Cosmetics increase the SPF value of its lotions to provide more protection against UV radiation to ensure product adaptation. Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 40) A television manufacturer in South Korea had to simplify its televisions before introducing them to the Nigerian markets, as the country lacked the skills to repair the product in case of a malfunction. The local salesforce also did not have the sufficient knowledge about the installation of the product. The requirement that is influencing product adaptation in this scenario is A) legal B) climatic C) political D) cultural E) technological Answer: E Explanation: By simplifying its television sets, South Korea has adapted its product to match the technological standards of the Nigerian market. Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

41) A women's clothing company based in Singapore had to modify its clothes before introducing them in Iran, as it needed to meet the needs of the women who are generally expected to cover themselves completely as per societal norms. To adapt its clothes to Iranian markets, the company used opaque material and provided accessories like scarves. Which requirement has dictated the product adaptation? A) legal B) cultural C) technological D) economic E) climatic Answer: B Explanation: By adapting its clothes to suit the societal expectation of the way a woman dresses in Iran, the company has been dictated by the cultural requirements of the Iranian market. Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 42) What is the definition of green marketing? A) It refers to word-of-mouth marketing, where a company develops customers who become voluntary advocates of a product. B) It refers to inbound marketing used on websites in the form of a banner, text, or graphic. C) It refers to the type of marketing that takes place on the Internet, where all the marketing resources and assets are transferred online. D) It is used to identify concerns with the environmental consequences of a variety of marketing activities. E) It refers to nontraditional or stealth marketing campaigns. Answer: D Explanation: Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing activities. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) PG Autos introduces a new technology in its cars to improve their mileage and reduce carbon emissions. It also takes measures to improve its production facilities in order to reduce its carbon footprint. Actual introduction of green measures to meet the government guidelines rather than just through advertising and marketing shows that PG Autos engages in ________ marketing. A) permission B) recycle C) green D) black E) greenwash Answer: C Explanation: Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing activities. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 44) Which country or group of countries has been at the forefront of the "green movement"? A) The United States B) Japan C) Europe D) OPEC countries E) NAFTA countries Answer: C Explanation: Europe has been at the forefront of the "green movement," with strong public opinion and specific legislation favoring environmentally friendly marketing and products. The global marketer should not view green marketing as a European problem; concern for the environment is worldwide, and similar legislation is sure to surface elsewhere. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) As part of the "green movement," the European Commission has passed legislation to control all kinds of packaging waste throughout the European Union. Two critical issues that affect product development are the control of the packaging component of solid waste and A) the prevalence of similar environmental standards across different member countries. B) consumer demand for environmentally friendly products. C) higher government subsidies for greener technologies. D) the continuous availability of alternative energy resources for production. E) the proven efficient management of inventory of conventional energy products. Answer: B Explanation: The European Commission has passed legislation to control all kinds of packaging waste throughout the European Union. Two critical issues that affect product development are the control of the packaging component of solid waste and consumer demand for environmentally friendly products. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) What is a physical attribute of a motorcycle that is essential for its primary function? A) color B) price C) mobility D) design E) popularity Answer: C Explanation: A product's physical attributes generally are required to create its primary function. The primary function of a motorcycle, for example, is to move passengers from point A to point B. Therefore, its primary function is mobility. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) An important first step in adapting a product to a foreign market is to determine the A) degree of newness of the product as perceived by the intended market. B) personal ethics of individuals in the target market. C) regional political parties present in the domestic market. D) language problem of the intended market. E) product's compliancy to irrational beliefs of its potential foreign consumers. Answer: A Explanation: An important first step in adapting a product to a foreign market is to determine the degree of newness as perceived by the intended market. How people react to newness and how new a product is to a market must be understood. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) From a sociological viewpoint, any idea perceived as new by a group of people is considered as A) a creation B) an adaptation C) a declension D) a tradition E) an innovation Answer: E Explanation: From a sociological viewpoint, an idea perceived as new by a group of people; when applied to a product, an innovation may be something completely new or something that is perceived as new in a given country or culture. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) Innovation spreads by the process of A) diffusion. B) filtering. C) dissolution. D) flighting. E) liquidation. Answer: A Explanation: Diffusion is the process by which innovation spreads and knowledge of this is helpful in developing a successful product strategy. Marketing strategies can guide and control, to a considerable degree, the rate and extent of new product diffusion. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) According to Everett Rogers, the goals of the diffusion researcher and the marketer are to shorten the time lag between A) the dispatch of the product from the company and the time it takes to reach the customer. B) the time that a budget is determined and the time needed for the funds to reach the communication channels. C) initial investment and the profits obtained from those investments. D) introduction of an idea or product and its widespread adoption. E) introduction of an idea or product and when revisions can be made. Answer: D Explanation: According to Everett Rogers, the goals of the diffusion researcher and the marketer are to shorten the time lag between introduction of an idea or product and its widespread adoption. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) What is one of the extraneous variables that affects the rate of diffusion of an object? A) the absolute marginal value of the innovation relative to the old B) the actual attributes of the innovation C) the climatic conditions in which the market is located D) the method used to communicate the idea E) the degree of actual novelty of the innovation Answer: D Explanation: At least three extraneous variables affect the rate of diffusion of an object: the degree of perceived newness, the perceived attributes of the innovation, and the method used to communicate the idea. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) Phineas is comparing the innovation characteristics of his company's water filters with those that are already being marketed in the local market. He believes there is lot of potential for his filters as they are functionally more advanced, have a longer life, and can also be marketed at a more competitive price than those of other sellers in the local market. The innovation characteristic of Phineas's product that will help in wide acceptance of his product in the local market is its A) compatibility. B) complexity. C) trialability. D) relative advantage E) observability. Answer: D Explanation: Phineas's water filters have a relative advantage over that of his counterparts in the local market as they are functionally more advanced, have a longer life, and can be marketed at competitive prices. Relative advantage is the perceived marginal value of the new product relative to the old. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

53) In terms of innovation characteristics, a product is said to be compatible if A) it provides greater value to the manufacturers than to the consumers. B) the degree of social repercussions associated with it is high. C) its benefits can be communicated easily. D) it has a higher degree of complexity compared with its counterparts'. E) it complies with the accepted behavior, values, and norms of the local market. Answer: E Explanation: A product's compatibility is its compatibility with acceptable behavior, norms, values, and so forth. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) Karyn, who is interested in marketing her company's diet products in Asia, studies the acceptable behavior, norms, and values in Asian markets as they relate to her product. In other words, Karyn is studying her product's ________ in the Asian markets. A) observability B) compatibility C) dissidence D) trialability E) complexity Answer: B Explanation: By studying the accepted norms, behavior and values in Asian markets, Karyn is focusing on her product's compatibility. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

55) A company focusing its efforts on making its new innovation more user-friendly than before is working on the _______ of the product. A) compatibility B) trialability C) complexity D) discordancy E) observability Answer: C Explanation: A product's complexity relates to the degree of difficulty associated with product use. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) Maya was happy that she did not have to read the instruction manual to determine how to turn on her new camera, snap a digital picture, and export the picture to her computer. The signs (symbols) on the camera body made it very clear what she was to do to achieve digital photography success. What characteristic of Maya's "new product" makes it easy for her to begin her digital experience? A) high partibility B) low susceptibility C) low complexity D) high trialability E) low compatibility Answer: C Explanation: The ease of use of Maya's new digital camera reduces the product's complexity and is therefore is an innovation characteristic that determines the rate of acceptance or resistance of the digital camera in the market. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

57) An American company wants to launch a new product in Madrid. Freda asks her product manager to distribute some samples to potential customers there so that she can gauge the consumer preferences there before introducing the product. Freda is attempting to reduce the degree of economic and/or social risk, also known as ________, associated with product use. A) compatibility B) relative advantage C) complexity D) trialability E) observability Answer: D Explanation: Introducing samples in the Madrid market even before actually introducing the product will help Freda gauge the trialability (social and/or economic risk) of her company's product in the new market. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 58) A product's ________ refers to the ease with which its benefits can be communicated to the customers. A) relative advantage B) compatibility C) complexity D) trialability E) observability Answer: E Explanation: A product's observability relates to the ease with which the product benefits can be communicated, and this affects the degree of its acceptance or resistance. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) AllClean develops promotional materials and product demonstrations to clearly and easily communicate the benefits of its cleaning products. In this scenario, AllClean is attempting to enhance the ________ of its products. A) relative advantage B) compatibility C) complexity D) trialability E) observability Answer: E Explanation: By trying to communicate the benefits of its cleaning products clearly and easily, AllClean tries to enhance the observability of its products in the markets. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 60) In general, the rate of acceptance or resistance of the market to a product is negatively related to A) relative advantage. B) compatibility. C) trialability. D) complexity. E) observability. Answer: D Explanation: In general, the rate of diffusion can be postulated as positively related to relative advantage, compatibility, trialability, and observability but negatively related to complexity. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) What factor is mainly responsible for a perceptual bias when interpreting the characteristics of a product? A) too much product information B) a shorter distribution channel C) a market analyst's self-reference criterion D) a low number of product competitors E) authoritative product information of the market analyst Answer: C Explanation: A market analyst's self-reference criterion (SRC) may cause a perceptual bias when interpreting the characteristics of a product. Thus, instead of evaluating product characteristics from the foreign user's frame of reference, the marketer might analyze them from his or her frame of reference, leading to a misinterpretation of the product's cultural importance. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) The success achieved by firms when they take their inventions to market is referred to as A) conversion-ability. B) liquidation. C) formation-ability. D) homologation. E) consultation. Answer: A Explanation: Conversion-ability is the success firms have when they take inventions to market. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

63) The product platform, design features, and functional features are all found in the ________ component of the physical product according to the Product Component Model. A) core B) support C) packaging D) supplementary E) auxiliary Answer: A Explanation: The core component consists of the physical product—the platform that contains the essential technology—and all its design and functional features. It is on the product platform that product variations can be added or deleted to satisfy local differences. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) Sarj, a specialist in product design, is responsible for a product's functional design. With respect to the Product Component Model, in which component category would Sarj's talents most likely be used? A) core B) support services C) packaging D) invisible E) auxiliary Answer: A Explanation: The core component consists of the physical product—the platform that contains the essential technology—and all its design and functional features. It is on the product platform that product variations can be added or deleted to satisfy local differences. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

65) If a company wished to alter a product's platform so that the product could be manufactured in a variety of forms to meet local differences in five different foreign markets, the component of the Product Component Model that is most likely to be under consideration is A) support services. B) packaging. C) delivery. D) ancillary. E) core. Answer: E Explanation: The core component consists of the physical product—the platform that contains the essential technology—and all its design and functional features. It is on the product platform that product variations can be added or deleted to satisfy local differences. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) Appliances-a-Rama, an Indian company that manufactures kitchen appliances, alters the design of its ranges to suit the needs of its Japanese consumers. The Japanese prefer compact and efficient appliances to fit their small kitchens. According to the Product Component Model, which product component is being addressed? A) packaging B) invisible C) core D) ancillary E) support services Answer: C Explanation: Appliances-a-Rama's products have undergone a change in their core components—design and function. The core component consists of the physical product—the platform that contains the essential technology—and all its design and functional features. It is on the product platform that product variations can be added or deleted to satisfy local differences. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

67) When a company alters the price of its product to compete with local companies in the international market, it is focusing on the ________ component of the product, according to the Product Component Model. A) core B) support C) design D) maintenance E) packaging Answer: E Explanation: The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product's package. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) A Canadian computer company had difficulties when it first entered the Japanese market. Some of its computers were returned unused after customers found the wrapping on the instruction manual damaged. Though this would probably be an insignificant problem in Canada, it was certainly a cause of concern in quality-conscious Japan. Which component of the Product Component Model should the company concentrate on to fix this problem? A) core B) support services C) packaging D) functional E) design Answer: C Explanation: The Canadian computer company should concentrate on the packaging aspect of the product component model in order to regain its deserved share in the Japanese market. The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product's package. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

69) A Brazilian food company had to change the labeling on its products to meet the specifications regarding vegetarian and nonvegetarian foods set by the government in the Taiwan market. It also had to mention the ingredients in Taiwanese to provide clarity to local customers. The component of the product that is affected is the ________ component. A) support services B) packaging C) functional D) design E) core Answer: B Explanation: By mentioning the product ingredients in Taiwanese and changing its labeling to meet specifications set by the Taiwan government, the Brazilian company has focused on the packaging component of its product. The packaging component includes style features, packaging, labeling, trademarks, brand name, quality, price, and all other aspects of a product's package. Labeling laws vary from country to country and do not seem to follow any predictable pattern. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 70) Eugene bought a new watch in January, and by March it stopped keeping time accurately. The warranty was still valid, so he sent it back to the manufacturer for repair. According to the Product Component Model, this demonstrates the ________ component of the product. A) core B) support services C) packaging D) functional E) styling Answer: B Explanation: The support services component includes repair and maintenance, instructions, installation, warranties, deliveries, and the availability of spare parts. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

71) Since the consumer is automatically angry with the manufacturer when something goes wrong with the vehicle, repair and maintenance has become a concern of the various automobile manufacturers. In which component of the Product Component Model would the management need to make improvements if problems such as this are to be solved? A) core B) functional C) packaging D) support services E) price Answer: D Explanation: The support services component includes repair and maintenance, instructions, installation, warranties, deliveries, and the availability of spare parts. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 72) A South Korean electronics company had to add detailed instructions about the repair and replacement of its product to make it easier for the local consumers to maintain it. Which element of the Product Component Model relates to this issue? A) support services B) design C) core D) packaging E) functional Answer: A Explanation: The support services component includes repair and maintenance, instructions, installation, warranties, deliveries, and the availability of spare parts. The literacy rates and educational levels of a country may require a firm to change a product's instructions. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

73) The washing machines marketed by Talcho failed in Asian markets as those countries lacked the skills necessary to repair and maintain Talcho's products. Also, the washing machine parts available in local markets were not compatible with these machines. This product failure is most likely to be a result of lack of attention by the company to the ________ component of the product. A) marketing B) price C) packaging D) support services E) style Answer: D Explanation: Talcho's washing machines' product failure was a result of the lack of support services offered by the company in its Asian markets. The support services component includes repair and maintenance, instructions, installation, warranties, deliveries, and the availability of spare parts. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 74) Dry cleaning, hair styling, and hotel accommodations have intrinsic value resulting from a process, a performance, or an occurrence that only exists while it is being created. Which characteristic of services is being referred to here? A) intangibility B) separability C) liquidity D) homogeneity E) durability Answer: A Explanation: Dry cleaning, hair styling, and hotel accommodations are intangible and have intrinsic value resulting from a process, a performance, or an occurrence that exists only while it is being created. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) Because a service is individually produced and is virtually unique, the service is said to have A) liquidity. B) coherence. C) inseparability. D) heterogeneity. E) tangibility. Answer: D Explanation: Services are distinguished by four unique characteristics—intangibility, inseparability, heterogeneity, and perishability—and thus require special consideration. A service is heterogeneous in that it is individually produced and is thus unique. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) Dr. Thomas is a dentist practicing in Chicago. During a four-day stretch in March, it snowed so heavily that not a single patient was able to visit him. Since none of the appointments took place, he did not make any money in those four days, even though his normal expenses remained. In this scenario, which characteristic of services most likely affected Dr. Thomas' business? A) tangibility B) feasibility C) durability D) homogeneity E) perishability Answer: E Explanation: Dr. Thomas' business is most likely affected by the perishable nature of the dental services rendered by him. A service is perishable in that once created it cannot be stored but must be consumed simultaneously with its creation. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

77) A characteristic of a service is that it is ________, since it cannot be stored and must be consumed simultaneously with its creation. A) durable B) feasible C) indelible D) tangible E) perishable Answer: E Explanation: Services are perishable in that once created they cannot be stored but must be consumed simultaneously with its creation. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) Levon, a hairstylist at a salon in Portland, styles his customers in various ways. His work looks different on different people even though he has styled all of them. This unique character of a service that is unique for every customer as it is individually produced is referred to as A) tangibility. B) separability. C) durability. D) heterogeneity. E) divisibility. Answer: D Explanation: A service is heterogeneous in that it is individually produced and is thus unique. Services are distinguished by four unique characteristics—intangibility, inseparability, heterogeneity, and perishability—and thus require special consideration. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

79) What is the largest services export of the United States, ranking behind only capital goods and industrial supplies when all exports are counted? A) automobile services B) international tourism C) banking services D) research and development E) education services Answer: B Explanation: International tourism is by far the largest services export of the United States, ranking behind only capital goods and industrial supplies when all exports are counted. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) How do the vast majority of services enter a foreign market? A) importing and exporting B) smuggling and pirating C) licensing, franchising, or direct investment D) through brokers E) through diaspora population Answer: C Explanation: The vast majority of services (some 85 percent) enter foreign markets by licensing, franchising, or direct investment. Difficulty: 1 Easy Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) Which barrier faced by consumer service marketers is in force when a foreign market applies a tariff on the service that is operating there? A) trade protectionism B) lack of transborder data flows restrictions C) protection of intellectual property D) religious requirements for adaptation E) language translation barriers Answer: A Explanation: Tariffs are a form of protectionism. Four kinds of barriers face consumer services marketers in this growing sector of the global marketplace: protectionism, controls on transborder data flows, protection of intellectual property, and cultural requirements for adaptation. Difficulty: 2 Medium Topic: Government Policies Affecting Trade Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) Blue Lobster considered opening restaurants in China. However, the restaurant's labor union felt that since accepting tips by wait staff is considered in bad taste in China, they would face considerable income loss. Therefore, they demanded to know how employees would be compensated for this since a great portion of a typical wait staff person's compensation comes in the form of tips. Which barrier does a consumer services marketer face in this illustration? A) protectionism B) controls on transborder data flows C) protection of intellectual property D) cultural requirements for adaptation E) language translation barriers Answer: D Explanation: Blue Lobster needs to adapt to the cultural requirement in China—to refrain its wait staff from accepting tips for services rendered—in order carry out smooth business there. Because trade in services frequently involves people-to-people contact, culture plays a much bigger role in services than in merchandise trade. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

83) An insurance firm based in California had difficulty expanding its operations to Asian markets as most of the target countries had strict regulations on sharing details about their customers with the home office. The company had to obtain approval from its customers before sharing their personal information with its U.S. office. Which barrier is most likely to have affected the services of the insurance firm? A) protectionism B) control on transborder data flows C) protection of intellectual property D) cultural requirements for adaptation E) language translation barriers Answer: B Explanation: The insurance firm has been affected by the barrier of control on transborder data flows that requires it to get an approval from its customers before sharing their personal information with its foreign branches. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 84) A name, term, sign, symbol, design, or combination used worldwide to identify goods or services of one seller and to differentiate them from those of competitors is called a A) copyright. B) product mark. C) global brand. D) brand's equity position. E) trademark. Answer: C Explanation: A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) A manufacturer of toiletries and cleaning products uses the name Home Helper, for most products in their international markets. The name has created a universal appeal for its products as customers identify their products with the name; hence, Home Helper can be regarded as a ________ brand. A) retailer's B) shelf C) store D) global E) dual Answer: D Explanation: Home Helper can be regarded as a global brand because the name is used for most of the company's products marketed worldwide. A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 86) The ________ effect refers to the possibility that the place of manufacture may affect product or brand image. A) doppler B) polar C) transfer D) misinformation E) country-of-origin Answer: E Explanation: Country-of-origin effect (COE) can be defined as any influence that the country of manufacture, assembly, or design has on a consumer's positive or negative perception of a product. A company competing in global markets today manufactures products worldwide; when the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand images. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-05 Country-of-origin effects on product image. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) A shoe manufacturer in the Philippines shipped its entire production to San Francisco and then brought it back to the Philippines to market it as "Made in the U.S." The manufacturer believed that people would prefer buying products made in the U.S. rather than those domestically produced. The factor that is influencing the perception of the customers in the given scenario is called the ________ effect. A) doppler B) comparative advantage C) country-of-origin D) mass E) placebo Answer: C Explanation: The country-of-origin effect is seen influencing the perception of the shoe manufacturer's customers located in the Philippines as they prefer goods labeled "Made in the U.S." rather than home-produced goods. The country-of-origin effect (COE) can be defined as any influence that the country of manufacture, assembly, or design has on a consumer's positive or negative perception of a product. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-05 Country-of-origin effects on product image. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 88) Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge "best." Which item would most likely not fit in the "best" stereotype scheme? A) English tea B) Indian cars C) French perfume D) Chinese silk E) Jamaican rum Answer: B Explanation: Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge "best": English tea, French perfume, Chinese silk, Italian leather, Japanese electronics, Jamaican rum, and so on. Indian cars are not generally placed in the "best" stereotype scheme. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-05 Country-of-origin effects on product image. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) In Russia, products are divided into two categories—"ours" and "imported." This is an example of A) an autarky. B) ethnocentrism. C) theocentrism. D) feudalism. E) a closed economy. Answer: B Explanation: Ethnocentrism can have country-of-origin effects; feelings of national pride—the "buy local" effect, for example—can influence attitudes toward foreign products. Russians prefer fresh, homegrown food products but imported clothing and manufactured items. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-05 Country-of-origin effects on product image. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) Kroger grocery stores stock many food items that are sold under the brand name Simple Truth®, which is sold exclusively in Kroger stores. This is an example of a ________ brand. A) global B) private C) specialty D) market. E) retail Answer: B Explanation: Private brands are owned by retailers and are growing as challengers to manufacturer's brands. Private brands are present in over 90 percent of consumer goods categories. Undoubtedly, private brands have become a force in global marketing. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-05 Country-of-origin effects on product image. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

91) How has the increased presence of global competition changed business strategies in the marketplace? Answer: Global competition is placing new emphasis on some basic tenets of business. It is shortening product life cycles and focusing on the importance of quality, competitive prices, and innovative products. The power in the marketplace is shifting from a sellers' market to a customers' market, and the latter have more choices because more companies are competing for their attention. More competition and more choices put more power in the hands of the customer, and that of course drives the need for quality. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-01 The importance of offering a product suitable for the intended market. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Compare and contrast the two ways consumers determine a product's quality. Answer: Quality can be defined on two dimensions: market-perceived quality and performance quality. The market-perceived quality attributes are embedded in the total product, that is, the physical or core product and all the additional features the consumer expects. Consumer perceptions of a quality product often have more to do with market-perceived quality than performance quality. But, since the consumer expects performance quality to be a given, quality to the consumer is more important than compliance. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-02 The importance of quality and how quality is defined. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 93) In the context of product adaptation, what is product homologation? Answer: Product homologation is a term used to describe the changes mandated by local product and service standards. A product may have to change in a number of ways to meet the physical or mandatory requirements of a new market ranging from simple package changes to total redesign of the physical core product. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

94) What are the five factors that influence product adaptation in new markets? Answer: Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 95) What is green marketing? How does it affect product development? Answer: Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing activities. It is a quality issue of growing importance all over the world. Two critical issues that affect product development are the control of the packaging component of solid waste and consumer demand for environmentally friendly products. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) Everett Rogers noted that four crucial elements affect the diffusion of new ideas. What are those elements? Answer: Everett Rogers noted that "crucial elements in the diffusion of new ideas are (1) an innovation, (2) which is communicated through certain channels, (3) over time, (4) among the members of a social system." Rogers continued with the statement that it is the element of time that differentiates diffusion from other types of communications research. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) Describe the five characteristics of an innovation that assist in determining the rate of acceptance or resistance of the market to a product. Answer: The five characteristics of an innovation that help to determine the rate of acceptance or resistance of the market to a product are as follows: (1) relative advantage (the perceived marginal value of the new product relative to the old), (2) compatibility (its compatibility with acceptable behavior, norms, values, and so forth), (3) complexity (the degree of complexity associated with product use), (4) trialability (the degree of economic and/or social risk associated with product use), and (5) observability (the ease with which the product benefits can be communicated). In general, the rate of diffusion can be postulated as positively related to relative advantage, compatibility, trialability, and observability but negatively related to complexity. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-03 Physical, mandatory, and cultural requirements for product adaptation. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) What are the four barriers faced by consumer services marketers when they enter the global market? Answer: The barriers to consumer services are (a) protectionism, (b) restrictions on transborder data flows, (c) protection of intellectual property, and (d) cultural barriers and adaptation. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) Define the term global brand. How are global brands important? Answer: A global brand is defined as the worldwide use of a name, term, sign, symbol (visual and/or auditory), design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors. The importance of a brand name, even in the nonprofit sector, is unquestionable. Companies with strong brands strive to use those brands globally. Even perceived "globalness" can lead to increases in sales. Ideally, a global brand gives a company uniformly positive worldwide brand associations that enhance efficiency and cost savings when introducing other products with the brand name. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-04 The need to view all attributes of a product to overcome resistance to acceptance. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 100) Define country-of-origin effect. How can a company overcome this effect? Answer: Country-of-origin effect (COE) can be defined as any influence that the country of manufacture, assembly, or design has on a consumer's positive or negative perception of a product. A company competing in global markets today manufactures products worldwide; when the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand images. Once the market gains experience with a product, negative country stereotypes can be overcome. Moreover, country stereotyping or "nation equity" can be overcome with good marketing. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 13-05 Country-of-origin effects on product image. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 14 Products and Services for Businesses 1) For firms producing products and services for industrial markets, the chief reason for venturing abroad is the prospect of high profits with no risk. 2) The single most important difference between consumer and industrial marketing is the cyclical swings in demand inherent in the latter. 3) Managers need to understand the concept of derived demand, particularly when they are selling capital equipment and big-ticket industrial services. 4) Derived demand can be defined as demand that is not dependent on another source. 5) Industrial demand is unaffected by changes in consumer demand. 6) One of the ways that an industrial firm should manage the inherent volatility of the industrial sector is by increasing advertising expenditure during booms. 7) The most significant environmental factor affecting the international market for industrial goods and services is the degree of standardization. 8) The degree of economic development of a country can be used as a rough measure of the country's industrial market. 9) In Stage 1 (the traditional society) of Rostow's five-stage model of economic development, the most important industrial demand is labor. 10) In Rostow's five-stage model of economic development, countries in Stage 5 (the age of mass consumption) are mostly service economies. 11) A country can leap several stages of economic development by using technology as economic leverage. 12) One of the interrelated trends that spurred the demand for technologically advanced products was the disintegration of the Soviet empire. 13) Good quality as interpreted by a highly industrialized market is the same as that interpreted by standards of a less industrialized nation. 14) A product that exceeds performance expectations can also be considered to be of poor quality. 15) A product whose design reflects the needs and expectations of the buyer—no more, no less—is a quality product. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

16) The lack of common standards for manufacturing highly specialized equipment is a problem in international sales of industrial products. 17) The adoption of universal quality standards would mean that the perceptions of industrial product quality would also be standardized. 18) While countries have standards for products produced within its borders, there are no such standards that are applicable to imported goods. 19) The U.S. Department of Commerce has mandated that all U.S. government purchases use the metric system. 20) The ISO 9000 certification guarantees that each product or service produced by a company is of the highest quality. 21) To receive ISO 9000 certification, a company requests a certifying body to conduct a registration assessment. 22) For many industrial products, the revenue from associated services exceeds the revenue from the products themselves. 23) For international users of heavy construction equipment, the manufacturer's country of origin is of primary importance in purchasing construction equipment. 24) A manufacturer who does not provide after-sales services and support could also be forgoing the opportunity of participating in a lucrative aftermarket. 25) Communism is the most serious threat to the continued expansion of international services trade. 26) A company website is the most important vehicle for selling industrial products, reaching prospective B2B customers, and marketing in most countries. 27) Trade shows serve a much more important role in the U.S. than in other countries. 28) In difficult economic and political circumstances or otherwise, online trade shows are a more than adequate substitute for physical trade shows or trade fairs. 29) The sales of industrial goods are driven by the buyer's need to make profits. 30) Relationship marketing shifts the focus away from price to service and long-term benefits.

31) Mai is a new international sales representative for an industrial supply company that is focusing heavily on technology as a selling feature. She will learn that this strategy A) will be a key selling feature in all markets. B) will have the most impact in developing countries. C) may not be appropriate for all countries. D) will not make a big difference in the global market. E) can be easily overcome by competitors. 32) Industrial markets differ from consumer markets in that A) the demand for industrial goods is more volatile than the demand for consumer goods. B) the market for industrial goods is insignificant in comparison to the market for consumer goods. C) industrial goods are marketed domestically whereas consumer goods are marketed internationally. D) industrial products are always more expensive than consumer products. E) industrial products use the same level of technology for all products making it appropriate for all countries whereas consumer goods need to be customized for each market. 33) What statement is true in industrial markets? A) Demand is nonvolatile by nature. B) Markets are unaffected by derived demand. C) Industrial sellers tend to have small numbers of customers upon which they are more dependent. D) Sales of industrial goods are stable and do not fluctuate. E) Professional buyers tend to undertake dissimilar investment actions to achieve the same goal. 34) What is a reason for marketing industrial goods abroad that does NOT necessarily apply to consumer goods? A) bypassing import tariffs B) avoiding sales tax C) reducing the volatility of demand D) acquiring ISO certification E) acquiring ACSI certification 35) What factor increases the volatility in demand in industrial markets? A) Professional buyers in the industrial market tend to act in concert. B) The demand for industrial goods is independent of changes in economic development. C) Small, noncyclical swings in demand are inherent in industrial markets. D) Experienced purchasers tend to make buying decisions independently. E) The demand for industrial goods is highly inelastic.

36) For managers selling capital equipment and big-ticket industrial services, understanding the concept of ________ is absolutely fundamental to their success. A) availability heuristic B) bank effect C) Baskerville effect D) derived demand E) catapult demand 37) Derived demand can be defined as demand that is A) independent of price. B) independent of consumer wants and needs. C) dependent on another source. D) highly volatile. E) highly responsive to factors other than price. 38) What can be used as a measure to manage volatility in industrial demand? A) maintaining a narrow product line B) reducing prices during booms C) reducing advertising expenditures during booms D) focusing on market share as a strategic goal E) avoiding investment in foreign high-yield financial instruments 39) Why do German and Japanese firms generally do better than U.S. firms when it comes to managing volatility? A) Their emphasis is on beating competitors. B) They value employees and stability more highly. C) They maintain limited product lines. D) They reduce prices faster and raise advertising expenditures during booms. E) They consider market share to be a strategic goal. 40) What is perhaps the most significant environmental factor affecting the international market for industrial goods and services? A) the foreign exchange market B) political conditions C) the degree of industrialization D) the level of domestic competition E) global warming 41) What is the first stage of Rostow's five-stage model of economic development? A) the traditional society B) drive to maturity C) preconditions for takeoff D) takeoff E) the age of mass consumption

42) In Stage 1 of Rostow's five-stage model of economic development, A) the economy is primarily driven by the production of services. B) the most important industrial demand relates to natural resources extraction. C) infrastructure development is a primary requirement in the economy. D) manufacturing of both semidurable and nondurable consumer goods has begun. E) the focus is on low-cost manufacturing of a variety of consumer and some industrial goods. 43) What is characteristic of Stage 2 of Rostow's five-stage model of economic growth? A) Industrial demand is mainly associated with natural resources extraction. B) The goods demanded relate to equipment and supplies to support manufacturing. C) The focus is more on low-cost manufacturing of a variety of consumer and some industrial goods. D) The focus is on design activities and the development of manufacturing techniques. E) Infrastructure development is a primary need. 44) Which country is designated as being in Stage 2 of Rostow's five-stage model of economic growth? A) Russia B) Germany C) South Korea D) Czech Republic E) Vietnam 45) A country has reached a level of economic development where the manufacturing of both semidurable and nondurable consumer goods has just begun. Also, the goods demanded relate to equipment and supplies to support manufacturing. In which stage of Rostow's five-stage model of economic growth does the country fit? A) the traditional society B) drive to maturity C) preconditions for takeoff D) takeoff E) the age of mass consumption 46) Russia and Eastern European countries fit in which stage of Rostow's five-stage model of economic growth? A) the traditional society B) drive to maturity C) preconditions for takeoff D) the age of mass consumption E) takeoff

47) The industrialized economies in the ________ stage of Rostow's five-stage model of economic development focus more on low-cost manufacturing of a variety of consumer and some industrial goods. They buy from all categories of industrial products and services. A) traditional society B) drive to maturity C) preconditions to takeoff D) age of mass consumption E) takeoff 48) In which stage of Rostow's five-stage model of economic growth do industrialized economies such as Korea and the Czech Republic fit? A) preconditions to takeoff B) takeoff C) traditional society D) drive to maturity E) the age of mass consumption 49) In which stage of Rostow's five-stage model of economic growth do highly-industrialized countries like Japan and Germany fit? A) traditional society B) preconditions to takeoff C) takeoff D) drive to maturity E) the age of mass consumption 50) Country X is most likely to be in the age of mass consumption according to Rostow's fivestage model of economic development if A) its economy is primarily driven by natural resource extraction. B) the economy is moving away from agriculture and toward manufacturing. C) the economy is driven by low-cost manufacturing. D) it is primarily a service economy. E) its economy is primarily agrarian. 51) If a country is in Stage 5 (the age of mass consumption) of Rostow's five-stage model of economic development, it purchases most of its highest-technology products and services from ________ suppliers. A) Stage 4 B) Stage 3 C) Stage 5 D) Stage 1 E) Stage 2

52) What is possibly the best indicator of a country's ability to use technology to leap several stages of economic development in a very short time? A) the quality of the educational system B) the size of the population C) the general economic environment D) the size and growth rate of the market E) the level of government regulations 53) Which trend spurs demand for technologically advanced products in the world? A) an increase in the size of the global unskilled labor force B) large fiscal deficits in developed nations C) expanding economic and industrial growth in Asia D) the increase in the average age in Europe E) the opening of the Trans-Arctic route 54) Which trend will expand demand for industrial goods and business services in Latin America? A) the increase of import tariff by 70 percent B) the adoption of Marxist–socialist policies C) the privatization of state-owned enterprises D) the increased use of labor in place of capital in production E) the decline of economic growth in Asia 55) What does the perception of quality depend on? A) government specifications B) the customer C) universal quality standards D) the manufacturer's specifications E) standardization 56) An important dimension of quality is how well the product A) meets the specific needs of the buyer. B) exceeds competitors' products. C) conforms to manufacturer's specifications. D) alters the marketing landscape. E) saves time and labor. 57) The process of total quality management (TQM) starts with A) providing all customers with technologically advanced products. B) signing trade agreements with developed countries. C) involving customers in the product development process. D) reducing the time taken for the product to reach the market. E) marketing the products at trade shows and fairs.

58) Which statement is true of universal standards in the sale of international products? A) The idea of universal standards is being resisted in developing countries. B) Firms that adhere to universal standards find the costs to be greater than the benefits. C) The international market for industrial goods uses the imperial system as a universal standard. D) All governments mandate universal standards. E) The lack of universal standards limits the expansion of industries. 59) The Global Harmonization Task Force is an international effort that is attempting to A) coordinate standards for several international industrial sectors. B) promote free trade among developing and developed nations. C) equalize wages among countries. D) increase double testing of goods and services. E) equalize the perception of quality across countries. 60) Buyers in country X prefer to use the older, cheaper version of Firm A's product although it is bulkier and less user-friendly. Buyers in country Y, however, prefer to use the newer, lightweight version for its new user interface. Which statement is the most accurate conclusion from the given information? A) Firm A needs to revamp its after-sales services. B) The sales of industrial goods are higher in country X than in country Y. C) The perception of quality can differ across countries. D) Country X is a highly industrialized nation. E) Country Y has a lower average income level compared to country X. 61) The U.S. Congress and businesses have been resisting conversion to the metric system because they fear A) market competition from international firms already using the metric system. B) consumer backlash and the substitution of international products. C) it will promote standardization. D) workers will not understand the system. E) it will be too costly to implement. 62) A U.S. manufacturing firm lost a big contract in Qatar because it provided pipes that were three yards long and the specifications called for three meters. In this case, the U.S. firm failed to recognize the importance of A) ISO 9000 standards. B) U.S. manufacturing guidelines. C) the EU Product Liability Directive. D) the American Customer Satisfaction Index. E) using the metric system. 63) The lack of universal standards in the industrial goods market A) increases the price of raw materials. B) gives each firm a competitive edge. C) increases the level of consumer satisfaction. D) reduces the price of the final goods. E) increases the cost of doing business. 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

64) Which of the following countries is not officially on the metric system? A) Liberia B) Japan C) Saudi Arabia D) Mexico E) China 65) The American Customer Satisfaction Index (ACSI) focuses on A) differentiating a product based on its quality. B) rating a company's quality based on its leadership, strategic planning, and customer and market focus. C) the audit of a company's business processes in order to ensure quality. D) quality as perceived by product and service users. E) the creation of a quality control system that can meet published quality standards. 66) What is true of the ISO 9000 standards? A) The ISO 9000 standards apply to specific products. B) The ISO 9000s guarantee that a manufacturer produces a "quality" product or service. C) The ISO 9000 series describes eight quality system models. D) The ISO 9000 standards are a certification of the quality control system that a company has in place. E) The ISO 9000s were originally designed by the International Organization for Quality in the United States. 67) ISO 9000 concerns the A) cost-effectiveness of the production of a good. B) registration and certification of a manufacturer's quality system. C) profitability of a production line. D) ability of a company's computer system to adapt to SAP, a business management software. E) marketing and promotional strategies of a firm. 68) Many suppliers are adopting ISO 9000 standards because A) they can acquire the certification at no extra cost. B) governments mandate ISO certification for all product categories. C) they want to be perceived as being environmentally friendly. D) the WTO expects international suppliers to conform to ISO standards. E) their buyers require them to be ISO 9000 registered. 69) What is driving a strong level of interest in the ISO 9000 certification? A) government regulations B) marketplace requirements C) environmental regulations D) trade tariff requirements E) protectionism restrictions 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

70) What statement about ISO 9000 certification is true? A) It does not require a registration assessment. B) It is generally voluntary except for certain regulated products. C) It requires an annual complete assessment for recertification. D) It measures customers' satisfaction and perceptions of quality of a representative sample. E) It guarantees that a manufacturer produces a "quality" product or service. 71) ________ certification is considered to be an important competitive marketing tool in Europe. A) ISO 9000 B) ICE C) ACSI D) AERA E) NCME 72) The ________ measures customers' satisfaction and perceptions of quality of a representative sample of America's goods and services. A) ISO 9000 B) ICE C) Net Promoter Score (NPS) D) American Customer Satisfaction Index (ACSI) E) American Price Index (API) 73) In the case of cellular phones, the physical product is practically given away to gain the phone services contract. This could be because A) cellular phone companies do not view market share as a strategic goal. B) the cost of production of cellular phones is very low. C) the revenues from associated services exceed the revenues from the cellular phones. D) the margins on after-sales services for cellular phones is low. E) consumers sometimes buy a variety of services that are not associated with products. 74) The ISO 9000 certification allows a company to A) hedge its risk from currency fluctuations. B) bypass all international trade barriers. C) diversify into other product lines. D) differentiate it from its competitors. E) provide after-sales services. 75) ________ is rapidly becoming a major after-sales service when selling technical products in countries that demand the latest technology. A) Promotional pricing B) Product innovation C) Capacity utilization efficiency D) Customer training E) Warranty 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

76) Firms that sell industrial goods in international markets should focus on after-sales services because these services A) are almost always more profitable than the actual sale of the goods themselves. B) require high levels of investment in training and development. C) ensure that the firm's goods are not liable to lawsuits. D) cost the firm almost nothing. E) cannot be outsourced to other companies and must be provided by the firm itself. 77) For most consumer services firms, the mode of entry into a foreign market is licensing, franchising, strategic alliances, or direct. This is usually done because A) services are highly differentiated. B) services produced cannot be added to inventory. C) the creation and consumption of services cannot be separated. D) the inputs used vary to a great extent. E) services usually do not have any intrinsic value that can be converted into a tangible form. 78) Some business services have intrinsic value that can be embodied in some tangible form; they can be produced in one country and exported to another. An example is A) language schools. B) in-flight services on an airplane. C) operating an automatic teller machine. D) data processing services. E) physicians' services. 79) What is true of business services? A) Most business services companies enter international markets to service their local clients abroad. B) Services are intangible and so cannot be produced in one country and exported to another. C) The removal of trade barriers poses a serious threat to the continued expansion of international services trade. D) Firms should avoid providing after-sales services as the costs do not justify the benefits. E) The perception of quality of a business service depends solely on the average per capita income of the buyer's country. 80) Alcare Advertising has just signed a contract with Miramar cosmetics company to create ads for Miramar's products. Miramar wants Alcare to come up with creative ideas for its recent expansion into South Asian markets of India and Indonesia. In order to accommodate Miramar, Alcare has now opened offices in two Indian cities and one Indonesian city. In this context, Alcare is a A) head hunter. B) client follower. C) bargain hunter. D) bet padder. E) risk avoider.

81) In knowledge-based services, such as consulting, engineering, education, and information technology, ________ are a key driver of success and failure. A) income taxes B) intellectual property issues C) free trade zones (FTZs) D) exchange rate regulations E) tariffs on the import of goods 82) What is the most serious threat to the continued expansion of international services trade? A) free trade B) capitalism C) globalization D) foreign trade zones (FTZs) E) protectionism 83) Restrictions on cross-border data flows are potentially the most damaging to industries that A) are fragmented. B) focus on domestic production. C) generate revenue from the sale of physical products across borders. D) rely on information transfers across countries. E) are concentrated in nature. 84) What has become the primary vehicle for business-to-business promotion and selling in many foreign countries? A) trade shows B) in-office visits by sales teams C) TV advertising D) local radio advertising E) transit media 85) _______ provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors' products. A) Catalogs B) Direct mail campaigns C) Banners D) Trade shows E) Specialty advertising blogs 86) Paul attends the London Book Fair every year to represent his company and show its products to publishers from other countries. He also meets with individual publishers to discuss distributing their books in the U.S. The London Book Fair is A) an industry forum. B) a commerce opportunity. C) a commercial storefront. D) a market expander. E) a trade show. 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

87) What is true of commercial relationships in countries with collectivistic and high-context cultures? A) The commercial relationship is limited to a one-time provision of the goods or service. B) Efficiency and innovation matter more than long-term relationship building. C) Trust is a crucial aspect of commercial relationships. D) The focus of the relationship is on price and value-for-money. E) Customer loyalty is fleeting and short-lived. 88) Jamal has been the sales representative for the western region for ten years, calling on the same customers repeatedly. Other companies have brought in reps from their home countries, but Jamal finds his customers prefer to deal with him. Jamal demonstrates qualities associated with A) relationship marketing. B) in-country advantage. C) sales orientation. D) consistency. E) efficiency. 89) The key functions of global account managers revolve around the notions of intelligence gathering, coordination with the customer's staff, and A) managing the marketing mix. B) adapting practices to the changing environment. C) increasing post-purchase sales D) attending trade shows. E) gauging demand in various environments. 90) In countries with strong cultures, particularly those with collectivistic and high-context cultures, ________ will be the single most important source of information about the development of new industrial products and services. A) knowledge of the local language and customs B) understanding competitive trends C) the use of technology D) constant and close communication with customers E) direct and assertive follow-up 91) Three factors affect the demand in international industrial markets differently than in consumer markets. What are these factors? 92) Explain the concept of derived demand. Provide an illustration. 93) Describe the five stages of Rostow's model of economic development. 94) What are the three trends that spur demand for technologically advanced products? 95) Discuss how a customer determines the quality of a product. Give a specific example to illustrate your answer. 96) What is the ISO 9000 certification? Why would a company need this? 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

97) Companies today must be ready to provide after-sale services in the international marketplace if they are to dominate the global arena. Explain why this is true. 98) What is the mode of entry chosen by most consumer services firms to enter a foreign market? What is the reason for this? 99) What has become the primary vehicle for doing business in many foreign countries? Explain and justify your answer. 100) What is relationship marketing, and how does it benefit an international marketer?

International Marketing, 18e (Cateora) Chapter 14 Products and Services for Businesses 1) For firms producing products and services for industrial markets, the chief reason for venturing abroad is the prospect of high profits with no risk. Answer: FALSE Explanation: Demand in industrial markets is by nature more volatile. Firms producing products and services for industrial markets have a crucial reason for venturing abroad: dampening the natural volatility of industrial markets. Difficulty: 1 Easy Topic: Managing Political Risk and Differences Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) The single most important difference between consumer and industrial marketing is the cyclical swings in demand inherent in the latter. Answer: TRUE Explanation: The single most important difference between consumer and industrial marketing is the huge, cyclical swings in demand inherent in the latter. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Managers need to understand the concept of derived demand, particularly when they are selling capital equipment and big-ticket industrial services. Answer: TRUE Explanation: For managers selling capital equipment and big-ticket industrial services, understanding the concept of derived demand is absolutely fundamental to their success. Derived demand can be defined as demand dependent on another source. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) Derived demand can be defined as demand that is not dependent on another source. Answer: FALSE Explanation: Derived demand is dependent on another source. Thus, the demand for Boeing 747s is derived from the worldwide consumer demand for air travel services. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Industrial demand is unaffected by changes in consumer demand. Answer: FALSE Explanation: Minor changes in consumer demand mean major changes in the related industrial demand. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) One of the ways that an industrial firm should manage the inherent volatility of the industrial sector is by increasing advertising expenditure during booms. Answer: FALSE Explanation: Industrial firms can take several measures to manage inherent volatility, such as maintaining broad product lines and broad market coverage, raising prices faster and reducing advertising expenditures during booms, ignoring market share as a strategic goal, eschewing layoffs, and focusing on stability. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) The most significant environmental factor affecting the international market for industrial goods and services is the degree of standardization. Answer: FALSE Explanation: The most significant environmental factor affecting the international market for industrial goods and services is the degree of industrialization. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The degree of economic development of a country can be used as a rough measure of the country's industrial market. Answer: TRUE Explanation: Although generalizing about countries is almost always imprudent, the degree of economic development can be used as a rough measure of a country's industrial market. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) In Stage 1 (the traditional society) of Rostow's five-stage model of economic development, the most important industrial demand is labor. Answer: FALSE Explanation: In Stage 1 of Rostow's five-stage model of economic development, the most important industrial demand will be associated with natural resources extraction—think parts of Africa and the Middle East. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) In Rostow's five-stage model of economic development, countries in Stage 5 (the age of mass consumption) are mostly service economies. Answer: TRUE Explanation: With respect to Rostow's five-stage model of economic development, countries in Stage 5 are countries where design activities are going on and manufacturing techniques are being developed, and they are mostly service economies. Japan and Germany are examples of this stage. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) A country can leap several stages of economic development by using technology as economic leverage. Answer: TRUE Explanation: An important approach to grouping countries is on the basis of their ability to benefit from and use technology, particularly now that countries are using technology as economic leverage to leap several stages of economic development in a very short time. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-02 How demand is affected by technology levels Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 12) One of the interrelated trends that spurred the demand for technologically advanced products was the disintegration of the Soviet empire. Answer: TRUE Explanation: Three interrelated trends spur demand for technologically advanced products: (1) expanding economic and industrial growth in Asia, particularly China and India; (2) the disintegration of the Soviet empire; and (3) the privatization of government-owned industries worldwide. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-02 How demand is affected by technology levels Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation

13) Good quality as interpreted by a highly industrialized market is the same as that interpreted by standards of a less industrialized nation. Answer: FALSE Explanation: Recent studies have demonstrated that perceptions of industrial product quality can vary across cultural groups even in the most technologically developed countries. Good quality as interpreted by a highly industrialized market is not the same as that interpreted by standards of a less industrialized nation. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-02 How demand is affected by technology levels Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) A product that exceeds performance expectations can also be considered to be of poor quality. Answer: TRUE Explanation: It is less apparent but nonetheless true that a product that exceeds performance expectations can also be of poor quality. Quality for many goods is assessed in terms of fulfilling specific expectations—no more and no less. Thus, a product that produces 20,000 units per hour when the buyer needs one that produces only 5,000 units per hour is not necessarily a higher quality product, in that the extra capacity is unnecessary to meet the buyer's use expectations. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) A product whose design reflects the needs and expectations of the buyer—no more, no less—is a quality product. Answer: TRUE Explanation: A product whose design reflects the needs and expectations of the buyer—no more, no less—is a quality product. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) The lack of common standards for manufacturing highly specialized equipment is a problem in international sales of industrial products. Answer: TRUE Explanation: The United States has two major areas of concern for the industrial goods exporter: a lack of common standards for manufacturing highly specialized equipment such as machine tools and computers, and the use of the inch-pound, or English, system of measurement. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) The adoption of universal quality standards would mean that the perceptions of industrial product quality would also be standardized. Answer: FALSE Explanation: The concept of quality encompasses many factors, and the perception of quality rests solely with the customer. The level of technology reflected in the product, compliance with standards that reflect customer needs, support services and follow-through, and the price relative to competitive products are all part of a customer's evaluation and perception of quality. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) While countries have standards for products produced within its borders, there are no such standards that are applicable to imported goods. Answer: FALSE Explanation: In addition to industry and international organizations setting standards, countries often have standards for products entering their markets. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) The U.S. Department of Commerce has mandated that all U.S. government purchases use the metric system. Answer: TRUE Explanation: To spur U.S. industry into action, the Department of Commerce indicated that accepting the metric system will not be mandatory unless you want to sell something to the U.S. government; all U.S. government purchases are to be conducted exclusively in metric. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) The ISO 9000 certification guarantees that each product or service produced by a company is of the highest quality. Answer: FALSE Explanation: ISO 9000 standards do not apply to specific products. They relate to generic system standards that enable a company, through a mix of internal and external audits, to provide assurance that it has a quality control system. It is a certification of the production process only and does not guarantee that a manufacturer produces a "quality" product or service. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) To receive ISO 9000 certification, a company requests a certifying body to conduct a registration assessment. Answer: TRUE Explanation: To receive ISO 9000 certification, a company requests a certifying body (a third party authorized to provide an ISO 9000 audit) to conduct a registration assessment—that is, an audit of the key business processes of a company. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) For many industrial products, the revenue from associated services exceeds the revenue from the products themselves. Answer: TRUE Explanation: For many industrial products, the revenues from associated services exceed the revenues from the products. For many capital equipment manufacturers, the margins on aftersale services (i.e., maintenance contracts, overhauls, repairs, and replacement parts) are much higher than the margins on the machinery itself. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) For international users of heavy construction equipment, the manufacturer's country of origin is of primary importance in purchasing construction equipment. Answer: FALSE Explanation: A recent study of international users of heavy construction equipment revealed that, next to the manufacturer's reputation, quick delivery of replacement parts was of major importance in purchasing construction equipment. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) A manufacturer who does not provide after-sales services and support could also be forgoing the opportunity of participating in a lucrative aftermarket. Answer: TRUE Explanation: Some international marketers also may be forgoing the opportunity of participating in a lucrative aftermarket. Certain kinds of machine tools use up to five times their original value in replacement parts during an average life span and thus represent an even greater market. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) Communism is the most serious threat to the continued expansion of international services trade. Answer: FALSE Explanation: Protectionism is the most serious threat to the continued expansion of international services trade. The growth of international services has drawn the attention of local companies, governments, and researchers. As a result, direct and indirect trade barriers have been imposed to restrict foreign companies from domestic markets. Difficulty: 1 Easy Topic: Trade Policy and Government Intervention in International Trade Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) A company website is the most important vehicle for selling industrial products, reaching prospective B2B customers, and marketing in most countries. Answer: FALSE Explanation: Trade shows serve as the most important vehicles for selling products, reaching prospective B2B customers, contacting and evaluating potential agents and distributors, and marketing in most countries. Firms that have successfully integrated trade show attendance and follow-up personal selling efforts have been consistently shown to be more profitable. Difficulty: 1 Easy Topic: Value of Trade Missions and Trade Fairs Learning Objective: 14-06 The importance of trade shows in promoting industrial goods Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) Trade shows serve a much more important role in the U.S. than in other countries. Answer: FALSE Explanation: Although important in the United States, trade shows serve a much more important role in other countries. They have been at the center of commerce in Europe for centuries and are where most prospects are found. Difficulty: 1 Easy Topic: Value of Trade Missions and Trade Fairs Learning Objective: 14-06 The importance of trade shows in promoting industrial goods Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) In difficult economic and political circumstances or otherwise, online trade shows are a more than adequate substitute for physical trade shows or trade fairs. Answer: FALSE Explanation: In difficult economic and/or political circumstances, online trade shows become a useful, but obviously less than adequate, substitute for actual trade shows. Difficulty: 1 Easy Topic: Value of Trade Missions and Trade Fairs Learning Objective: 14-06 The importance of trade shows in promoting industrial goods Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) The sales of industrial goods are driven by the buyer's need to make profits. Answer: TRUE Explanation: The first and foremost characteristic of industrial goods markets is the motive of the buyer: to make a profit. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-07 The importance of relationship marketing for industrial products and services Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) Relationship marketing shifts the focus away from price to service and long-term benefits. Answer: TRUE Explanation: The objective of relationship marketing is to make the relationship an important attribute of the transaction, thus differentiating oneself from competitors. It shifts the focus away from price to service and long-term benefits. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-07 The importance of relationship marketing for industrial products and services Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) Mai is a new international sales representative for an industrial supply company that is focusing heavily on technology as a selling feature. She will learn that this strategy A) will be a key selling feature in all markets. B) will have the most impact in developing countries. C) may not be appropriate for all countries. D) will not make a big difference in the global market. E) can be easily overcome by competitors. Answer: C Explanation: Not only is technology the key to economic growth, but for many products, it is also the competitive edge in today's global markets. However, the level of technology of products and services makes their sale more appropriate for some countries than others. Difficulty: 2 Medium Topic: Differences Between Domestic and International Marketing Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation 32) Industrial markets differ from consumer markets in that A) the demand for industrial goods is more volatile than the demand for consumer goods. B) the market for industrial goods is insignificant in comparison to the market for consumer goods. C) industrial goods are marketed domestically whereas consumer goods are marketed internationally. D) industrial products are always more expensive than consumer products. E) industrial products use the same level of technology for all products making it appropriate for all countries whereas consumer goods need to be customized for each market. Answer: A Explanation: Three factors seem to affect the demand in international industrial markets differently than in consumer markets. First, demand in industrial markets is by nature more volatile. Second, stages of industrial and economic development affect demand for industrial products. Third, the level of technology of products and services makes their sale more appropriate for some countries than others. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) What statement is true in industrial markets? A) Demand is nonvolatile by nature. B) Markets are unaffected by derived demand. C) Industrial sellers tend to have small numbers of customers upon which they are more dependent. D) Sales of industrial goods are stable and do not fluctuate. E) Professional buyers tend to undertake dissimilar investment actions to achieve the same goal. Answer: C Explanation: In industrial markets, three factors come into play that exacerbate both the ups and downs in demand: Industrial sellers tend to have small numbers of customers upon which they are more dependent, professional buyers tend to act in concert, and derived demand accelerates changes in markets. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) What is a reason for marketing industrial goods abroad that does NOT necessarily apply to consumer goods? A) bypassing import tariffs B) avoiding sales tax C) reducing the volatility of demand D) acquiring ISO certification E) acquiring ACSI certification Answer: C Explanation: Firms producing products and services for industrial markets have a crucial reason for venturing abroad: dampening the natural volatility of industrial markets. Perhaps the single most important difference between consumer and industrial marketing is the huge, cyclical swings in demand inherent in the latter. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) What factor increases the volatility in demand in industrial markets? A) Professional buyers in the industrial market tend to act in concert. B) The demand for industrial goods is independent of changes in economic development. C) Small, noncyclical swings in demand are inherent in industrial markets. D) Experienced purchasers tend to make buying decisions independently. E) The demand for industrial goods is highly inelastic. Answer: A Explanation: In industrial markets, three factors come into play that exacerbate both the ups and downs in demand: Industrial sellers tend to have small numbers of customers upon which they are more dependent, professional buyers tend to act in concert, and derived demand accelerates changes in markets. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) For managers selling capital equipment and big-ticket industrial services, understanding the concept of ________ is absolutely fundamental to their success. A) availability heuristic B) bank effect C) Baskerville effect D) derived demand E) catapult demand Answer: D Explanation: For managers selling capital equipment and big-ticket industrial services, understanding the concept of derived demand is absolutely fundamental to their success. Derived demand can be defined as demand dependent on another source. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) Derived demand can be defined as demand that is A) independent of price. B) independent of consumer wants and needs. C) dependent on another source. D) highly volatile. E) highly responsive to factors other than price. Answer: C Explanation: Derived demand can be defined as demand dependent on another source. For example, the demand for Boeing aircraft is derived from the worldwide consumer demand for air travel services. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) What can be used as a measure to manage volatility in industrial demand? A) maintaining a narrow product line B) reducing prices during booms C) reducing advertising expenditures during booms D) focusing on market share as a strategic goal E) avoiding investment in foreign high-yield financial instruments Answer: C Explanation: Industrial firms can take several measures to manage the inherent volatility in industrial demand, such as maintaining broad product lines and broad market coverage, raising prices faster and reducing advertising expenditures during booms, ignoring market share as a strategic goal, eschewing layoffs, and focusing on stability. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) Why do German and Japanese firms generally do better than U.S. firms when it comes to managing volatility? A) Their emphasis is on beating competitors. B) They value employees and stability more highly. C) They maintain limited product lines. D) They reduce prices faster and raise advertising expenditures during booms. E) They consider market share to be a strategic goal. Answer: B Explanation: For most U.S. firms, where corporate cultures emphasize beating competitors, stabilizing measures such as maintaining broad product lines and broad market coverage, raising prices faster and reducing advertising expenditures during booms, ignoring market share as a strategic goal, eschewing layoffs, and focusing on stability are usually given only lip service. Conversely, German and Japanese firms value employees and stability more highly and are generally better at managing volatility in markets. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) What is perhaps the most significant environmental factor affecting the international market for industrial goods and services? A) the foreign exchange market B) political conditions C) the degree of industrialization D) the level of domestic competition E) global warming Answer: C Explanation: Perhaps the most significant environmental factor affecting the international market for industrial goods and services is the degree of industrialization. Although generalizing about countries is almost always imprudent, the degree of economic development can be used as a rough measure of a country's industrial market. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) What is the first stage of Rostow's five-stage model of economic development? A) the traditional society B) drive to maturity C) preconditions for takeoff D) takeoff E) the age of mass consumption Answer: A Explanation: In Stage 1 (the traditional society), the most important industrial demand will be associated with natural resources extraction—think parts of Africa and the Middle East. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) In Stage 1 of Rostow's five-stage model of economic development, A) the economy is primarily driven by the production of services. B) the most important industrial demand relates to natural resources extraction. C) infrastructure development is a primary requirement in the economy. D) manufacturing of both semidurable and nondurable consumer goods has begun. E) the focus is on low-cost manufacturing of a variety of consumer and some industrial goods. Answer: B Explanation: In Stage 1 (the traditional society), the most important industrial demand will be associated with natural resources extraction—think parts of Africa and the Middle East. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) What is characteristic of Stage 2 of Rostow's five-stage model of economic growth? A) Industrial demand is mainly associated with natural resources extraction. B) The goods demanded relate to equipment and supplies to support manufacturing. C) The focus is more on low-cost manufacturing of a variety of consumer and some industrial goods. D) The focus is on design activities and the development of manufacturing techniques. E) Infrastructure development is a primary need. Answer: E Explanation: In Stage 2 (preconditions for takeoff), manufacturing is beginning. Primary needs will be related to agriculture and infrastructure development—for example, telecommunications, construction, and power generation equipment and expertise. Vietnam would fit this category. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) Which country is designated as being in Stage 2 of Rostow's five-stage model of economic growth? A) Russia B) Germany C) South Korea D) Czech Republic E) Vietnam Answer: E Explanation: In Stage 2 (preconditions for takeoff), manufacturing is beginning. Primary needs will be related to infrastructure development—for example, telecommunications, construction, and power generation equipment and expertise. Vietnam would fit this category. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) A country has reached a level of economic development where the manufacturing of both semidurable and nondurable consumer goods has just begun. Also, the goods demanded relate to equipment and supplies to support manufacturing. In which stage of Rostow's five-stage model of economic growth does the country fit? A) the traditional society B) drive to maturity C) preconditions for takeoff D) takeoff E) the age of mass consumption Answer: D Explanation: In Stage 3 (takeoff), manufacturing of both semidurable and nondurable consumer goods has begun. Goods demanded relate to equipment and supplies to support manufacturing. Russian and Eastern European countries fit this category. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) Russia and Eastern European countries fit in which stage of Rostow's five-stage model of economic growth? A) the traditional society B) drive to maturity C) preconditions for takeoff D) the age of mass consumption E) takeoff Answer: E Explanation: In Stage 3 (takeoff), manufacturing of both semidurable and nondurable consumer goods has begun. Goods demanded relate to equipment and supplies to support manufacturing. Russian and Eastern European countries fit this category. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) The industrialized economies in the ________ stage of Rostow's five-stage model of economic development focus more on low-cost manufacturing of a variety of consumer and some industrial goods. They buy from all categories of industrial products and services. A) traditional society B) drive to maturity C) preconditions to takeoff D) age of mass consumption E) takeoff Answer: B Explanation: In Stage 4 (drive to maturity) of Rostow's five-stage model of economic development are industrialized economies such as Korea and the Czech Republic. Their focus is more on low-cost manufacturing of a variety of consumer and some industrial goods. They buy from all categories of industrial products and services. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) In which stage of Rostow's five-stage model of economic growth do industrialized economies such as Korea and the Czech Republic fit? A) preconditions to takeoff B) takeoff C) traditional society D) drive to maturity E) the age of mass consumption Answer: D Explanation: In Stage 4 (drive to maturity) of Rostow's five-stage model of economic development are industrialized economies such as Korea and the Czech Republic. Their focus is more on low-cost manufacturing of a variety of consumer and some industrial goods. They buy from all categories of industrial products and services. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) In which stage of Rostow's five-stage model of economic growth do highly-industrialized countries like Japan and Germany fit? A) traditional society B) preconditions to takeoff C) takeoff D) drive to maturity E) the age of mass consumption Answer: E Explanation: In Stage 5 (the age of mass consumption) of Rostow's five-stage model of economic development are countries where design activities are going on and manufacturing techniques are being developed, and they are mostly service economies. Japan and Germany are obvious examples of countries that purchase the highest-technology products and services, mostly from other Stage 5 suppliers and consumer products from Stage 3 and 4 countries. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) Country X is most likely to be in the age of mass consumption according to Rostow's fivestage model of economic development if A) its economy is primarily driven by natural resource extraction. B) the economy is moving away from agriculture and toward manufacturing. C) the economy is driven by low-cost manufacturing. D) it is primarily a service economy. E) its economy is primarily agrarian. Answer: D Explanation: In Stage 5 (the age of mass consumption) of Rostow's five-stage model of economic development are countries where design activities are going on and manufacturing techniques are being developed, and they are mostly service economies. Difficulty: 2 Medium Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) If a country is in Stage 5 (the age of mass consumption) of Rostow's five-stage model of economic development, it purchases most of its highest-technology products and services from ________ suppliers. A) Stage 4 B) Stage 3 C) Stage 5 D) Stage 1 E) Stage 2 Answer: C Explanation: In Stage 5 (the age of mass consumption) of Rostow's five-stage model of economic development are countries where design activities are going on and manufacturing techniques are being developed, and they are mostly service economies. Japan and Germany are obvious examples of countries that purchase the highest-technology products and services, mostly from other Stage 5 suppliers and consumer products from Stage 3 and 4 countries. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) What is possibly the best indicator of a country's ability to use technology to leap several stages of economic development in a very short time? A) the quality of the educational system B) the size of the population C) the general economic environment D) the size and growth rate of the market E) the level of government regulations Answer: A Explanation: An important approach to grouping countries is on the basis of their ability to benefit from and use technology, particularly now that countries are using technology as economic leverage to leap several stages of economic development in a very short time. Perhaps the best indicator of this dimension of development is the quality of the educational system. Difficulty: 1 Easy Topic: Economic Development Learning Objective: 14-02 How demand is affected by technology levels Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation

53) Which trend spurs demand for technologically advanced products in the world? A) an increase in the size of the global unskilled labor force B) large fiscal deficits in developed nations C) expanding economic and industrial growth in Asia D) the increase in the average age in Europe E) the opening of the Trans-Arctic route Answer: C Explanation: Three interrelated trends spur demand for technologically advanced products: (1) expanding economic and industrial growth in Asia, particularly China and India; (2) the disintegration of the Soviet empire; and (3) the privatization of government-owned industries worldwide. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-02 How demand is affected by technology levels Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 54) Which trend will expand demand for industrial goods and business services in Latin America? A) the increase of import tariff by 70 percent B) the adoption of Marxist–socialist policies C) the privatization of state-owned enterprises D) the increased use of labor in place of capital in production E) the decline of economic growth in Asia Answer: C Explanation: The privatization of state-owned enterprises in Latin America and elsewhere will create expanding demand, particularly for industrial goods and business services, well into the 21st century. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-02 How demand is affected by technology levels Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) What does the perception of quality depend on? A) government specifications B) the customer C) universal quality standards D) the manufacturer's specifications E) standardization Answer: B Explanation: The concept of quality encompasses many factors, and the perception of quality rests solely with the customer. The level of technology reflected in the product, compliance with standards that reflect customer needs, support services and follow-through, and the price relative to competitive products are all part of a customer's evaluation and perception of quality. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-02 How demand is affected by technology levels Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) An important dimension of quality is how well the product A) meets the specific needs of the buyer. B) exceeds competitors' products. C) conforms to manufacturer's specifications. D) alters the marketing landscape. E) saves time and labor. Answer: A Explanation: One important dimension of quality is how well a product meets the specific needs of the buyer. When a product falls short of performance expectations, its poor quality is readily apparent. However, it is less apparent but nonetheless true that a product that exceeds performance expectations can also be of poor quality. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) The process of total quality management (TQM) starts with A) providing all customers with technologically advanced products. B) signing trade agreements with developed countries. C) involving customers in the product development process. D) reducing the time taken for the product to reach the market. E) marketing the products at trade shows and fairs. Answer: C Explanation: To be competitive in today's global markets, the concept of total quality management (TQM) must be a part of all MNCs' management strategy, and TQM starts with talking to customers. Indeed, more and more frequently, industrial customers, including foreign ones, are directly involved in all aspects of the product development process, from generating new ideas to prototype testing. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) Which statement is true of universal standards in the sale of international products? A) The idea of universal standards is being resisted in developing countries. B) Firms that adhere to universal standards find the costs to be greater than the benefits. C) The international market for industrial goods uses the imperial system as a universal standard. D) All governments mandate universal standards. E) The lack of universal standards limits the expansion of industries. Answer: E Explanation: A lack of universal standards is a problem in international sales of industrial products. In the telecommunications industry, the vast differences in standards among countries create enormous problems for the expansion of that industry. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) The Global Harmonization Task Force is an international effort that is attempting to A) coordinate standards for several international industrial sectors. B) promote free trade among developing and developed nations. C) equalize wages among countries. D) increase double testing of goods and services. E) equalize the perception of quality across countries. Answer: A Explanation: The U.S. Department of Commerce participates in programs to promote U.S. standards and is active in the development of the Global Harmonization Task Force, an international effort to harmonize standards for several industry sectors. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) Buyers in country X prefer to use the older, cheaper version of Firm A's product although it is bulkier and less user-friendly. Buyers in country Y, however, prefer to use the newer, lightweight version for its new user interface. Which statement is the most accurate conclusion from the given information? A) Firm A needs to revamp its after-sales services. B) The sales of industrial goods are higher in country X than in country Y. C) The perception of quality can differ across countries. D) Country X is a highly industrialized nation. E) Country Y has a lower average income level compared to country X. Answer: C Explanation: The concept of quality encompasses many factors, and the perception of quality rests solely with the customer. The level of technology reflected in the product, compliance with standards that reflect customer needs, support services and follow-through, and the price relative to competitive products are all part of a customer's evaluation and perception of quality. Difficulty: 3 Hard Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

61) The U.S. Congress and businesses have been resisting conversion to the metric system because they fear A) market competition from international firms already using the metric system. B) consumer backlash and the substitution of international products. C) it will promote standardization. D) workers will not understand the system. E) it will be too costly to implement. Answer: E Explanation: In the United States, conversion to the metric system and acceptance of international standards have been slow. Congress and industry have dragged their feet for fear conversion would be too costly. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) A U.S. manufacturing firm lost a big contract in Qatar because it provided pipes that were three yards long and the specifications called for three meters. In this case, the U.S. firm failed to recognize the importance of A) ISO 9000 standards. B) U.S. manufacturing guidelines. C) the EU Product Liability Directive. D) the American Customer Satisfaction Index. E) using the metric system. Answer: E Explanation: As foreign customers on the metric system account for more and more American industrial sales, the cost of delaying standardization mounts. Measurement-sensitive products account for one-half to two-thirds of U.S. exports, and if the European Union bars nonmetric imports, as expected, many U.S. products will lose access to that market. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

63) The lack of universal standards in the industrial goods market A) increases the price of raw materials. B) gives each firm a competitive edge. C) increases the level of consumer satisfaction. D) reduces the price of the final goods. E) increases the cost of doing business. Answer: E Explanation: A lack of universal standards is another problem in international sales of industrial products. Congress and industry have dragged their feet for fear conversion would be too costly. But the cost will come from not adopting the metric system. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) Which of the following countries is not officially on the metric system? A) Liberia B) Japan C) Saudi Arabia D) Mexico E) China Answer: A Explanation: The only three countries not officially on the metric system are Liberia, Myanmar, and the United States. It is becoming increasingly evident that the United States must change or be left behind. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) The American Customer Satisfaction Index (ACSI) focuses on A) differentiating a product based on its quality. B) rating a company's quality based on its leadership, strategic planning, and customer and market focus. C) the audit of a company's business processes in order to ensure quality. D) quality as perceived by product and service users. E) the creation of a quality control system that can meet published quality standards. Answer: D Explanation: The American Customer Satisfaction Index (ACSI) measures customers' satisfaction and perceptions of quality of a representative sample of America's goods and services. Difficulty: 1 Easy Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) What is true of the ISO 9000 standards? A) The ISO 9000 standards apply to specific products. B) The ISO 9000s guarantee that a manufacturer produces a "quality" product or service. C) The ISO 9000 series describes eight quality system models. D) The ISO 9000 standards are a certification of the quality control system that a company has in place. E) The ISO 9000s were originally designed by the International Organization for Quality in the United States. Answer: D Explanation: ISO 9000s were originally designed by the International Organization for Standardization in Geneva. ISO 9000 standards do not apply to specific products. It is a certification of the production process only and does not guarantee that a manufacturer produces a "quality" product or service. It is a certification of the existence of a quality control system that a company has in place to ensure it can meet published quality standards. The series describes three quality system models. Difficulty: 2 Medium Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) ISO 9000 concerns the A) cost-effectiveness of the production of a good. B) registration and certification of a manufacturer's quality system. C) profitability of a production line. D) ability of a company's computer system to adapt to SAP, a business management software. E) marketing and promotional strategies of a firm. Answer: B Explanation: ISO 9000 concerns the registration and certification of a manufacturer's quality system. It is a certification of the production process only and does not guarantee that a manufacturer produces a "quality" product or service. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) Many suppliers are adopting ISO 9000 standards because A) they can acquire the certification at no extra cost. B) governments mandate ISO certification for all product categories. C) they want to be perceived as being environmentally friendly. D) the WTO expects international suppliers to conform to ISO standards. E) their buyers require them to be ISO 9000 registered. Answer: E Explanation: As the market demands quality and more and more companies adopt some form of TQM, manufacturers are increasingly requiring ISO 9000 registration of their suppliers. Difficulty: 2 Medium Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) What is driving a strong level of interest in the ISO 9000 certification? A) government regulations B) marketplace requirements C) environmental regulations D) trade tariff requirements E) protectionism restrictions Answer: B Explanation: A strong level of interest in ISO 9000 is being driven more by marketplace requirements than by government regulations, and ISO 9000 is now an important competitive marketing tool in Europe and around the world. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) What statement about ISO 9000 certification is true? A) It does not require a registration assessment. B) It is generally voluntary except for certain regulated products. C) It requires an annual complete assessment for recertification. D) It measures customers' satisfaction and perceptions of quality of a representative sample. E) It guarantees that a manufacturer produces a "quality" product or service. Answer: B Explanation: Although ISO 9000 is generally voluntary, except for certain regulated products, the EU Product Liability Directive puts pressure on all companies to become certified. Difficulty: 2 Medium Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) ________ certification is considered to be an important competitive marketing tool in Europe. A) ISO 9000 B) ICE C) ACSI D) AERA E) NCME Answer: A Explanation: A strong level of interest in ISO 9000 is being driven more by marketplace requirements than by government regulations, and ISO 9000 is now an important competitive marketing tool in Europe and around the world. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) The ________ measures customers' satisfaction and perceptions of quality of a representative sample of America's goods and services. A) ISO 9000 B) ICE C) Net Promoter Score (NPS) D) American Customer Satisfaction Index (ACSI) E) American Price Index (API) Answer: D Explanation: The American Customer Satisfaction Index (ACSI) measures customers' satisfaction and perceptions of quality of a representative sample of America's goods and services. The appeal of the ACSI approach is its focus on results, that is, quality as perceived by product and service users. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) In the case of cellular phones, the physical product is practically given away to gain the phone services contract. This could be because A) cellular phone companies do not view market share as a strategic goal. B) the cost of production of cellular phones is very low. C) the revenues from associated services exceed the revenues from the cellular phones. D) the margins on after-sales services for cellular phones is low. E) consumers sometimes buy a variety of services that are not associated with products. Answer: C Explanation: For many industrial products, the revenues from associated services exceed the revenues from the products. Perhaps the most obvious case is cellular phones, in which the physical product is practically given away to gain the phone services contract. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 74) The ISO 9000 certification allows a company to A) hedge its risk from currency fluctuations. B) bypass all international trade barriers. C) diversify into other product lines. D) differentiate it from its competitors. E) provide after-sales services. Answer: D Explanation: ISO 9000 may also be used to serve as a means of differentiating "classes" of suppliers, particularly in high-tech areas where high product reliability is crucial. In other words, if two suppliers are competing for the same contract, the one with ISO 9000 registration may have a competitive edge. Difficulty: 2 Medium Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) ________ is rapidly becoming a major after-sales service when selling technical products in countries that demand the latest technology. A) Promotional pricing B) Product innovation C) Capacity utilization efficiency D) Customer training E) Warranty Answer: D Explanation: Customer training is rapidly becoming a major after-sales service when selling technical products in countries that demand the latest technology but do not always have trained personnel. Difficulty: 1 Easy Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) Firms that sell industrial goods in international markets should focus on after-sales services because these services A) are almost always more profitable than the actual sale of the goods themselves. B) require high levels of investment in training and development. C) ensure that the firm's goods are not liable to lawsuits. D) cost the firm almost nothing. E) cannot be outsourced to other companies and must be provided by the firm itself. Answer: A Explanation: After-sales services are not only crucial in building strong customer loyalty and the all-important reputation that leads to sales at other companies, but they are also almost always more profitable than the actual sale of the machinery or product. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

77) For most consumer services firms, the mode of entry into a foreign market is licensing, franchising, strategic alliances, or direct. This is usually done because A) services are highly differentiated. B) services produced cannot be added to inventory. C) the creation and consumption of services cannot be separated. D) the inputs used vary to a great extent. E) services usually do not have any intrinsic value that can be converted into a tangible form. Answer: C Explanation: The mode of entry for most consumer services firms is licensing, franchising, strategic alliances, or direct. This tendency is so because of the inseparability of the creation and consumption of the services. Difficulty: 2 Medium Topic: Basic Decisions for Entering Foreign Markets Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) Some business services have intrinsic value that can be embodied in some tangible form; they can be produced in one country and exported to another. An example is A) language schools. B) in-flight services on an airplane. C) operating an automatic teller machine. D) data processing services. E) physicians' services. Answer: D Explanation: Because some business services have intrinsic value that can be embodied in some tangible form, they can be produced in one country and exported to another. Data processing and data analysis services are good examples. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) What is true of business services? A) Most business services companies enter international markets to service their local clients abroad. B) Services are intangible and so cannot be produced in one country and exported to another. C) The removal of trade barriers poses a serious threat to the continued expansion of international services trade. D) Firms should avoid providing after-sales services as the costs do not justify the benefits. E) The perception of quality of a business service depends solely on the average per capita income of the buyer's country. Answer: A Explanation: Most business services companies enter international markets to service their local clients abroad. Once established, many of these client followers, as one researcher refers to them, expand their client base to include local companies as well. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) Alcare Advertising has just signed a contract with Miramar cosmetics company to create ads for Miramar's products. Miramar wants Alcare to come up with creative ideas for its recent expansion into South Asian markets of India and Indonesia. In order to accommodate Miramar, Alcare has now opened offices in two Indian cities and one Indonesian city. In this context, Alcare is a A) head hunter. B) client follower. C) bargain hunter. D) bet padder. E) risk avoider. Answer: B Explanation: Most business services companies enter international markets to service their local clients abroad. Most recently, healthcare services providers have been following firms abroad. Once established, many of these client followers, as one researcher refers to them, expand their client base to include local companies as well. In this context, as Alcare is following its client into international markets, it is a client follower. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

81) In knowledge-based services, such as consulting, engineering, education, and information technology, ________ are a key driver of success and failure. A) income taxes B) intellectual property issues C) free trade zones (FTZs) D) exchange rate regulations E) tariffs on the import of goods Answer: B Explanation: At least one study has demonstrated that personnel and intellectual property issues are key drivers of success and failure, particularly in knowledge-based services such as consulting, engineering, education, and information technology. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) What is the most serious threat to the continued expansion of international services trade? A) free trade B) capitalism C) globalization D) foreign trade zones (FTZs) E) protectionism Answer: E Explanation: Protectionism is the most serious threat to the continued expansion of international services trade. The growth of international services has drawn the attention of local companies, governments, and researchers. As a result, direct and indirect trade barriers have been imposed to restrict foreign companies from domestic markets. Difficulty: 1 Easy Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) Restrictions on cross-border data flows are potentially the most damaging to industries that A) are fragmented. B) focus on domestic production. C) generate revenue from the sale of physical products across borders. D) rely on information transfers across countries. E) are concentrated in nature. Answer: D Explanation: Restrictions on cross-border data flows are potentially the most damaging to both the communications industry and other MNCs that rely on data transfers across borders to conduct business. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) What has become the primary vehicle for business-to-business promotion and selling in many foreign countries? A) trade shows B) in-office visits by sales teams C) TV advertising D) local radio advertising E) transit media Answer: A Explanation: In addition to advertising in print media and reaching industrial customers through catalogs, websites, and direct mail, the trade show or trade fair has become the primary vehicle for doing business in many foreign countries. Difficulty: 1 Easy Topic: Value of Trade Missions and Trade Fairs Learning Objective: 14-06 The importance of trade shows in promoting industrial goods Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) _______ provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors' products. A) Catalogs B) Direct mail campaigns C) Banners D) Trade shows E) Specialty advertising blogs Answer: D Explanation: Trade shows provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors' products. Difficulty: 1 Easy Topic: Value of Trade Missions and Trade Fairs Learning Objective: 14-06 The importance of trade shows in promoting industrial goods Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) Paul attends the London Book Fair every year to represent his company and show its products to publishers from other countries. He also meets with individual publishers to discuss distributing their books in the U.S. The London Book Fair is A) an industry forum. B) a commerce opportunity. C) a commercial storefront. D) a market expander. E) a trade show. Answer: E Explanation: Trade shows serve as the most important vehicles for selling products, reaching prospective B2B customers, contacting and evaluating potential agents and distributors, and marketing in most countries. Firms that have successfully integrated trade show attendance and follow-up personal selling efforts have been consistently shown to be more profitable. Difficulty: 2 Medium Topic: Value of Trade Missions and Trade Fairs Learning Objective: 14-06 The importance of trade shows in promoting industrial goods Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

87) What is true of commercial relationships in countries with collectivistic and high-context cultures? A) The commercial relationship is limited to a one-time provision of the goods or service. B) Efficiency and innovation matter more than long-term relationship building. C) Trust is a crucial aspect of commercial relationships. D) The focus of the relationship is on price and value-for-money. E) Customer loyalty is fleeting and short-lived. Answer: C Explanation: Focusing on long-term relationship building will be especially important in most international markets where culture dictates stronger ties between people and companies. Particularly in countries with collectivistic and high-context cultures, such as those in Latin America or Asia, trust will be a crucial aspect of commercial relationships. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-07 The importance of relationship marketing for industrial products and services Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) Jamal has been the sales representative for the western region for ten years, calling on the same customers repeatedly. Other companies have brought in reps from their home countries, but Jamal finds his customers prefer to deal with him. Jamal demonstrates qualities associated with A) relationship marketing. B) in-country advantage. C) sales orientation. D) consistency. E) efficiency. Answer: A Explanation: Jamal's length of tenure and the preference his customers show to work with him demonstrate his ability to use relationship marketing to his advantage over his competitors. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-07 The importance of relationship marketing for industrial products and services Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

89) The key functions of global account managers revolve around the notions of intelligence gathering, coordination with the customer's staff, and A) managing the marketing mix. B) adapting practices to the changing environment. C) increasing post-purchase sales D) attending trade shows. E) gauging demand in various environments. Answer: B Explanation: The key functions of global account managers revolve around the notions of intelligence gathering, coordination with the customer's staff, and reconfiguration (i.e., adapting the practices and process to the changing competitive environment). Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-07 The importance of relationship marketing for industrial products and services Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) In countries with strong cultures, particularly those with collectivistic and high-context cultures, ________ will be the single most important source of information about the development of new industrial products and services. A) knowledge of the local language and customs B) understanding competitive trends C) the use of technology D) constant and close communication with customers E) direct and assertive follow-up Answer: D Explanation: Constant and close communication with customers will be the single most important source of information about the development of new industrial products and services. Particularly in countries with collectivistic and high-context cultures, such as those in Latin America or Asia, trust will be a crucial aspect of commercial relationships. Difficulty: 2 Medium Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-07 The importance of relationship marketing for industrial products and services Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) Three factors affect the demand in international industrial markets differently than in consumer markets. What are these factors? Answer: The three factors that affect the demand in international industrial markets differently than in consumer markets are (1) demand in industrial markets is by nature more volatile, (2) stages of industrial and economic development affect demand for industrial products, and (3) the level of technology of products and services makes their sale more appropriate for some countries than others. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Explain the concept of derived demand. Provide an illustration. Answer: Derived demand can be defined as demand dependent on another source. Thus, the demand for Boeing 747s is derived from the worldwide consumer demand for air travel services. Students' examples will vary. Difficulty: 3 Hard Topic: Demand in Global Business-to-Business (B2B) Markets Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) Describe the five stages of Rostow's model of economic development. Answer: The five stages of Rostow's five-stage model of economic development are: Stage 1 (the traditional society). The most important industrial demand will be associated with natural resources extraction—think parts of Africa and the Middle East. Stage 2 (preconditions for takeoff). Manufacturing is beginning. Primary needs will be related to agriculture and infrastructure development, e.g., Vietnam Stage 3 (takeoff). Manufacturing of both semidurable and nondurable consumer goods has begun. Goods demanded relate to equipment and supplies to support manufacturing. Russian and Eastern European countries fit this category. Stage 4 (drive to maturity). Their focus is more on low-cost manufacturing of a variety of consumer and some industrial goods. They buy from all categories of industrial products and services, e.g., South Korea and the Czech Republic. Stage 5 (the age of mass consumption). These are countries where design activities are going on and manufacturing techniques are being developed, and they are mostly service economies, for example Germany and Japan. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-01 The importance of derived demand in industrial markets Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) What are the three trends that spur demand for technologically advanced products? Answer: Three interrelated trends spur demand for technologically advanced products: (1) expanding economic and industrial growth in Asia, particularly China and India; (2) the disintegration of the Soviet empire; and (3) the privatization of government-owned industries worldwide. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-02 How demand is affected by technology levels Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) Discuss how a customer determines the quality of a product. Give a specific example to illustrate your answer. Answer: One important dimension of quality is how well a product meets the specific needs of the buyer. When a product falls short of performance expectations, its poor quality is readily apparent. However, it is less apparent but nonetheless true that a product that exceeds performance expectations can also be of poor quality. A product whose design exceeds the wants of the buyer's intended use generally has a higher price or is more complex, reflecting the extra capacity. Quality for many goods is assessed in terms of fulfilling specific expectations—no more and no less. For example, a product that produces 20,000 units per hour when the buyer needs one that produces only 5,000 units per hour is not a quality product, in that the extra capacity is unnecessary to meet the buyer's use expectations. This price–quality relationship is an important factor in marketing in developing economies, especially those in the first three stages of economic development. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-03 Characteristics of an industrial product Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) What is the ISO 9000 certification? Why would a company need this? Answer: The ISO 9000s are a series of five international industrial standards originally designed by the International Organization for Standardization to meet the need for product quality assurances in purchasing agreements. The original ISO 9000 system was promulgated in 1994. In 2000 the system was streamlined, as it was again in 2006. ISO 9000 concerns the registration and certification of a manufacturer's quality system. It is a certification of the existence of a quality control system that a company has in place to ensure it can meet published quality standards. Difficulty: 3 Hard Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) Companies today must be ready to provide after-sale services in the international marketplace if they are to dominate the global arena. Explain why this is true. Answer: Effective competition abroad requires not only proper product design but effective service, prompt deliveries, and the ability to furnish spare and replacement parts without delay. After-sales services are not only crucial in building strong customer loyalty and the all-important reputation that leads to sales at other companies, but they are also almost always more profitable than the actual sale of the machinery or product. Difficulty: 3 Hard Topic: Requirements of a Globally Dispersed Production System Learning Objective: 14-04 The importance of ISO 9000 certification Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) What is the mode of entry chosen by most consumer services firms to enter a foreign market? What is the reason for this? Answer: The mode of entry for most consumer services firms is licensing, franchising, strategic alliances, or direct. This tendency is so because of the inseparability of the creation and consumption of the services. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-05 The growth of business services and nuances of their marketing Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) What has become the primary vehicle for doing business in many foreign countries? Explain and justify your answer. Answer: Trade shows and trade fairs have rapidly become the primary way for U.S. firms to market their wares in the international arena. Trade shows serve as the most important vehicles for selling products, reaching prospective customers, contacting and evaluating prospective agents and distributors, and marketing in most countries. Firms that have successfully integrated trade show attendance and follow-up personal selling efforts have been consistently shown to be more profitable. Trade shows provide the facilities for a manufacturer to exhibit and demonstrate products to potential users and to view competitors' products. They are an opportunity to create sales and establish relationships with agents, distributors, franchisees, and suppliers that can lead to more nearly permanent distribution channels in foreign markets. In fact, a trade show may be the only way to reach some prospects. Trade show experts estimate that 80 to 85 percent of the people seen on a trade show floor never have a salesperson call on them. Difficulty: 3 Hard Topic: Value of Trade Missions and Trade Fairs Learning Objective: 14-06 The importance of trade shows in promoting industrial goods Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 100) What is relationship marketing, and how does it benefit an international marketer? Answer: The characteristics that yield the uniqueness of industrial products and services lead naturally to relationship marketing. The long-term relationships with customers that define relationship marketing fit the characteristics inherent in industrial products and are a viable strategy for business-to-business marketing. For an industrial marketer to fulfill the needs of a customer, the marketer must understand those needs as they exist today and how they will change as the buyer strives to compete in global markets that call for long-term relationships. Difficulty: 3 Hard Topic: Challenges and Opportunities Created by Globalization Learning Objective: 14-06 The importance of trade shows in promoting industrial goods Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 15 International Marketing Channels 1) The distribution process includes promotion of goods and services by sellers and resellers. 2) The behavior of channel members in the distribution process is the result of the interactions between the cultural environment and the marketing process. 3) In an import-oriented distribution structure, supply often exceeds demand. 4) Traditional distribution channels in developing countries evolved from economies with a strong dependence on imported manufactured goods. 5) In a traditional distribution structure, distribution systems are national rather than local in scope. 6) In the traditional distribution structure in a developing country, independent agencies that provide facilitating functions are nonexistent or underdeveloped. 7) A distinguishing characteristic of the Japanese distribution channel system is that it is controlled by a few small local retailers. 8) The Japanese distribution structure is similar to ones found in the United States or Europe. 9) In the context of the distribution structure in Japan, it has been observed that Japanese consumers favor cheaper prices over personal service. 10) As traditional channel structures are changing, importers and retailers are becoming less involved in new product development. 11) In the context of distribution structures, one of Walmart's strengths is its ability to work with distributors one-on-one. 12) Globally, wholesaling shows a greater diversity in its distribution structure than does retailing. 13) Direct marketing works well in affluent markets as well as in markets with underdeveloped distribution systems. 14) Agent middlemen work on commission and do not take title to the merchandise. 15) Merchant middlemen tend to be more controllable than agent middlemen because they take title to manufacturers' goods. 16) The distribution channel process includes all activities, beginning with the manufacturer and ending with the retailer. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) Domestic middlemen offer many advantages for companies with large international sales volume. 18) An export management company (EMC) functions as a low-cost, independent marketing department with direct responsibility to the parent firm. 19) The WTO in 2003 ruled export management companies to be in violation of international trade rules. 20) The Export Trading Company Act allows producers of similar products to form export trading companies. 21) Trading companies provide the best means for intensive coverage of the market in Japan. 22) Using foreign-country middlemen moves the manufacturer away from the market and the company becomes less involved with problems of language, physical distribution, communications, and financing. 23) Channels of distribution often pose longevity problems as they tend to be small institutions. 24) In the United States, if a middleman is terminated, the company is required to pay 1 percent of the middleman's average annual compensation multiplied by the number of years the middleman served as a final settlement. 25) Selecting a middleman is usually as simple as asking for a recommendation from a company's local manager. 26) Legal advice is not necessary when entering distribution contracts with middlemen. 27) Ideally, a website should be translated into the languages of the target market. 28) An e-vendor in a foreign market can generally ignore culture as an important variable because the commerce is being done via the Internet, which is culturally insensitive. 29) A change of transportation mode can affect a change in packaging and handling, inventory costs, warehousing time and cost, and delivery charges. 30) A physical distribution system involves only the physical movement of goods. 31) The ________ process includes the physical handling and distribution of goods, the passage of ownership (title), and the buying and selling negotiations between producers and middlemen and between middlemen and customers. A) logistics B) marketing C) channel D) distribution E) control 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

32) In a ________ distribution structure, an importer controls a fixed supply of goods and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers. A) domestic B) traditional C) manufacturer-oriented D) service E) customer-oriented 33) Which distribution structure is also known as a traditional distribution structure? A) Export-oriented B) Import-oriented C) Manufacturer-oriented D) Service-oriented E) Customer-oriented 34) In an import-oriented distribution structure, A) the importer–wholesaler traditionally performs most of the marketing functions. B) the relationship between the importer and any middleman is similar to that found in a massmarketing system. C) several independent agencies provide functions such as advertising, marketing research, and financing. D) the idea of a channel as a chain of intermediaries performing specific activities is common. E) the distribution system is national in scope. 35) Distribution in ________ has long been considered the most effective nontariff barrier to that market. A) China B) Japan C) the U.S. D) Western Europe E) Canada 36) What group is considered to be the foundation of the Japanese distribution system? A) consumers B) brokers C) manufacturers D) small retailers E) wholesalers 37) Which feature characterizes the business philosophy of Japanese distribution channels? A) loyalty B) direct sales C) fast delivery D) variety E) price competition 3 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

38) In Japan, under the Large-Scale Retail Store Law, all proposals for new "large" stores were first judged by the A) Transport and Tourism Department. B) Internal Affairs and Business Council. C) Ministry of International Trade and Industry. D) Health and Welfare Committee. E) Local Retailers Union. 39) What makes Walmart's transactions with suppliers highly efficient and lowers its cost of operations? A) clean business reputation B) internal Internet-based system with suppliers C) lack of competitors D) outreach programs to placate small retailers E) ability to influence foreign governments 40) General Motors, ________, and DaimlerChrysler have created a single online site called Covisint for purchasing automotive parts from suppliers. A) Toyota Motor Corporation B) Honda Motor Company C) Ford Motor Company D) Nissan Motor Company E) Hyundai Motors 41) The rate of change in retailing around the world appears to be directly related to the A) literacy rate. B) rate of inflation. C) population growth. D) speed of economic development. E) currency exchange rate. 42) What is often the approach of choice in markets with insufficient or underdeveloped distribution systems? A) direct marketing B) a big wholesale store C) Internet selling D) a discount house E) television advertising 43) What has proven to be an important way to break the trade barrier imposed by the Japanese distribution system? A) direct sales through catalogs B) large wholesale stores C) street corner kiosks D) Internet shopping E) television advertising 4 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

44) Which group is frequently criticized for not representing the best interests of a manufacturer? A) global wholesalers B) trading companies C) consumers D) merchant middlemen E) brokers 45) Which group takes title to manufacturers' goods and assume the trading risks? A) merchant middlemen B) brokers C) buying offices D) export agent E) agent middlemen 46) The channel process includes all activities, beginning with the manufacturer and ending with the A) wholesaler. B) agent middlemen. C) merchant middlemen. D) retailer. E) final consumer. 47) A disadvantage when using home-country middlemen as intermediaries in the distribution process is the A) large financial investment required. B) limited control over the distribution process. C) large managerial investments required. D) limited number of retailers in the foreign country who can be reached. E) large amount of commission. 48) How are global retailers like IKEA, Costco, and Walmart becoming major domestic middlemen for international markets? A) They maintain their core marketing approaches while localizing the array of products, promotions, and other peripheral aspects of their operations. B) They work under the names of the manufacturers and function as low-cost, independent marketing departments with direct responsibility to the parent firms. C) They have minimum investment costs as they do not commit to investing in company personnel. D) They serve as the producer's export department but have a short-term relationship, cover only one or two markets, and operate on a straight commission basis. E) They offer reduction of export costs, demand expansion through promotion, trade barrier reduction, and improvement of trade terms through bilateral bargaining.

49) Home-country middlemen are also known as ________ middlemen, and are located in the producing firm's country. A) area B) local C) merchant D) domestic E) regional 50) What company offers a manufacturer's retail store? A) Toys "R" Us B) Walmart C) Costco D) Benetton E) IKEA 51) A marketing manager of a firm with small international sales volume is looking for a middleman who can take responsibility for promotion of the company's products, credit arrangements, physical handling, and market research. Also, the middleman must be able to provide information on financial, patent, and licensing matters. What type of middleman would be the best choice for this marketing manager if he wants to meet his objectives? A) a manufacturer's export agent B) an export merchant C) a trade representative D) an export management company E) a complementary marketer 52) Which statement is true regarding an export management company (EMC)? A) It acts as a middleman for firms with relatively large international sales volume. B) It operates under its own name while providing services to another firm. C) It does not have direct responsibility to the parent firm. D) It acts as a middleman for firms willing to involve their own personnel in international functions. E) It calls for smaller investment from the parent firm to get into international markets. 53) A major disadvantage of ________ is that they can seldom afford to make the kind of market investment needed to establish deep distribution for products. A) export management companies B) trading companies C) import associations D) global retailers E) complementary marketers

54) ________ offer one of the easiest routes to gain entrance into the complicated Japanese distribution system because they virtually control distribution through all levels of channels in Japan. A) Trade representatives B) Trading companies C) Brokers D) Export management companies E) Complementary marketers 55) A major goal of the Export Trading Company (ETC) Act was to A) allow U.S. companies to bypass tax laws with respect to international trading. B) remove antitrust disincentives to export activities in the U.S.. C) bypass trade barriers in foreign countries. D) earn the highest possible profits in foreign countries. E) combine export shipments within single containers. 56) Which arrangement is best undertaken when a firm wants to keep its seasonal distribution channels functioning throughout the year? A) price skimming B) using the services of a trading company C) establishing a retail store D) using the services of an export management company E) complementary marketing 57) IGP owned a large warehouse in England where it stored and distributed books. It was approached by a greeting card company in the U.S. to distribute those as well. Since the products would go into similar markets and IGP could make a profit on the distribution of the greeting card line, it decided to participate in A) backhauling. B) demand shifting. C) piggybacking. D) shape shifting. E) skimming. 58) Companies with marketing facilities or contacts in different countries with excess distribution capacity or a desire for a broader product line sometimes take on additional lines for international distribution. The formal name for such activities is A) skimming. B) backhauling. C) complementary marketing. D) export marketing. E) demand shifting.

59) A(n) ________ is an individual agent middleman or an agent middleman firm providing a selling service for manufacturers that cover only one or two markets. A) manufacturer's retail store B) export management company C) Webb-Pomerene export association D) global retailer E) manufacturer's export agent 60) A ________ provides a selling service for a manufacturer, has a short-term relationship with the manufacturer, and operates on a straight commission basis. A) manufacturers' retail store B) trading company C) global retailer D) manufacturer's export agent E) complementary marketer 61) The Webb-Pomerene Act of 1918 made it possible for American business firms to join forces in export activities without being subject to the A) Sherman Antitrust Act. B) Federal Communications Act. C) Trade Commission Act. D) Food, Drug, and Cosmetics Act. E) Robinson-Patman Act. 62) A(n) ________ is a middleman in a foreign country or U.S. possession that can obtain a corporate tax exemption on a portion of the earnings generated by the sale or lease of export property. A) Webb-Pomerene export association B) manufacturer's export agent C) export management company D) complementary marketer E) foreign sales corporation 63) ________ are a type of domestic middleman. A) Sole proprietors B) Export management companies C) Foreign distributors D) Lessors E) Joint ventures

64) In the context of the types of domestic middlemen, the WTO in 2003 ruled ________ to be in violation of international trade rules, thus starting a major trade dispute with the European Union. A) foreign sales corporations B) direct marketing partnerships C) trading companies D) export promotion companies E) Webb-Pomerene export associations 65) What is true of foreign sales corporations? A) They are commonly called piggybackers. B) They can only be related to a manufacturing parent and not an independent broker. C) They virtually control distribution through all levels of channels in Japan. D) They accumulate, transport, and distribute goods from many countries. E) They can function as a principal or a commissioned agent. 66) What is one of the six Cs of distribution channel strategy? A) communication B) continuity C) capacity D) commission E) contribution 67) What is one of the key elements in distribution decisions when it comes to choosing channels? A) selection of optimum container sizes B) volume discounts and rebates C) functions performed by middlemen D) local advertising modes E) target market culture 68) What is a critical element associated with using a particular type of middleman? A) knowledge of the culture of the target market B) number of employees C) mode of transportation for moving goods D) influence over the target market E) cash-flow patterns 69) Which mode of distribution in the foreign market will require a company to make the maximum financial investment? A) export management companies B) trading companies C) export associations D) direct sales force E) complementary marketers 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

70) What is one of the highest costs of doing business in China? A) money required for the transportation of goods B) money required for obtaining appropriate permits C) cost of local advertising D) capital required to maintain effective distribution E) cost of customizing products for the Chinese market 71) Which mode of distribution affords the most control over the distribution channels but often at a cost that is not practical? A) complementary marketers B) direct sales force C) export associations D) trading companies E) export management companies 72) Transporting and storing goods, breaking bulk, providing credit, local advertising, sales representation, and negotiations with middlemen most directly relate to which of the six Cs of the channel distribution strategy? A) cost B) control C) coverage D) character E) continuity 73) One way to get around the difficulty of full-market coverage in a country is to A) seek significant penetration in major population areas. B) avoid countries with multiple languages. C) assess countries in terms of market segments, not geographic segments. D) keep marketing efforts to highly developed areas. E) focus on the use of one channel. 74) Most middlemen handle brands in good times when the line is making money but quickly reject such products within a season or a year if they fail to produce during that period. This is a problem associated with which of the six Cs of distribution channel strategy? A) character B) continuity C) control D) cost E) capital requirement 75) One reason channels of distribution often pose longevity problems is that most middlemen A) do not maintain sufficient inventory to serve customers. B) lack product knowledge resulting in low sales volume. C) have little loyalty to their vendors. D) tend to slow down distribution to extract higher commissions. E) do not have sufficient knowledge of the target market. 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

76) What subject area should be on the checklist of criteria for evaluating middlemen servicing a market? A) flexibility B) sensitivity C) cultural empathy D) productivity E) breadth of knowledge 77) Which action should be taken when beginning the search for prospective middlemen? A) short-listing the middlemen B) studying the target market C) evaluating the available financial resources D) designing the sales force required E) understanding the mission of the manufacturing firm 78) Sixty percent of the Japanese population lives in the ________ market area, which essentially functions as one massive city. A) Tokyo–Nagoya–Osaka B) Komaki–Tokoname–Kariya C) Nagoya–Handa–Seto D) Nishio–Okazaki–Inazawa E) Inuyama–Nisshin–Takahama 79) According to experienced exporters, what is the only effective way to select a middleman? A) Conduct a background check on all the distributors available in the target market. B) Issue a request-for-proposal to all distributors in the target market and evaluate their responses. C) Consult other manufacturers of similar products and select the distributor recommended by them. D) Consult trade organizations and select the distributor recommended by them. E) Talk personally to ultimate consumers to find whom they consider to be the best distributors. 80) The closer the company wants to get to the customer in its channel contact, A) the larger the sales force required. B) the more routine the channel-building process becomes. C) the more likely the company will use middlemen. D) the more important it is to consult with trade organizations. E) the more effective use of the Internet will be.

81) Abel Corp. is a wholesaler for Global Electric in the French market. Global Electric discovered that Abel Corp. was diverting some of its goods to the English market. Abel could get a greater profit in the English market because the goods were bought by the firm at a cheaper price in France. What is Abel engaged in? A) black marketing B) parallel importing C) backwashing D) industrial piracy E) smuggling 82) Parallel importing is also known as A) secondary wholesaling. B) black marketing. C) backwashing. D) industrial piracy. E) smuggling. 83) E-commerce is more developed in ________ than the rest of the world, partly because of the lower cost of access to the Internet than found elsewhere. A) China B) Brazil C) Switzerland D) Japan E) the United States 84) When developing a website, what is true about the use of language? A) English should be used, as it is the most universal language. B) It is not necessary to use multiple languages because the customer will bridge the language gap. C) Simple translation of web pages is sufficient to reach foreign markets. D) Language and culture do not impact a website's message in any significant way. E) A country-specific (and language-specific) website may make the difference between success and failure. 85) A website should be seen as A) a sole means of advertising. B) a vehicle for product delivery. C) a substitute for marketing in more than one language. D) a way to get around differences in cultures. E) a means of promotion and a retail store. 86) E-commerce is a form of ________ selling. A) direct B) parallel C) dual D) indirect E) targeted 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

87) A website and the product must be culturally neutral, which can be a problem when it comes to color. For instance, the color red is associated with socialism in A) the United States. B) China. C) Brazil. D) Uruguay. E) Spain. 88) Cargo ships are reducing transit time and are larger and thus able to carry more containers. What is a disadvantage of this for U.S. companies' imports? A) They are taking business away from other forms of transit. B) Some ships are too large to fit into U.S. ports. C) The cost is becoming prohibitive. D) Containers cannot be shipped by rail in Europe. E) They have impeded investment in supersonic passenger jets. 89) One result of the EU's unification is A) the elimination of trade barriers with countries outside the EU. B) the acceptance of universal prices on basic goods. C) the elimination of transportation barriers among member countries. D) an increase in the number of warehouses in member countries. E) elimination of the need for cargo ships for distribution. 90) What happens in an import-oriented distribution structure? How are intermediaries affected? 91) The Japanese distribution structure has four distinguishing features. Discuss these and explain how they impact Japan's market. 92) What are the main features of export management companies? Describe their advantages and disadvantages. 93) How does complementary marketing extend a company's distribution? When is a company most likely to use it? 94) Discuss the Export Trading Company (ETC) Act and its effects on U.S. firms. 95) What is a foreign sales corporation? 96) Discuss the continuity problem associated with a channel of distribution. 97) What are the various techniques that can be used to motivate middlemen? 98) What is secondary wholesaling and when might it be used?

International Marketing, 18e (Cateora) Chapter 15 International Marketing Channels 1) The distribution process includes promotion of goods and services by sellers and resellers. Answer: FALSE Explanation: The distribution process includes the physical handling and distribution of goods, the passage of ownership (title), and the buying and selling negotiations between producers and middlemen and between middlemen and customers. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) The behavior of channel members in the distribution process is the result of the interactions between the cultural environment and the marketing process. Answer: TRUE Explanation: The behavior of channel members is the result of the interactions between the cultural environment and the marketing process. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) In an import-oriented distribution structure, supply often exceeds demand. Answer: FALSE Explanation: In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods, and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers. In the resulting seller's market, market penetration and mass distribution are not necessary because demand exceeds supply, and in most cases, the customer seeks the supply from a limited number of middlemen. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

4) Traditional distribution channels in developing countries evolved from economies with a strong dependence on imported manufactured goods. Answer: TRUE Explanation: Traditional channels in developing countries evolved from economies with a strong dependence on imported manufactured goods. In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods, and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) In a traditional distribution structure, distribution systems are national rather than local in scope. Answer: FALSE Explanation: In the traditional distribution structure, distribution systems are local rather than national in scope. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) In the traditional distribution structure in a developing country, independent agencies that provide facilitating functions are nonexistent or underdeveloped. Answer: TRUE Explanation: In a traditional distribution structure, the importer–wholesaler performs most of the marketing functions. Hence, independent agencies that provide advertising, marketing research, warehousing and storage, transportation, financing, and other facilitating functions found in a developed, mature marketing infrastructure are nonexistent or underdeveloped. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

7) A distinguishing characteristic of the Japanese distribution channel system is that it is controlled by a few small local retailers. Answer: FALSE Explanation: The Japanese system has four distinguishing features: (1) a structure dominated by many small middlemen dealing with many small retailers, (2) channel control by manufacturers, (3) a business philosophy shaped by a unique culture, and (4) laws that protect the foundation of the system—the small retailer. Difficulty: 1 Easy Topic: Retailers in Foreign Markets Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The Japanese distribution structure is similar to ones found in the United States or Europe. Answer: FALSE Explanation: The Japanese distribution structure is different enough from its U.S. or European counterparts that it should be carefully studied by anyone contemplating entry. The Japanese system has four distinguishing features: (1) a structure dominated by many small middlemen dealing with many small retailers, (2) channel control by manufacturers, (3) a business philosophy shaped by a unique culture, and (4) laws that protect the foundation of the system— the small retailer. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

9) In the context of the distribution structure in Japan, it has been observed that Japanese consumers favor cheaper prices over personal service. Answer: FALSE Explanation: The Japanese consumer contributes to the continuation of the traditional nature of the distribution system through frequent buying trips, small purchases, favoring personal service over price, and a proclivity for loyalty to brands perceived to be of high quality. Additionally, Japanese law gives the small retailer enormous advantage over the development of larger stores and competition. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 10) As traditional channel structures are changing, importers and retailers are becoming less involved in new product development. Answer: FALSE Explanation: Importers and retailers also are becoming more involved in new product development, as channel expansion contributes to firm value; for example, the Mexican appliance and electronics giant Grupo Elektra has formed an alliance with Beijing Automobile Works Group to develop and build low-cost cars for Mexico and export markets. Difficulty: 2 Medium Topic: Retailers in Foreign Markets Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

11) In the context of distribution structures, one of Walmart's strengths is its ability to work with distributors one-on-one. Answer: FALSE Explanation: One of Walmart's strengths in distribution is its internal Internet-based system, which makes its transactions with suppliers more efficient and lowers its cost of operations. It is buying ailing retailers around the world with the intention of "saving them" with its distribution technologies. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) Globally, wholesaling shows a greater diversity in its distribution structure than does retailing. Answer: FALSE Explanation: Retailing shows greater diversity in its structure than does wholesaling. Difficulty: 1 Easy Topic: Retailers in Foreign Markets Learning Objective: 15-03 How distribution patterns affect the various aspects of international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 13) Direct marketing works well in affluent markets as well as in markets with underdeveloped distribution systems. Answer: TRUE Explanation: Selling directly to the consumer through mail, by telephone, or door-to-door is often the approach of choice in markets with insufficient or underdeveloped distribution systems. The approach, of course, also works well in the most affluent markets. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-03 How distribution patterns affect the various aspects of international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

14) Agent middlemen work on commission and do not take title to the merchandise. Answer: TRUE Explanation: Agent middlemen work on commission and arrange for sales in the foreign country but do not take title to the merchandise. By using agents, the manufacturer assumes trading risk but maintains the right to establish policy guidelines and prices and to require its agents to provide sales records and customer information. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) Merchant middlemen tend to be more controllable than agent middlemen because they take title to manufacturers' goods. Answer: FALSE Explanation: Merchant middlemen actually take title to manufacturers' goods and assume the trading risks, so they tend to be less controllable than agent middlemen. Because merchant middlemen primarily are concerned with sales and profit margins on their merchandise, they are frequently criticized for not representing the best interests of a manufacturer. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 16) The distribution channel process includes all activities, beginning with the manufacturer and ending with the retailer. Answer: FALSE Explanation: The distribution channel process includes all activities, beginning with the manufacturer and ending with the final consumer. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

17) Domestic middlemen offer many advantages for companies with large international sales volume. Answer: FALSE Explanation: Domestic middlemen offer many advantages for companies with small international sales volume, those inexperienced with foreign markets, those not wanting to become immediately involved with the complexities of international marketing, and those wanting to sell abroad with minimal financial and management commitment. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) An export management company (EMC) functions as a low-cost, independent marketing department with direct responsibility to the parent firm. Answer: TRUE Explanation: Working under the names of the manufacturers, the EMC functions as a low-cost, independent marketing department with direct responsibility to the parent firm. The working relationship is so close that customers are often unaware they are not dealing directly with the export department of the company. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 19) The WTO in 2003 ruled export management companies to be in violation of international trade rules. Answer: FALSE Explanation: The WTO in 2003 ruled foreign sales corporations to be in violation of international trade rules, thus starting a major trade dispute with the European Union that still simmers and occasionally boils over. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 7 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

20) The Export Trading Company Act allows producers of similar products to form export trading companies. Answer: TRUE Explanation: The Export Trading Company (ETC) Act allows producers of similar products to form export trading companies. A major goal of the ETC Act was to increase U.S. exports by encouraging more efficient export trade services to producers and suppliers to improve the availability of trade finance and to remove antitrust disincentives to export activities. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) Trading companies provide the best means for intensive coverage of the market in Japan. Answer: TRUE Explanation: Because trading companies may control many of the distributors and maintain broad distribution channels, they provide the best means for intensive coverage of the market. For companies seeking entrance into the complicated Japanese distribution system, the Japanese trading company offers one of the easiest routes to success. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 22) Using foreign-country middlemen moves the manufacturer away from the market and the company becomes less involved with problems of language, physical distribution, communications, and financing. Answer: FALSE Explanation: Using foreign-country middlemen moves the manufacturer closer to the market and involves the company more closely with problems of language, physical distribution, communications, and financing. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

23) Channels of distribution often pose longevity problems as they tend to be small institutions. Answer: TRUE Explanation: Channels of distribution often pose longevity problems. Most agent middlemen firms tend to be small institutions. When one individual retires or moves out of a line of business, the company may find it has lost its distribution in that area. Wholesalers and especially retailers are not noted for their continuity in business either. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) In the United States, if a middleman is terminated, the company is required to pay 1 percent of the middleman's average annual compensation multiplied by the number of years the middleman served as a final settlement. Answer: FALSE Explanation: In the United States, termination is usually a simple action regardless of the type of middlemen; they are simply dismissed. However, in other parts of the world, the middleman often has some legal protection that makes termination difficult. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 25) Selecting a middleman is usually as simple as asking for a recommendation from a company's local manager. Answer: FALSE Explanation: The screening and selection process for a middleman should include an exploratory letter or e-mail including product information and distributor requirements in the native language sent to each prospective middleman; a follow-up with the best respondents for specific information concerning lines handled, territory covered, size of firm, number of salespeople, and other background information; check of credit and references from other clients and customers of the prospective middleman; and, if possible, a personal check of the most promising firms. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

26) Legal advice is not necessary when entering distribution contracts with middlemen. Answer: FALSE Explanation: Competent legal advice is vital when entering distribution contracts with middlemen. But as many experienced international marketers know, the best rule is to avoid the need to terminate distributors by screening all prospective middlemen carefully. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) Ideally, a website should be translated into the languages of the target market. Answer: TRUE Explanation: Ideally, a website should be translated into the languages of the target markets. This translation may not be financially feasible for some companies, but at least the most important pages of the site should be translated. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 28) An e-vendor in a foreign market can generally ignore culture as an important variable because the commerce is being done via the Internet, which is culturally insensitive. Answer: FALSE Explanation: The website and the product must be culturally neutral or adapted to fit the uniqueness of a market, because culture does matter. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation

29) A change of transportation mode can affect a change in packaging and handling, inventory costs, warehousing time and cost, and delivery charges. Answer: TRUE Explanation: A change of transportation mode can affect a change in packaging and handling, inventory costs, warehousing time and cost, and delivery charges. Since container ships move more than 95% of the world's manufactured goods, changes in cargo capacity can have a dramatic effect on pricing flow of goods at the retail level. Difficulty: 1 Easy Topic: The Importance of Production and Logistics Decisions Learning Objective: 15-07 The interdependence of physical distribution activities. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) A physical distribution system involves only the physical movement of goods. Answer: FALSE Explanation: A physical distribution system involves more than the physical movement of goods. It includes the location of plants and warehousing (storage), transportation mode, inventory quantities, and packing. Difficulty: 1 Easy Topic: The Importance of Production and Logistics Decisions Learning Objective: 15-07 The interdependence of physical distribution activities. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) The ________ process includes the physical handling and distribution of goods, the passage of ownership (title), and the buying and selling negotiations between producers and middlemen and between middlemen and customers. A) logistics B) marketing C) channel D) distribution E) control Answer: D Explanation: The distribution process includes the physical handling and distribution of goods, the passage of ownership (title), and—most important from the standpoint of marketing strategy—the buying and selling negotiations between producers and middlemen and between middlemen and customers. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) In a ________ distribution structure, an importer controls a fixed supply of goods and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers. A) domestic B) traditional C) manufacturer-oriented D) service E) customer-oriented Answer: B Explanation: In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods, and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) Which distribution structure is also known as a traditional distribution structure? A) Export-oriented B) Import-oriented C) Manufacturer-oriented D) Service-oriented E) Customer-oriented Answer: B Explanation: An import-oriented distribution structures is also known as a traditional distribution structure. In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods, and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) In an import-oriented distribution structure, A) the importer–wholesaler traditionally performs most of the marketing functions. B) the relationship between the importer and any middleman is similar to that found in a massmarketing system. C) several independent agencies provide functions such as advertising, marketing research, and financing. D) the idea of a channel as a chain of intermediaries performing specific activities is common. E) the distribution system is national in scope. Answer: A Explanation: An import-oriented distribution structure is considered as a traditional distribution structure. Since the importer–wholesaler traditionally performs most marketing functions, independent agencies that provide advertising, marketing research, warehousing, and storage are nonexistent or underdeveloped. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) Distribution in ________ has long been considered the most effective nontariff barrier to that market. A) China B) Japan C) the U.S. D) Western Europe E) Canada Answer: B Explanation: Distribution in Japan has historically been considered the most effective nontariff barrier to the Japanese market. However, the market is becoming more open as many traditional modes of operation are eroding in the face of competition from foreign marketers and as Japanese consumers continue to focus on lower prices. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) What group is considered to be the foundation of the Japanese distribution system? A) consumers B) brokers C) manufacturers D) small retailers E) wholesalers Answer: D Explanation: The Japanese system has four distinguishing features: (1) a structure dominated by many small middlemen dealing with many small retailers, (2) channel control by manufacturers, (3) a business philosophy shaped by a unique culture, and (4) laws that protect the foundation of the system—the small retailer. Difficulty: 1 Easy Topic: Retailers in Foreign Markets Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) Which feature characterizes the business philosophy of Japanese distribution channels? A) loyalty B) direct sales C) fast delivery D) variety E) price competition Answer: A Explanation: Coupled with the close economic ties and dependency created by trade customs and the long structure of Japanese distribution channels is a relationship-oriented business philosophy that emphasizes loyalty, harmony, and friendship. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) In Japan, under the Large-Scale Retail Store Law, all proposals for new "large" stores were first judged by the A) Transport and Tourism Department. B) Internal Affairs and Business Council. C) Ministry of International Trade and Industry. D) Health and Welfare Committee. E) Local Retailers Union. Answer: C Explanation: In Japan, under the Large-Scale Retail Store Law, all proposals for new "large" stores were first judged by the Ministry of International Trade and Industry. Then, if all local retailers unanimously agreed to the plan, it was swiftly approved. However, without approval at the prefecture level, the plan was returned for clarification and modification, a process that could take several years (10 years was not unheard of) for approval. Difficulty: 1 Easy Topic: Retailers in Foreign Markets Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) What makes Walmart's transactions with suppliers highly efficient and lowers its cost of operations? A) clean business reputation B) internal Internet-based system with suppliers C) lack of competitors D) outreach programs to placate small retailers E) ability to influence foreign governments Answer: B Explanation: One of Walmart's strengths is its internal Internet-based system, which makes its transactions with suppliers highly efficient and lowers its cost of operations. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) General Motors, ________, and DaimlerChrysler have created a single online site called Covisint for purchasing automotive parts from suppliers. A) Toyota Motor Corporation B) Honda Motor Company C) Ford Motor Company D) Nissan Motor Company E) Hyundai Motors Answer: C Explanation: General Motors, Ford Motor Company, and DaimlerChrysler have created a single online site called Covisint (www.covisint.com) for purchasing automotive parts from suppliers, which is expected to save the companies millions of dollars. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) The rate of change in retailing around the world appears to be directly related to the A) literacy rate. B) rate of inflation. C) population growth. D) speed of economic development. E) currency exchange rate. Answer: D Explanation: Retailing around the world has been in a state of active ferment for several years and the rate of change appears to be directly related to the stage and speed of economic development, and even the least developed countries are experiencing dramatic changes. Supermarkets of one variety or another are blossoming in developed and underdeveloped countries alike. Difficulty: 2 Medium Topic: Retailers in Foreign Markets Learning Objective: 15-03 How distribution patterns affect the various aspects of international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) What is often the approach of choice in markets with insufficient or underdeveloped distribution systems? A) direct marketing B) a big wholesale store C) Internet selling D) a discount house E) television advertising Answer: A Explanation: Selling directly to the consumer through mail, by telephone, or door-to-door is often the approach of choice in markets with insufficient or underdeveloped distribution systems. The approach, of course, also works well in the most affluent markets. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-03 How distribution patterns affect the various aspects of international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) What has proven to be an important way to break the trade barrier imposed by the Japanese distribution system? A) direct sales through catalogs B) large wholesale stores C) street corner kiosks D) Internet shopping E) television advertising Answer: A Explanation: Direct sales through catalogs have proved to be a successful way to enter foreign markets. In Japan, it has been an important way to break the trade barrier imposed by the Japanese distribution system. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-03 How distribution patterns affect the various aspects of international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) Which group is frequently criticized for not representing the best interests of a manufacturer? A) global wholesalers B) trading companies C) consumers D) merchant middlemen E) brokers Answer: D Explanation: Because merchant middlemen primarily are concerned with sales and profit margins on their merchandise, they are frequently criticized for not representing the best interests of a manufacturer. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) Which group takes title to manufacturers' goods and assume the trading risks? A) merchant middlemen B) brokers C) buying offices D) export agent E) agent middlemen Answer: A Explanation: Merchant middlemen actually take title to manufacturers' goods and assume the trading risks. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) The channel process includes all activities, beginning with the manufacturer and ending with the A) wholesaler. B) agent middlemen. C) merchant middlemen. D) retailer. E) final consumer. Answer: E Explanation: The channel process includes all activities, beginning with the manufacturer and ending with the final consumer. This inclusion means the seller must exert influence over two sets of channels: one in the home country and one in the foreign-market country. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) A disadvantage when using home-country middlemen as intermediaries in the distribution process is the A) large financial investment required. B) limited control over the distribution process. C) large managerial investments required. D) limited number of retailers in the foreign country who can be reached. E) large amount of commission. Answer: B Explanation: A major trade-off when using home-country middlemen is limited control over the entire process. Domestic middlemen are most likely to be used when the marketer is uncertain or desires to minimize financial and management investment. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) How are global retailers like IKEA, Costco, and Walmart becoming major domestic middlemen for international markets? A) They maintain their core marketing approaches while localizing the array of products, promotions, and other peripheral aspects of their operations. B) They work under the names of the manufacturers and function as low-cost, independent marketing departments with direct responsibility to the parent firms. C) They have minimum investment costs as they do not commit to investing in company personnel. D) They serve as the producer's export department but have a short-term relationship, cover only one or two markets, and operate on a straight commission basis. E) They offer reduction of export costs, demand expansion through promotion, trade barrier reduction, and improvement of trade terms through bilateral bargaining. Answer: A Explanation: As global retailers like IKEA, Costco, and Walmart expand their global coverage, they are becoming major domestic middlemen for international markets. Their successes seem to result from maintaining their core marketing approaches while localizing the array of products, promotions, and other peripheral aspects of their operations. Difficulty: 2 Medium Topic: Retailers in Foreign Markets Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) Home-country middlemen are also known as ________ middlemen, and are located in the producing firm's country. A) area B) local C) merchant D) domestic E) regional Answer: D Explanation: Home-country middlemen are also known as domestic middlemen. They are located in the producing firm's country and provide marketing services from a domestic base. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) What company offers a manufacturer's retail store? A) Toys "R" Us B) Walmart C) Costco D) Benetton E) IKEA Answer: D Explanation: An important channel of distribution for a large number of manufacturers is the owned, or perhaps franchised, retail store. Disney, Benetton, and many of the classic Italian luxury goods makers take this approach. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) A marketing manager of a firm with small international sales volume is looking for a middleman who can take responsibility for promotion of the company's products, credit arrangements, physical handling, and market research. Also, the middleman must be able to provide information on financial, patent, and licensing matters. What type of middleman would be the best choice for this marketing manager if he wants to meet his objectives? A) a manufacturer's export agent B) an export merchant C) a trade representative D) an export management company E) a complementary marketer Answer: D Explanation: An export management company functions as a low-cost, independent marketing department with direct responsibility to the parent firm. The export management company may take full or partial responsibility for promotion of the goods, credit arrangements, physical handling, market research, and information on financial, patent, and licensing matters. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 52) Which statement is true regarding an export management company (EMC)? A) It acts as a middleman for firms with relatively large international sales volume. B) It operates under its own name while providing services to another firm. C) It does not have direct responsibility to the parent firm. D) It acts as a middleman for firms willing to involve their own personnel in international functions. E) It calls for smaller investment from the parent firm to get into international markets. Answer: E Explanation: The export management company (EMC) is an important middleman for firms with relatively small international volume or those unwilling to involve their own personnel in the international function. Two of the chief advantages of EMCs are minimum investment on the part of the company to get into international markets, and no commitment of company personnel or major expenditure of managerial effort. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) A major disadvantage of ________ is that they can seldom afford to make the kind of market investment needed to establish deep distribution for products. A) export management companies B) trading companies C) import associations D) global retailers E) complementary marketers Answer: A Explanation: A major disadvantage of export management companies is that they seldom can afford to make the kind of market investment needed to establish deep distribution for products because they must have immediate sales payout to survive. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) ________ offer one of the easiest routes to gain entrance into the complicated Japanese distribution system because they virtually control distribution through all levels of channels in Japan. A) Trade representatives B) Trading companies C) Brokers D) Export management companies E) Complementary marketers Answer: B Explanation: For companies seeking entrance into the complicated Japanese distribution system, the Japanese trading company offers one of the easiest routes to success. The omnipresent trading companies virtually control distribution through all levels of channels in Japan. Because trading companies may control many of the distributors and maintain broad distribution channels, they provide the best means for intensive coverage of the market. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) A major goal of the Export Trading Company (ETC) Act was to A) allow U.S. companies to bypass tax laws with respect to international trading. B) remove antitrust disincentives to export activities in the U.S.. C) bypass trade barriers in foreign countries. D) earn the highest possible profits in foreign countries. E) combine export shipments within single containers. Answer: B Explanation: The Export Trading Company (ETC) Act allows producers of similar products to form export trading companies. A major goal of the ETC Act was to increase U.S. exports by encouraging more efficient export trade services to producers and suppliers to improve the availability of trade finance and to remove antitrust disincentives to export activities. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) Which arrangement is best undertaken when a firm wants to keep its seasonal distribution channels functioning throughout the year? A) price skimming B) using the services of a trading company C) establishing a retail store D) using the services of an export management company E) complementary marketing Answer: E Explanation: Most complementary marketing (piggybacking) arrangements are undertaken when a firm wants to fill out its product line or keep its seasonal distribution channels functioning throughout the year. Companies may work either on an agency or merchant basis, but the greatest volume of piggyback business is handled on an ownership (merchant) purchaseand-resale arrangement. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) IGP owned a large warehouse in England where it stored and distributed books. It was approached by a greeting card company in the U.S. to distribute those as well. Since the products would go into similar markets and IGP could make a profit on the distribution of the greeting card line, it decided to participate in A) backhauling. B) demand shifting. C) piggybacking. D) shape shifting. E) skimming. Answer: C Explanation: The selection process for new products for piggyback distribution determines whether (1) the product relates to the product line and contributes to it, (2) the product fits the sales and distribution channel presently employed, (3) the margin is adequate to make the undertaking worthwhile, and (4) the product will find market acceptance and profitable volume. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 58) Companies with marketing facilities or contacts in different countries with excess distribution capacity or a desire for a broader product line sometimes take on additional lines for international distribution. The formal name for such activities is A) skimming. B) backhauling. C) complementary marketing. D) export marketing. E) demand shifting. Answer: C Explanation: Companies with marketing facilities or contacts in different countries with excess distribution capacity or a desire for a broader product line sometimes take on additional lines for international distribution; though the formal name for such activities is complementary marketing, it is commonly called piggybacking. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) A(n) ________ is an individual agent middleman or an agent middleman firm providing a selling service for manufacturers that cover only one or two markets. A) manufacturer's retail store B) export management company C) Webb-Pomerene export association D) global retailer E) manufacturer's export agent Answer: E Explanation: The manufacturer's export agent (MEA) is an individual agent middleman or an agent middleman firm providing a selling service for manufacturers. Unlike the EMC, the MEA does not serve as the producer's export department but has a short-term relationship, covers only one or two markets, and operates on a straight commission basis. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) A ________ provides a selling service for a manufacturer, has a short-term relationship with the manufacturer, and operates on a straight commission basis. A) manufacturers' retail store B) trading company C) global retailer D) manufacturer's export agent E) complementary marketer Answer: D Explanation: The manufacturer's export agent (MEA) is an individual agent middleman or an agent middleman firm providing a selling service for manufacturers. Unlike the EMC, the MEA does not serve as the producer's export department but has a short-term relationship, covers only one or two markets, and operates on a straight commission basis. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) The Webb-Pomerene Act of 1918 made it possible for American business firms to join forces in export activities without being subject to the A) Sherman Antitrust Act. B) Federal Communications Act. C) Trade Commission Act. D) Food, Drug, and Cosmetics Act. E) Robinson-Patman Act. Answer: A Explanation: The Webb-Pomerene Act of 1918 allowed American business firms to join forces in export activities without being subject to the Sherman Antitrust Act. Webb-Pomerene export associations (WPEAs) are another major form of group exporting. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) A(n) ________ is a middleman in a foreign country or U.S. possession that can obtain a corporate tax exemption on a portion of the earnings generated by the sale or lease of export property. A) Webb-Pomerene export association B) manufacturer's export agent C) export management company D) complementary marketer E) foreign sales corporation Answer: E Explanation: A foreign sales corporation (FSC) is a sales corporation set up in a foreign country or U.S. possession that can obtain a corporate tax exemption on a portion of the earnings generated by the sale or lease of export property. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

63) ________ are a type of domestic middleman. A) Sole proprietors B) Export management companies C) Foreign distributors D) Lessors E) Joint ventures Answer: B Explanation: Export management companies (EMCs) are a type of domestic middlemen. They are an important middleman for firms with relatively small international volume or those unwilling to involve their own personnel in the international function. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) In the context of the types of domestic middlemen, the WTO in 2003 ruled ________ to be in violation of international trade rules, thus starting a major trade dispute with the European Union. A) foreign sales corporations B) direct marketing partnerships C) trading companies D) export promotion companies E) Webb-Pomerene export associations Answer: A Explanation: The WTO in 2003 ruled FSCs to be in violation of international trade rules, thus starting a major trade dispute with the European Union that still simmers and occasionally boils over. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) What is true of foreign sales corporations? A) They are commonly called piggybackers. B) They can only be related to a manufacturing parent and not an independent broker. C) They virtually control distribution through all levels of channels in Japan. D) They accumulate, transport, and distribute goods from many countries. E) They can function as a principal or a commissioned agent. Answer: E Explanation: A foreign sales corporation can function as a principal, buying and selling for its own account, or a commissioned agent. It can be related to a manufacturing parent or can be an independent merchant or broker. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) What is one of the six Cs of distribution channel strategy? A) communication B) continuity C) capacity D) commission E) contribution Answer: B Explanation: The six Cs of distribution channel strategy are cost, capital, control, coverage, character, and continuity. In forging the overall channel-of-distribution strategy, each of the six Cs must be considered in building an economical, effective distribution organization within the long-range channel policies of the company. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) What is one of the key elements in distribution decisions when it comes to choosing channels? A) selection of optimum container sizes B) volume discounts and rebates C) functions performed by middlemen D) local advertising modes E) target market culture Answer: C Explanation: Key elements in distribution decisions include the functions performed by middlemen (and the effectiveness with which each is performed), the cost of their services, their availability, and the extent of control that the manufacturer can exert over middlemen activities. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) What is a critical element associated with using a particular type of middleman? A) knowledge of the culture of the target market B) number of employees C) mode of transportation for moving goods D) influence over the target market E) cash-flow patterns Answer: E Explanation: Capital requirement and cash-flow patterns are critical elements associated with using a particular type of middleman. Use of distributors or dealers may lessen the capital investment, but manufacturers often have to provide initial inventories on consignment, loans, floor plans, or other arrangements. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) Which mode of distribution in the foreign market will require a company to make the maximum financial investment? A) export management companies B) trading companies C) export associations D) direct sales force E) complementary marketers Answer: D Explanation: Maximum investment is usually required when a company establishes its own internal channels, that is, its own sales force. Use of distributors or dealers may lessen the capital investment, but manufacturers often have to provide initial inventories on consignment, loans, floor plans, or other arrangements. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) What is one of the highest costs of doing business in China? A) money required for the transportation of goods B) money required for obtaining appropriate permits C) cost of local advertising D) capital required to maintain effective distribution E) cost of customizing products for the Chinese market Answer: D Explanation: One of the highest costs of doing business in China is the capital required to maintain effective distribution. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) Which mode of distribution affords the most control over the distribution channels but often at a cost that is not practical? A) complementary marketers B) direct sales force C) export associations D) trading companies E) export management companies Answer: B Explanation: The more involved a company is with the distribution, the more control it exerts. A company's own sales force affords the most control but often at a cost that is not practical. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) Transporting and storing goods, breaking bulk, providing credit, local advertising, sales representation, and negotiations with middlemen most directly relate to which of the six Cs of the channel distribution strategy? A) cost B) control C) coverage D) character E) continuity Answer: A Explanation: The costs of middlemen include transporting and storing the goods, breaking bulk, providing credit, local advertising, sales representation, and negotiations. In forging the overall channel-of-distribution strategy, each of the six Cs must be considered in building an economical, effective distribution organization within the long-range channel policies of the company. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) One way to get around the difficulty of full-market coverage in a country is to A) seek significant penetration in major population areas. B) avoid countries with multiple languages. C) assess countries in terms of market segments, not geographic segments. D) keep marketing efforts to highly developed areas. E) focus on the use of one channel. Answer: A Explanation: Many companies do not attempt full-market coverage but seek significant penetration in major population centers. To achieve coverage, a company may have to use many different channels—its own sales force in one country, manufacturers' agents in another, and merchant wholesalers in still another. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) Most middlemen handle brands in good times when the line is making money but quickly reject such products within a season or a year if they fail to produce during that period. This is a problem associated with which of the six Cs of distribution channel strategy? A) character B) continuity C) control D) cost E) capital requirement Answer: B Explanation: Channels of distribution often pose longevity problems. Wholesalers and retailers are not noted for their continuity in business. Most middlemen have little loyalty to their vendors. They handle brands in good times when the line is making money but quickly reject such products within a season or a year if they fail to produce during that period. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) One reason channels of distribution often pose longevity problems is that most middlemen A) do not maintain sufficient inventory to serve customers. B) lack product knowledge resulting in low sales volume. C) have little loyalty to their vendors. D) tend to slow down distribution to extract higher commissions. E) do not have sufficient knowledge of the target market. Answer: C Explanation: Channels of distribution often pose longevity problems. Most agent middlemen firms tend to be small institutions. When one individual retires or moves out of a line of business, the company may find it has lost its distribution in that area. Most middlemen have little loyalty to their vendors. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) What subject area should be on the checklist of criteria for evaluating middlemen servicing a market? A) flexibility B) sensitivity C) cultural empathy D) productivity E) breadth of knowledge Answer: D Explanation: The checklist of criteria differs according to the type of middlemen being used and the nature of their relationship with the company. Basically, such lists are built around four subject areas: productivity or volume, financial strength, managerial stability and capability, and the nature and reputation of the business. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

77) Which action should be taken when beginning the search for prospective middlemen? A) short-listing the middlemen B) studying the target market C) evaluating the available financial resources D) designing the sales force required E) understanding the mission of the manufacturing firm Answer: B Explanation: The search for prospective middlemen should begin with study of the market and determination of criteria for evaluating middlemen servicing that market. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) Sixty percent of the Japanese population lives in the ________ market area, which essentially functions as one massive city. A) Tokyo–Nagoya–Osaka B) Komaki–Tokoname–Kariya C) Nagoya–Handa–Seto D) Nishio–Okazaki–Inazawa E) Inuyama–Nisshin–Takahama Answer: A Explanation: Many companies do not attempt full-market coverage but seek significant penetration in major population centers. In some countries, two or three cities constitute the majority of the national buying power. For instance, 60 percent of the Japanese population lives in the Tokyo–Nagoya–Osaka market area, which essentially functions as one massive city. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) According to experienced exporters, what is the only effective way to select a middleman? A) Conduct a background check on all the distributors available in the target market. B) Issue a request-for-proposal to all distributors in the target market and evaluate their responses. C) Consult other manufacturers of similar products and select the distributor recommended by them. D) Consult trade organizations and select the distributor recommended by them. E) Talk personally to ultimate consumers to find whom they consider to be the best distributors. Answer: E Explanation: Experienced exporters suggest that the only way to select a middleman is to go personally to the country and talk to ultimate users of your product to find whom they consider to be the best distributors. Visit each possible middleman once before selecting the one to represent you; look for one with a key person who will take the new product to his or her heart and make it a personal objective to make the sale of that line a success. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) The closer the company wants to get to the customer in its channel contact, A) the larger the sales force required. B) the more routine the channel-building process becomes. C) the more likely the company will use middlemen. D) the more important it is to consult with trade organizations. E) the more effective use of the Internet will be. Answer: A Explanation: In international marketing, the channel-building process is hardly routine. The closer the company wants to get to the consumer in its channel contact, the larger the sales force required. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) Abel Corp. is a wholesaler for Global Electric in the French market. Global Electric discovered that Abel Corp. was diverting some of its goods to the English market. Abel could get a greater profit in the English market because the goods were bought by the firm at a cheaper price in France. What is Abel engaged in? A) black marketing B) parallel importing C) backwashing D) industrial piracy E) smuggling Answer: B Explanation: A company's goods intended for one country are sometimes diverted through distributors to another country, where they compete with existing retail or wholesale organizations. This is known as parallel importing or secondary wholesaling. Difficulty: 2 Medium Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 82) Parallel importing is also known as A) secondary wholesaling. B) black marketing. C) backwashing. D) industrial piracy. E) smuggling. Answer: A Explanation: A company's goods intended for one country are sometimes diverted through distributors to another country, where they compete with existing retail or wholesale organizations. This is known as parallel importing or secondary wholesaling. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) E-commerce is more developed in ________ than the rest of the world, partly because of the lower cost of access to the Internet than found elsewhere. A) China B) Brazil C) Switzerland D) Japan E) the United States Answer: E Explanation: E-commerce is more developed in the United States than the rest of the world, partly because of the vast number of people who own personal computers and partly because of the much lower cost of access to the Internet than found elsewhere. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) When developing a website, what is true about the use of language? A) English should be used, as it is the most universal language. B) It is not necessary to use multiple languages because the customer will bridge the language gap. C) Simple translation of web pages is sufficient to reach foreign markets. D) Language and culture do not impact a website's message in any significant way. E) A country-specific (and language-specific) website may make the difference between success and failure. Answer: E Explanation: Simple translation of important pages is only a stopgap measure. If companies are making a long-term commitment to sales in another country, web pages should be designed for that market. It is the company's responsibility to bridge the language and cultural gap; the customer will not bother—he or she will simply go to a site that speaks his or her language. As competition increases, a country-specific website may make the difference between success and failure. Difficulty: 2 Medium Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) A website should be seen as A) a sole means of advertising. B) a vehicle for product delivery. C) a substitute for marketing in more than one language. D) a way to get around differences in cultures. E) a means of promotion and a retail store. Answer: E Explanation: Although the Web is a means of promotion, if you are engaging in e-commerce, you also need to advertise your presence and the products or services offered. A website should be seen as a retail store, with the only difference between it and a physical store being that the customer arrives over the Internet instead of on foot. Difficulty: 2 Medium Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) E-commerce is a form of ________ selling. A) direct B) parallel C) dual D) indirect E) targeted Answer: A Explanation: Technically, e-commerce is a form of direct selling; however, because of its newness and the unique issues associated with this form of distribution, it is important to differentiate it from other types of direct marketing. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) A website and the product must be culturally neutral, which can be a problem when it comes to color. For instance, the color red is associated with socialism in A) the United States. B) China. C) Brazil. D) Uruguay. E) Spain. Answer: E Explanation: The different cultural reactions to color can be a potential problem for websites designed for global markets. While red may be highly regarded in China or associated with love in the United States, in Spain it is associated with socialism. Difficulty: 1 Easy Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) Cargo ships are reducing transit time and are larger and thus able to carry more containers. What is a disadvantage of this for U.S. companies' imports? A) They are taking business away from other forms of transit. B) Some ships are too large to fit into U.S. ports. C) The cost is becoming prohibitive. D) Containers cannot be shipped by rail in Europe. E) They have impeded investment in supersonic passenger jets. Answer: B Explanation: Cargo ships are now reducing transit time by taking an Arctic route. Innovations in container ships include ships too large to fit through the Panama Canal and into most U.S. ports. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) One result of the EU's unification is A) the elimination of trade barriers with countries outside the EU. B) the acceptance of universal prices on basic goods. C) the elimination of transportation barriers among member countries. D) an increase in the number of warehouses in member countries. E) elimination of the need for cargo ships for distribution. Answer: C Explanation: One of the major benefits of the European Union's unification is the elimination of transportation barriers among member countries. Instead of approaching Europe on a country-bycountry basis, a centralized logistics network can be developed. The trend in Europe is toward pan-European distribution centers. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) What happens in an import-oriented distribution structure? How are intermediaries affected? Answer: In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods, and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers. In the resulting seller's market, market penetration and mass distribution are not necessary because demand exceeds supply, and in most cases, the customer seeks the supply from a limited number of middlemen. This configuration affects the development of intermediaries and their functions. Distribution systems are local rather than national in scope, and the relationship between the importer and any middleman in the marketplace is considerably different from that found in a mass-marketing system. The idea of a channel as a chain of intermediaries performing specific activities and each selling to a smaller unit beneath it until the chain reaches the ultimate consumer is not common in an import-oriented system. Because the importer–wholesaler traditionally performs most marketing functions, independent agencies that provide advertising, marketing research, warehousing and storage, transportation, financing, and other facilitating functions found in a developed, mature marketing infrastructure are nonexistent or underdeveloped. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-01 The variety of distribution channels and how they affect cost and efficiency in marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) The Japanese distribution structure has four distinguishing features. Discuss these and explain how they impact Japan's market. Answer: Distribution in Japan has long been considered a most effective nontariff barrier to the Japanese market. The Japanese system has four distinguishing features: a structure dominated by many small middlemen dealing with many small retailers, channel control by manufacturers, a business philosophy shaped by a unique culture, and laws that protect the foundation of the system—the small retailer. The density of middlemen, retailers, and wholesalers in the Japanese market is unparalleled in any Western industrialized country. The traditional Japanese structure serves consumers who make small, frequent purchases at small, conveniently located stores. An equal density of wholesalers supports the high density of small stores with small inventories. It is not unusual for consumer goods to go through three or four intermediaries before reaching the consumer— producer to primary, secondary, regional, and local wholesaler, and finally to retailer to consumer. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-02 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

92) What are the main features of export management companies? Describe their advantages and disadvantages. Answer: The export management company (EMC) is an important middleman for firms with relatively small international volume or those unwilling to involve their own personnel in the international function. Typically, the EMC becomes an integral part of the marketing operations of its client companies. Working under the names of the manufacturers, the EMC functions as a low-cost, independent marketing department with direct responsibility to the parent firm. The working relationship is so close that customers are often unaware they are not dealing directly with the export department of the company. The export management company may take full or partial responsibility for promotion of the goods, credit arrangements, physical handling, market research, and information on financial, patent, and licensing matters. An EMC's specialization in a given field often enables it to offer a level of service that could not be attained by the manufacturer without years of groundwork. Traditionally, the EMC works on commission, though an increasing number are buying products on their own account. Two of the chief advantages of EMCs are minimum investment on the part of the company to get into international markets, and no commitment of company personnel or major expenditure of managerial effort. The result, in effect, is an extension of the market for the firm with negligible financial or personnel commitments. The major disadvantage is that EMCs seldom can afford to make the kind of market investment needed to establish deep distribution for products because they must have immediate sales payout to survive. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) How does complementary marketing extend a company's distribution? When is a company most likely to use it? Answer: Companies with marketing facilities or contacts in different countries with excess marketing capacity or a desire for a broader product line sometimes take on additional lines for international distribution; though the formal name for such activities is complementary marketing, it is commonly called piggybacking. Most piggyback arrangements are undertaken when a firm wants to fill out its product line or keep its seasonal distribution channels functioning throughout the year. Companies may work either on an agency or merchant basis, but the greatest volume of piggyback business is handled on an ownership (merchant) purchase-and-resale arrangement. The selection process for new products for piggyback distribution determines whether (1) the product relates to the product line and contributes to it, (2) the product fits the sales and distribution channel presently employed, (3) the margin is adequate to make the undertaking worthwhile, and (4) the product will find market acceptance and profitable volume. If these requirements are met, piggybacking can be a logical way of increasing volume and profit for both the carrier and the piggybacker. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) Discuss the Export Trading Company (ETC) Act and its effects on U.S. firms. Answer: The Export Trading Company (ETC) Act allows producers of similar products to form export trading companies. A major goal of the ETC Act was to increase U.S. exports by encouraging more efficient export trade services to producers and suppliers to improve the availability of trade finance and to remove antitrust disincentives to export activities. By providing U.S. businesses with an opportunity to obtain antitrust preclearance for specified export activities, the ETC Act created a more favorable environment for the formation of joint export ventures. Through such joint ventures, U.S. firms can take advantage of economies of scale, spread risk, and pool their expertise. In addition, through joint selling arrangements, domestic competitors can avoid interfirm rivalry in foreign markets. Prior to the passage of the ETC Act, competing companies could not engage in joint exporting efforts without possible violation of antitrust provisions. The other important provision of the ETC Act permits bank holding companies to own ETCs. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

95) What is a foreign sales corporation? Answer: A foreign sales corporation (FSC) is a sales corporation set up in a foreign country or U.S. possession that can obtain a corporate tax exemption on a portion of the earnings generated by the sale or lease of export property. Manufacturers and export groups can form FSCs. An FSC can function as a principal, buying and selling for its own account, or a commissioned agent. It can be related to a manufacturing parent or can be an independent merchant or broker. The WTO in 2003 ruled FSCs to be in violation of international trade rules, thus starting a major trade dispute with the European Union. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) Discuss the continuity problem associated with a channel of distribution. Answer: Channels of distribution often pose longevity problems. Most agent middlemen firms tend to be small institutions. When one individual retires or moves out of a line of business, the company may find it has lost its distribution in that area. Wholesalers and especially retailers are not noted for their continuity in business either. Most middlemen have little loyalty to their vendors. They handle brands in good times when the line is making money but quickly reject such products within a season or a year if they fail to produce during that period. Distributors and dealers are probably the most loyal middlemen, but even with them, manufacturers must attempt to build brand loyalty downstream in a channel lest middlemen shift allegiance to other companies or other inducements. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-04 The functions, advantages, and disadvantages of various kinds of middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) What are the various techniques that can be used to motivate middlemen? Answer: The level of distribution and the importance of the individual middleman to the company determine the activities undertaken to keep the middleman motivated. The middleman's motivation is clearly correlated with sales volume. Motivational techniques that can be employed to maintain middleman interest and support for the product may be grouped into five categories: financial rewards, psychological rewards, communications, company support, and corporate rapport. Financial rewards must be adequate for any middleman to carry and promote a company's products. Margins or commissions must be set to meet the needs of the middleman and may vary according to the volume of sales and the level of services offered. Without a combination of adequate margin and adequate volume, a middleman cannot afford to give much attention to a product. Being human, middlemen and their salespeople respond to psychological rewards and recognition of their efforts. A trip to the United States or to the parent company's home or regional office is a great honor. Publicity in company media and local newspapers also builds esteem and involvement among foreign middlemen. In all instances, but particularly when cultural distances are great, the company should maintain a continuing flow of communication in the form of letters, newsletters, and periodicals to all its middlemen. Finally, considerable attention must be paid to the establishment of close rapport between the company and its middlemen. In addition to methods noted, a company should be certain that the conflicts that arise are handled skillfully and diplomatically. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) What is secondary wholesaling and when might it be used? Answer: Control over the system and control over middlemen are necessary in international business. Some manufacturers have lost control through "secondary wholesaling" or parallel imports. A company's goods intended for one country are sometimes diverted through distributors to another country, where they compete with existing retail or wholesale organizations. This is known as secondary wholesaling. Difficulty: 1 Easy Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) Company B found out that the middleman it was using was skimming money from its profits, so it decided it had to terminate the relationship. What does Company B need to know before terminating a middleman in a foreign country? Answer: When middlemen do not perform up to standards or when market situations change, requiring a company to restructure its distribution, it may be necessary to terminate relationships. In the United States, this termination is usually a simple action regardless of the type of middlemen; they are simply dismissed. However, in other parts of the world, the middleman often has some legal protection that makes termination difficult. In Colombia, for example, if you terminate an agent, you are required to pay 10 percent of the agent's average annual compensation, multiplied by the number of years the agent served, as a final settlement. Competent legal advice is vital when entering distribution contracts with middlemen. But as many experienced international marketers know, the best rule is to avoid the need to terminate distributors by screening all prospective middlemen carefully. A poorly chosen distributor may not only fail to live up to expectations but may also adversely affect future business and prospects in the country. Difficulty: 3 Hard Topic: Factors to Consider When Designing International Distribution Strategies Learning Objective: 15-05 The importance of selecting and maintaining middlemen. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation

100) What are the six issues that must be taken into consideration by an e-vendor? Answer: The various issues that must be taken into consideration by an e-vendor are: Culture: The website and the product must be culturally neutral or adapted to fit the uniqueness of a market, because culture does matter. Adaptation: Ideally, a website should be translated into the languages of the target markets. This translation may not be financially feasible for some companies, but at least the most important pages of the site should be translated. Local contact: Companies fully committed to foreign markets are creating virtual offices abroad; they buy server space and create mirror sites, whereby a company has a voice mail or fax contact point in key markets. Foreign customers are more likely to visit sites in their own country and in the local language. Payment: The consumer should be able to use a credit card number—by e-mail (from a secure page on the website), by fax, or over the phone. Delivery: For companies operating in the United States, surface postal delivery of small parcels is the most cost effective but takes the longest time. For more rapid but more expensive deliveries, FedEx, UPS, and other private delivery services provide delivery worldwide. Promotion: Although the Web is a means of promotion, if you are engaging in ecommerce, you also need to advertise your presence and the products or services offered. Difficulty: 2 Medium Topic: How the Physical Environment and Technology Influence Culture Learning Objective: 15-06 The growing importance of e-commerce as a distribution alternative. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 16 Integrated Marketing Communications and International Advertising 1) For most companies, trade shows and direct selling are the major components in the marketing communications mix. 2) Sales promotions are marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. 3) Contests, sweepstakes, and sponsorship of special events such as concerts are techniques used for maintaining and improving public relations. 4) Sales promotions are long-term IMC efforts directed to the consumer or retailer. 5) Sales promotions constitute the major portion of the promotional effort in rural and less accessible parts of a market. 6) Of all the elements of the marketing mix, decisions involving advertising are those most often affected by cultural differences among country markets. 7) While developing an international advertisement campaign, the last step of the process is executing the campaign. 8) The role of public relations is to create good relationships with the popular press and other media to help companies communicate messages to their publics. 9) Different cultures usually seek different values or benefits from the primary function of a product. 10) A reason for the failure of marketing communications is that the message received by the intended audience is not understood because of different cultural interpretations. 11) When a message from a source is converted into effective symbolism for transmission to a receiver, the message is said to have been decoded. 12) Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process of communication are called feedback. 13) When a marketing executive advertises his product in a newspaper, the newspaper acts as a feedback channel. 14) Problems of literacy, media availability, and types of media create problems in the international communications process at the encoding step. 15) Errors at the receiver end of the international communications process can be avoided if the message is encoded properly. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

16) The feedback step of the international communications process is unrelated to the effectiveness of the other steps. 17) Other sales personnel are a source of noise in the international communications process. 18) Feedback channels must be carefully selected if a decoded message is to reach the consumer. 19) A proper feedback system allows a company to correct errors before substantial damage occurs. 20) In the context of advertising, a marketer's self-reference criterion (SRC) may affect the ultimate success of the communication. 21) The French government until recently forbade TV ads for retailers, publishing, cinema, and the press. 22) With some exceptions, usually a majority of the population of less developed countries can be reached readily through the traditional mass medium of advertising. 23) In spite of their inherent entertainment value, radio and television have not been able to become major communications media in most nations. 24) Satellites have the ability to span a wide geographical region covering many different cultures. 25) Industrial advertisers rarely use direct mail for advertising. 26) In international advertising, an advertiser should consider availability, cost, and coverage of media. 27) International advertisers prefer global television (satellite broadcasts) due to the availability of accurate market data in most countries. 28) International advertisers use foreign national consumer magazines extensively because they have dependable circulation figures. 29) In the context of international advertising, search engines have now become crucial directors of Internet users' attention. 30) As advertising agencies have expanded internationally, local agencies have virtually disappeared.

31) Most toy manufacturers would agree that toys cannot be marketed profitably in countries without commercial television advertising directed toward children. In this scenario, commercial television advertising exemplifies the availability of appropriate A) demonstrations. B) personal selling services. C) direct mailing services. D) public relations. E) communication channels. 32) Integrated marketing communications include A) marketing management. B) research and development. C) human resources. D) logistics. E) advertising. 33) What are the major components in the marketing communications mix for most companies? A) public relations and advertising B) direct selling and trade shows C) advertising and personal selling D) public relations and sales promotions E) direct selling and sales promotions 34) Sales promotions are A) marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. B) long-term efforts directed to a manufacturer or supplier. C) composed of activities that encourage the press to cover positive stories about companies. D) ineffective in markets where consumers are hard to reach. E) the only element of the marketing mix that are affected by cultural differences among country markets. 35) Sales promotions are short-term efforts directed to the consumer or retailer to achieve specific objectives such as A) consumer product trial or immediate purchase. B) reducing advertising expenses. C) discouraging stores from stocking a product. D) eliminating the need for retail point-of-purchase displays. E) long-term performance of a product. 36) In-store demonstrations, samples, coupons, contests, and sweepstakes are examples of ________ devices. A) personal selling B) sales promotions C) content marketing D) direct selling E) public relations 3 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

37) An especially effective promotional tool when a product concept is new or has a very small market share is A) sponsorship. B) sweepstakes. C) product sampling. D) contests. E) product tie-ins. 38) Which statement best defines the concept of public relations? A) It is the practice of using the public to promote a company's products through vehicles like blogs. B) It is the direct sale of goods at discount rates to the public at trade fairs. C) It the creation of relationships with the media to help communicate messages to their customers, the general public, and governmental regulators. D) It is the distribution of samples and coupons directly to the public. E) It is the use of various forms of promotions to improve relationships with customers.. 39) Which element of integrated marketing communications includes encouraging the press to cover positive stories about companies and managing unfavorable rumors, stories, and events? A) public relations B) direct selling C) crisis management D) personal selling E) sales promotion 40) Since 2007, FedEx has contributed millions to the PGA Tour, and as its most lucrative donor, an event is named after the company. This is an example of A) an entrepreneurship. B) sustainability. C) governance. D) a bribe. E) a sponsorship 41) Corporate ________ might be classified as an aspect of sales promotions or public relations, though they also bear a connection to advertising. A) entrepreneurships B) sustainability C) governance D) espionage E) sponsorships

42) In an international advertising campaign, what happens once the goals of the communication have been specified? A) Develop the most effective message(s) for the market segments selected. B) Compose and secure a budget. C) Select effective media. D) Execute the campaign. E) Evaluate the campaign relative to the goals specified. 43) Of all the elements of the marketing mix, decisions involving ________ are those most often affected by cultural differences among country markets. A) direct selling B) public relations C) trade shows D) advertising E) sales promotion 44) In the context of international advertising, it has been observed that advertising expenditures are generally A) linear. B) supplemental. C) minimal. D) cyclical. E) one-time only. 45) When developing an international advertisement campaign, what is the first step of the process? A) Compose and secure a budget based on what is required to meet goals. B) Specify the goals of the communication. C) Select effective media. D) Execute the campaign. E) Perform marketing research. 46) What is an example of the primary function of a product? A) the ability of a camera to take a picture B) the design and form factor of a phone C) the color of a cell phone D) the prestige associated with driving a car E) the shape of speakers 47) Due to differences in culture in different markets, standardized products that are marketed globally will most likely require A) different advertising appeals. B) different primary functions. C) consistent promotional messages. D) standardized marketing strategies. E) standardized secondary attributes. 5 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

48) The emergence of pan-European communications media will most likely cause companies to A) opt for localized promotional campaigns. B) opt for greater customization of promotional efforts. C) promote their products only in English. D) use only the Internet as their message channel. E) choose more standardized promotional efforts. 49) During which step of the international communications process does the receiver of the message interpret symbolism transmitted from an information source? A) selecting a message B) encoding C) selecting a message channel D) decoding E) identifying the sources of noise 50) During ________, the message from the source is converted into effective symbolism for transmission to a receiver. A) interpretation B) scrambling C) standardizing D) decoding E) encoding 51) The sales force of a company that provides the company's product specifications to the customer acts as a(n) A) decoder. B) interpreter. C) receiver. D) message channel. E) noise. 52) An international marketing executive with a product message to communicate specifically acts as a(n) A) decoder. B) information source. C) receiver. D) encoder. E) noise source. 53) ________ is defined as the interpretation by the receiver of the symbolism transmitted from an information source. A) Encoding B) Message selection C) Decoding D) Message channel selection E) Feedback evaluation 6 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

54) A multinational pharmaceutical company used a saffron trident in a promotional campaign for one of its drugs in India. The saffron trident, a religious symbol in India, was meant to indicate the three levels of efficacy of the drug but mistakenly conveyed a religious message to Indians. This miscommunication indicates a problem associated with which step of the international communications process? A) encoding B) noise cancellation C) media channel selection D) message transmission E) information source selection 55) Which element of the international communications process comprises external influences such as competitive advertising, other sales personnel, and confusion at the receiving end that can detract from the ultimate effectiveness of the communication? A) selecting a message source B) encoding C) selecting a message channel D) decoding E) noise 56) Janel, a media consultant, is helping the integrated marketing communications manager of a French cosmetics company with the design and content to be used in an upcoming promotional campaign in Japan. The IMC manager knows what to convey but wants to word it in a culturally relevant manner. With which step of the international communications process is Janel helping the company? A) encoding of the message B) choosing an appropriate channel for the message C) decoding of the message D) providing feedback from customers E) reducing noise from competing ad campaigns 57) In the context of the communications process in advertising, problems of literacy, media availability, and types of media create challenges in the communications process at the ________ step. A) feedback B) decoding C) amplification D) encoding E) message selection

58) Using newspapers or magazine ads as a channel of communication when the majority of the intended users cannot read is an example of ineffective ________ in the communications process. A) feedback B) media channel selection C) noise D) market selection E) message selection 59) Using the Internet as a communication medium when only a small percentage of an intended market has access to it is an example of an error related to A) feedback. B) decoding. C) message channel selection. D) encoding. E) message selection. 60) A manufacturer of sports bicycles uses various cycling legends and sports celebrities as brand ambassadors to promote its product in China. Bicycles in China are used mainly by the working class for commuting, not sports, so the promotional campaign was a failure. During which step of the international communications process did the manufacturer most likely go wrong? A) information source B) message channel C) encoding D) decoding E) noise cancellation 61) The ________ step in the international communications process refers to the information about the effectiveness of the message that flows from the receiver back to the information source for evaluation of the effectiveness of the process. A) message channel selection B) interpretation C) encoding D) decoding E) feedback 62) Which step of the international communications process is important as a check on the effectiveness of the other steps? A) selecting a proper message B) encoding the message C) selecting an appropriate channel of communication D) decoding the message E) feedback

63) Which statement about advertising laws is correct? A) Advertising of pharmaceuticals is unrestricted in most countries. B) Toy, tobacco, and liquor advertising is restricted in numerous countries. C) Advertising on television is unregulated in most countries. D) The Internet is the only medium where no restrictions exist in any country. E) Television ads are exempted from tax in all countries. 64) What is an example of comparative advertising? A) an ad using a scantily clad model to promote a soft drink B) an ad showing a celebrity smoking his preferred brand of cigarettes C) an ad showing a dog choosing one brand of dog food over another brand D) an ad showing the superiority of synthetic materials used in its products as compared to cotton E) an ad using shocking or taboo material to promote a product 65) What is especially vulnerable as EU member states decide which area of regulation should apply to these services? A) newspaper advertising B) radio advertising C) outdoor services D) personal selling E) Internet services 66) Companies that rely on television infomercials and television shopping are restricted by the limitations placed on the ________ of television commercials permitted when their programs are classified as advertisements. A) length and number B) religious content C) subliminal messaging D) cost E) ethnic focus 67) Advertising ________ in some countries can distort media choice by changing the cost ratios of various media. A) taxation B) language C) demographics D) cultural focus E) channels 68) The only way to avoid linguistic problems in advertising communication is by A) creating an entirely new advertisement for the new market. B) using only English in all media promotions. C) developing a new version of the product for the new market. D) performing in-country testing with the target consumer group. E) using facial expressions and physical gestures in the advertisement. 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

69) ________ is especially important when an advertising budget is small, where there are severe production limitations, or where there are low literacy rates. A) Class distinction B) Politicization C) Standardization D) Creativity E) Following a formula 70) Certain advertising media are forbidden by government edict to accept some advertising materials. Such restrictions are most prevalent in A) Internet forums. B) personal selling initiatives. C) radio and television broadcasting. D) trade shows and exhibitions. E) direct selling and sales promotions. 71) What is true of the newspaper industry? A) In many countries, newspapers hardly have any trouble achieving complete market coverage. B) Most U.S. cities have three or four major daily newspapers. C) In many countries, there is a time lag before advertisements can be run in a newspaper. D) Since there is an indication that the space for advertising is paid for, it is easy to tell exactly how much advertising appears in a given newspaper. E) Japan has more than 15 national daily newspapers, but the circulation numbers are low. 72) ________ are considered to be major communications media in most countries due to their inherent entertainment value. A) Newspapers and magazines B) Radio and television C) Newspapers and billboards D) Billboards and television E) Radio and newspapers 73) One of the drawbacks of satellite TV is A) the cost of creating a high quality ad for satellite television. B) the limited market penetration of satellite television. C) the number of intermediaries required for satellite service transmission. D) the government regulations placed on satellite advertising. E) governments' fear of a loss of control over their airwaves and messages. 74) _______ allows ESPN to fill blank walls, streets, or stadium sidings with computergenerated visuals that look like they belong in the scene. A) Self-extracting archive B) Princeton Video Imaging C) High Definition Television D) HighMAT (High Performance Media Access Technologies) E) Conditional Access System 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

75) Direct mail is an unpopular medium in Chile because A) the literacy level in Chile is extremely low. B) customers must pay for every item delivered by the letter carrier. C) it uses paper; hence, it is considered a threat to the environment. D) its reach is extremely limited. E) it is subject to complicated government regulations. 76) Which medium suffer(s) from issues such as difficulty in assessing taxes, unfair competition, import duties, and privacy? A) the radio B) direct mail C) magazines D) newspapers E) the Internet 77) Compensation arrangements for advertising agencies throughout the world are based on the U.S. system of ________ commissions. A) 15 percent B) 25 percent C) consistent D) no E) shared 78) In the context of consumer products, what is the major limitation of the Internet? A) knowledge of how to use the Internet B) accessibility outside the United States C) government regulations on the use of the Internet D) difficulty in tracking the effectiveness of advertisements on the Internet E) cost of using the Internet 79) Blogs, virtual worlds, and video sharing are examples of media commonly known as A) global media. B) local media. C) social media. D) Texas Visual Imaging. E) widespread media. 80) Billboards are especially useful in countries: A) with high income levels. B) where the laws governing the Internet are very complicated. C) with high illiteracy rates. D) where sales promotions are ineffective. E) where people prefer buying in small quantities.

81) In the context of international advertising, ________ is the neon capital of the world. A) Paris B) Hong Kong C) London D) Sydney E) Brasília 82) In Spain, a new medium for advertising called Publicoche involves A) lasers projected onto clouds. B) private cars that are painted with advertisements. C) buses fitted with television sets showing promotional messages. D) financing of popular sporting and entertainment events. E) hot air balloons printed with promotional messages. 83) In the context of international advertising, companies are moving from the commission system to a ________ system. A) tactical B) standardized C) reward-by-results D) self-regulation E) business-to-business 84) A study of a representative sample of European consumers indicated that A) nearly 8 in 10 believed ads were often deceptive about product quality. B) most believed advertising was necessary for product purchase decisions. C) most considered ads enjoyable and entertaining. D) about 1 in 10 believed advertising meant higher prices for a product. E) advertising was a way to obtain valuable information about products. 85) What is true of advertising agencies for international advertising? A) The cross-cultural communication between a foreign client and a local agency can be problematic. B) A multinational agency always has the best feel for a market. C) Only a multinational agency can provide the best cultural interpretation in a situation in which local modification is required. D) Only a local domestic agency can provide a company with a high level of sophistication. E) Agency commission patterns are consistent throughout the world. 86) ________ in advertising is a thorny issue because most member countries of the European Commission have different interpretations of what constitutes a misleading advertisement. A) Discrimination B) Endorsement C) Deception D) Plagiarism E) Fear mongering 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

87) The assault on advertising of ________ is escalating, as evidenced by the World Health Organization launching a global campaign against it. A) trans fat B) alcohol C) tobacco products D) pharmaceuticals E) animal-derived products 88) Skepticism and negative attitudes about advertising, along with poor practices by some advertisers, have resulted in the International Advertising Association A) producing public service announcements to improve their image. B) banning certain types of ads. C) hiring public relations professionals. D) asking governments to intervene. E) developing self-regulating codes of conduct. 89) Which country has the most egregious control over advertising, where each medium has its own censorship board that passes judgment on any advertising even before it is submitted for approval by the Ministry of Information? A) Germany B) France C) Myanmar D) Australia E) Argentina 90) What is the purpose of sales promotions? Describe 5 examples of sales promotions and give an example of each. 91) Describe the role of public relations (PR). 92) List the seven steps in creating an international advertising campaign. 93) Describe the seven essential elements of the international communications process that affect the accuracy of the message. 94) The encoding step has many factors that can affect the interpretation of the message. Explain with an example. 95) Language is one of the major barriers to effective communication through advertising. Explain with an example. 96) How does cultural diversity influence the IMC process? Give examples. 97) In an international advertising process, what four factors must be considered by an advertiser while selecting a medium? Describe them and give an example. 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

98) Explain the significance of radio and television in international advertising. How has this changed over time? 99) How might social media be used as a marketing tool? What do international advertisers need to do to take advantage of this medium?

International Marketing, 18e (Cateora) Chapter 16 Integrated Marketing Communications and International Advertising 1) For most companies, trade shows and direct selling are the major components in the marketing communications mix. Answer: FALSE Explanation: For most companies, advertising and personal selling are the major components in the marketing communications mix. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-01 Local market characteristics that affect the advertising and promotion of products. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 2) Sales promotions are marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. Answer: TRUE Explanation: Sales promotions are marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. Sales promotions are short-term efforts directed to the consumer or retailer to achieve specific objectives. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Contests, sweepstakes, and sponsorship of special events such as concerts are techniques used for maintaining and improving public relations. Answer: FALSE Explanation: Cents-off, in-store demonstrations, samples, coupons, gifts, product tie-ins, contests, sweepstakes, sponsorship of special events such as concerts, the Olympics, fairs, and point-of-purchase displays are types of sales promotion devices. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

4) Sales promotions are long-term IMC efforts directed to the consumer or retailer. Answer: FALSE Explanation: Sales promotions are short-term efforts directed to the consumer or retailer to achieve such specific objectives as consumer product trial or immediate purchase, consumer introduction to the store or brand, gaining retail point-of-purchase displays, encouraging stores to stock the product, and supporting and augmenting advertising and personal sales efforts. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Sales promotions constitute the major portion of the promotional effort in rural and less accessible parts of a market. Answer: TRUE Explanation: In markets in which the consumer is hard to reach because of media limitations, the percentage of the promotional budget allocated to sales promotions may have to be increased. In some less developed countries, sales promotions constitute the major portion of the promotional effort in rural and less accessible parts of the market. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

6) Of all the elements of the marketing mix, decisions involving advertising are those most often affected by cultural differences among country markets. Answer: TRUE Explanation: Of all the elements of the marketing mix, decisions involving advertising are those most often affected by cultural differences among country markets. Advertising's function is to interpret or translate the qualities of products and services in terms of consumer needs, wants, desires, and aspirations. Thus, the emotional appeals, symbols, persuasive approaches, and other characteristics of an advertisement must coincide with cultural norms if the ad is to be effective. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 7) While developing an international advertisement campaign, the last step of the process is executing the campaign. Answer: FALSE Explanation: The steps to be performed for developing an international advertisement campaign are: perform marketing research; specify the goals of the communication; develop the most effective message(s) for the market segments selected; select effective media; compose and secure a budget based on what is required to meet goals; execute the campaign; and evaluate the campaign relative to the goals specified. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

8) The role of public relations is to create good relationships with the popular press and other media to help companies communicate messages to their publics. Answer: TRUE Explanation: Creating good relationships with the popular press and other media to help companies communicate messages to their publics—customers, the general public, and governmental regulators—is the role of public relations (PR). Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 9) Different cultures usually seek different values or benefits from the primary function of a product. Answer: FALSE Explanation: Different cultures often seek the same value or benefits from the primary function of a product—for example, the ability of an automobile to get from point A to point B, a camera to take a picture, or a wristwatch to tell time. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-03 When global advertising is most effective; when modified advertising is necessary. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 10) A reason for the failure of marketing communications is that the message received by the intended audience is not understood because of different cultural interpretations. Answer: TRUE Explanation: International communications may fail for a variety of reasons: A message may not get through because of media inadequacy, the message may be received by the intended audience but not be understood because of different cultural interpretations, or the message may reach the intended audience and be understood but have no effect because the marketer did not correctly assess the needs and wants or even the thinking processes of the target market. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

11) When a message from a source is converted into effective symbolism for transmission to a receiver, the message is said to have been decoded. Answer: FALSE Explanation: If the message from a source is converted into effective symbolism for transmission to a receiver, the message is encoded. Decoding occurs when the receiver interprets the symbolism transmitted from the information source. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 12) Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process of communication are called feedback. Answer: FALSE Explanation: Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process of communication are called noise. Noise comprises all other external influences, such as competitive advertising, other sales personnel, and confusion at the receiving end, that can detract from the ultimate effectiveness of the communication. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 13) When a marketing executive advertises his product in a newspaper, the newspaper acts as a feedback channel. Answer: FALSE Explanation: In this case, since the marketer is sending his message to his target audience through a newspaper, the newspaper acts as a message channel. Information about the effectiveness of the message does not flow from the receiver (the intended target) back to the information source for evaluation of the effectiveness of the process. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

14) Problems of literacy, media availability, and types of media create problems in the international communications process at the encoding step. Answer: TRUE Explanation: Problems of literacy, media availability, and types of media create challenges in the communications process at the encoding step. Encoding is the message from the source converted into effective symbolism for transmission to a receiver. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 15) Errors at the receiver end of the international communications process can be avoided if the message is encoded properly. Answer: TRUE Explanation: Errors at the receiver end of the process generally result from a combination of factors: an improper message resulting from incorrect knowledge of use patterns, poor encoding producing a meaningless message, poor media selection that does not get the message to the receiver, or inaccurate decoding by the receiver so that the message is garbled or incorrect. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 16) The feedback step of the international communications process is unrelated to the effectiveness of the other steps. Answer: FALSE Explanation: The feedback step of the communications process is important as a check on the effectiveness of the other steps. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

17) Other sales personnel are a source of noise in the international communications process. Answer: TRUE Explanation: Noise comprises external influences such as competitive advertising, other sales personnel, and confusion at the receiving end that can detract from the ultimate effectiveness of the communication. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 18) Feedback channels must be carefully selected if a decoded message is to reach the consumer. Answer: FALSE Explanation: Message channels must be carefully selected if an encoded message is to reach the consumer. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 19) A proper feedback system allows a company to correct errors before substantial damage occurs. Answer: TRUE Explanation: A proper feedback system allows a company to correct errors before substantial damage occurs. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

20) In the context of advertising, a marketer's self-reference criterion (SRC) may affect the ultimate success of the communication. Answer: TRUE Explanation: The international communications model's significance is that one or all steps in the process, cultural factors, or the marketer's self-reference criterion (SRC) can affect the ultimate success of the communication. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 21) The French government until recently forbade TV ads for retailers, publishing, cinema, and the press. Answer: TRUE Explanation: A variety of restrictions on advertising of specific products exist around the world. Advertising of pharmaceuticals is restricted in many countries. The French government until recently forbade TV ads for retailers, publishing, cinema, and the press. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 22) With some exceptions, usually a majority of the population of less developed countries can be reached readily through the traditional mass medium of advertising. Answer: FALSE Explanation: A majority of the population of less developed countries cannot be reached readily through the traditional mass medium of advertising. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

23) In spite of their inherent entertainment value, radio and television have not been able to become major communications media in most nations. Answer: FALSE Explanation: Possibly because of their inherent entertainment value, radio and television have become major communications media in almost all nations. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 24) Satellites have the ability to span a wide geographical region covering many different cultures. Answer: TRUE Explanation: One of the drawbacks of satellites is also their strength, that is, their ability to span a wide geographical region covering many different country markets. That means a single message is broadcast throughout a wide area. This span may not be desirable for some products. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 25) Industrial advertisers rarely use direct mail for advertising. Answer: FALSE Explanation: Industrial advertisers are heavy direct mail users and rely on catalogs and sales sheets to generate large volumes of international business. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

26) In international advertising, an advertiser should consider availability, cost, and coverage of media. Answer: TRUE Explanation: In international advertising, an advertiser must consider the availability, cost, coverage, and appropriateness of the media. Local variations and lack of market data require added attention. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 27) International advertisers prefer global television (satellite broadcasts) due to the availability of accurate market data in most countries. Answer: FALSE Explanation: Lack of available market data seems to characterize most international markets; advertisers need information on income, age, and geographic distribution, but such basic data seem chronically elusive except in the largest markets. Even the attractiveness of global television (satellite broadcasts) is diminished somewhat because of the lack of media research available. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 28) International advertisers use foreign national consumer magazines extensively because they have dependable circulation figures. Answer: FALSE Explanation: The use of foreign national consumer magazines by international advertisers has been notably low for many reasons. Few magazines have a large circulation or provide dependable circulation figures. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

29) In the context of international advertising, search engines have now become crucial directors of Internet users' attention. Answer: TRUE Explanation: The sheer proliferation of the number of websites makes it increasingly difficult for a customer to stumble across a particular page. Search engines have now become crucial directors of Internet users' attention. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 30) As advertising agencies have expanded internationally, local agencies have virtually disappeared. Answer: FALSE Explanation: Advertising agencies have expanded internationally to provide sophisticated agency assistance worldwide. Local agencies also have expanded as the demand for advertising services by MNCs has developed. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

31) Most toy manufacturers would agree that toys cannot be marketed profitably in countries without commercial television advertising directed toward children. In this scenario, commercial television advertising exemplifies the availability of appropriate A) demonstrations. B) personal selling services. C) direct mailing services. D) public relations. E) communication channels. Answer: E Explanation: In many markets, the availability of appropriate communication channels to customers can determine entry decisions. For example, most toy manufacturers would agree that toys cannot be marketed profitably in countries without commercial television advertising directed toward children. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-01 Local market characteristics that affect the advertising and promotion of products. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 32) Integrated marketing communications include A) marketing management. B) research and development. C) human resources. D) logistics. E) advertising. Answer: E Explanation: Integrated marketing communications (IMC) are composed of advertising, sales promotions, trade shows, personal selling, direct selling, and public relations. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-01 Local market characteristics that affect the advertising and promotion of products. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

33) What are the major components in the marketing communications mix for most companies? A) public relations and advertising B) direct selling and trade shows C) advertising and personal selling D) public relations and sales promotions E) direct selling and sales promotions Answer: C Explanation: For most companies, advertising and personal selling are the major components in the marketing communications mix. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-01 Local market characteristics that affect the advertising and promotion of products. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 34) Sales promotions are A) marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. B) long-term efforts directed to a manufacturer or supplier. C) composed of activities that encourage the press to cover positive stories about companies. D) ineffective in markets where consumers are hard to reach. E) the only element of the marketing mix that are affected by cultural differences among country markets. Answer: A Explanation: Sales promotions are marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. Sales promotions are short-term efforts directed to the consumer or retailer to achieve specific objectives. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) Sales promotions are short-term efforts directed to the consumer or retailer to achieve specific objectives such as A) consumer product trial or immediate purchase. B) reducing advertising expenses. C) discouraging stores from stocking a product. D) eliminating the need for retail point-of-purchase displays. E) long-term performance of a product. Answer: A Explanation: Sales promotions are short-term efforts directed to the consumer or retailer to achieve such specific objectives as consumer product trial or immediate purchase, consumer introduction to the store or brand, gaining retail point-of-purchase displays, encouraging stores to stock the product, and supporting and augmenting advertising and personal sales efforts. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) In-store demonstrations, samples, coupons, contests, and sweepstakes are examples of ________ devices. A) personal selling B) sales promotions C) content marketing D) direct selling E) public relations Answer: B Explanation: Cents-off, in-store demonstrations, samples, coupons, gifts, product tie-ins, contests, sweepstakes, sponsorship of special events such as concerts, the Olympics, fairs, and point-of-purchase displays are types of sales promotion devices. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) An especially effective promotional tool when a product concept is new or has a very small market share is A) sponsorship. B) sweepstakes. C) product sampling. D) contests. E) product tie-ins. Answer: C Explanation: An especially effective promotional tool when the product concept is new or has a very small market share is product sampling. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) Which statement best defines the concept of public relations? A) It is the practice of using the public to promote a company's products through vehicles like blogs. B) It is the direct sale of goods at discount rates to the public at trade fairs. C) It the creation of relationships with the media to help communicate messages to their customers, the general public, and governmental regulators. D) It is the distribution of samples and coupons directly to the public. E) It is the use of various forms of promotions to improve relationships with customers.. Answer: C Explanation: Creating good relationships with the popular press and other media to help companies communicate messages to their publics—customers, the general public, and governmental regulators—is the role of public relations. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

39) Which element of integrated marketing communications includes encouraging the press to cover positive stories about companies and managing unfavorable rumors, stories, and events? A) public relations B) direct selling C) crisis management D) personal selling E) sales promotion Answer: A Explanation: A public relations job consists of not only encouraging the press to cover positive stories about companies but also managing unfavorable rumors, stories, and events. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 40) Since 2007, FedEx has contributed millions to the PGA Tour, and as its most lucrative donor, an event is named after the company. This is an example of A) an entrepreneurship. B) sustainability. C) governance. D) a bribe. E) a sponsorship Answer: E Explanation: Corporate sponsorships might be classified as an aspect of sales promotions or public relations, though their connections to advertising are also manifest. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

41) Corporate ________ might be classified as an aspect of sales promotions or public relations, though they also bear a connection to advertising. A) entrepreneurships B) sustainability C) governance D) espionage E) sponsorships Answer: E Explanation: Corporate sponsorships might be classified as an aspect of sales promotions or public relations, though their connections to advertising are also manifest. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) In an international advertising campaign, what happens once the goals of the communication have been specified? A) Develop the most effective message(s) for the market segments selected. B) Compose and secure a budget. C) Select effective media. D) Execute the campaign. E) Evaluate the campaign relative to the goals specified. Answer: A Explanation: Once the goals of the communication have been specified, the most daunting task begins—developing the message. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) Of all the elements of the marketing mix, decisions involving ________ are those most often affected by cultural differences among country markets. A) direct selling B) public relations C) trade shows D) advertising E) sales promotion Answer: D Explanation: Of all the elements of the marketing mix, decisions involving advertising are those most often affected by cultural differences among country markets. Advertising's function is to interpret or translate the qualities of products and services in terms of consumer needs, wants, desires, and aspirations. Thus, the emotional appeals, symbols, persuasive approaches, and other characteristics of an advertisement must coincide with cultural norms if the ad is to be effective. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 44) In the context of international advertising, it has been observed that advertising expenditures are generally A) linear. B) supplemental. C) minimal. D) cyclical. E) one-time only. Answer: D Explanation: One important study has shown that advertising expenditures are generally cyclical, though less so in relationship-oriented countries where managers and regulators favor stability and long-term performance. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) When developing an international advertisement campaign, what is the first step of the process? A) Compose and secure a budget based on what is required to meet goals. B) Specify the goals of the communication. C) Select effective media. D) Execute the campaign. E) Perform marketing research. Answer: E Explanation: The steps to be performed for developing an international advertisement campaign are: perform marketing research; specify the goals of the communication; develop the most effective message(s) for the market segments selected; select effective media; compose and secure a budget based on what is required to meet goals; execute the campaign; and evaluate the campaign relative to the goals specified. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 46) What is an example of the primary function of a product? A) the ability of a camera to take a picture B) the design and form factor of a phone C) the color of a cell phone D) the prestige associated with driving a car E) the shape of speakers Answer: A Explanation: A market offering really is a bundle of satisfactions the buyer receives. This package of satisfactions, or utilities, includes the primary function of the product or service, in this case—the ability of a camera to take a picture—along with many other benefits imputed by the values and customs of the culture. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-03 When global advertising is most effective; when modified advertising is necessary. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) Due to differences in culture in different markets, standardized products that are marketed globally will most likely require A) different advertising appeals. B) different primary functions. C) consistent promotional messages. D) standardized marketing strategies. E) standardized secondary attributes. Answer: A Explanation: In many cases, standardized products may be marketed globally. But because of differences in cultures, they still require a different advertising appeal in different markets. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-03 When global advertising is most effective; when modified advertising is necessary. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 48) The emergence of pan-European communications media will most likely cause companies to A) opt for localized promotional campaigns. B) opt for greater customization of promotional efforts. C) promote their products only in English. D) use only the Internet as their message channel. E) choose more standardized promotional efforts. Answer: E Explanation: The emergence of pan-European communications media is enticing many companies to push the balance toward more standardized promotional efforts. As media coverage across Europe expands, it will become more common for markets to be exposed to multiple messages and brands of the same product. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-03 When global advertising is most effective; when modified advertising is necessary. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

49) During which step of the international communications process does the receiver of the message interpret symbolism transmitted from an information source? A) selecting a message B) encoding C) selecting a message channel D) decoding E) identifying the sources of noise Answer: D Explanation: The interpretation by the receiver of the symbolism transmitted from an information source is known as decoding. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 50) During ________, the message from the source is converted into effective symbolism for transmission to a receiver. A) interpretation B) scrambling C) standardizing D) decoding E) encoding Answer: E Explanation: Once a message to be communicated is finalized, it must be encoded. During encoding, the message from the source is converted into effective symbolism for transmission to a receiver. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

51) The sales force of a company that provides the company's product specifications to the customer acts as a(n) A) decoder. B) interpreter. C) receiver. D) message channel. E) noise. Answer: D Explanation: In the international communications process, the sales force and/or advertising media convey the encoded message to the intended receiver and thus it acts as a message channel. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 52) An international marketing executive with a product message to communicate specifically acts as a(n) A) decoder. B) information source. C) receiver. D) encoder. E) noise source. Answer: B Explanation: In the international communications process, an international marketing executive with a product message to communicate acts as an information source. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

53) ________ is defined as the interpretation by the receiver of the symbolism transmitted from an information source. A) Encoding B) Message selection C) Decoding D) Message channel selection E) Feedback evaluation Answer: C Explanation: Decoding is defined as the interpretation by the receiver of the symbolism transmitted from an information source. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 54) A multinational pharmaceutical company used a saffron trident in a promotional campaign for one of its drugs in India. The saffron trident, a religious symbol in India, was meant to indicate the three levels of efficacy of the drug but mistakenly conveyed a religious message to Indians. This miscommunication indicates a problem associated with which step of the international communications process? A) encoding B) noise cancellation C) media channel selection D) message transmission E) information source selection Answer: A Explanation: In this case, the miscommunication of the message is most likely associated with the encoding stage of the international communications process. The encoding step causes problems even with a "proper" message. At this step, such factors as color, timing, values, beliefs, humor, tastes, and appropriateness of spokespersons can cause an international marketer to convert the message into improper symbolism. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

55) Which element of the international communications process comprises external influences such as competitive advertising, other sales personnel, and confusion at the receiving end that can detract from the ultimate effectiveness of the communication? A) selecting a message source B) encoding C) selecting a message channel D) decoding E) noise Answer: E Explanation: Noise comprises various external influences such as competitive advertising, other sales personnel, and confusion at the receiving end that can detract from the ultimate effectiveness of the communication. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 56) Janel, a media consultant, is helping the integrated marketing communications manager of a French cosmetics company with the design and content to be used in an upcoming promotional campaign in Japan. The IMC manager knows what to convey but wants to word it in a culturally relevant manner. With which step of the international communications process is Janel helping the company? A) encoding of the message B) choosing an appropriate channel for the message C) decoding of the message D) providing feedback from customers E) reducing noise from competing ad campaigns Answer: A Explanation: In this case, Janel is helping the company with the encoding step of the international communications process. The encoding step can cause problems even with a "proper" message. At this step, such factors as color, timing, values, beliefs, humor, tastes, and appropriateness of spokespersons can cause the international marketer to symbolize the message incorrectly. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

57) In the context of the communications process in advertising, problems of literacy, media availability, and types of media create challenges in the communications process at the ________ step. A) feedback B) decoding C) amplification D) encoding E) message selection Answer: D Explanation: Problems of literacy, media availability, and types of media create challenges in the communications process at the encoding step. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 58) Using newspapers or magazine ads as a channel of communication when the majority of the intended users cannot read is an example of ineffective ________ in the communications process. A) feedback B) media channel selection C) noise D) market selection E) message selection Answer: B Explanation: Errors such as using the Internet as a medium when only a small percentage of an intended market has access to the Internet or using print media for a channel of communications when the majority of the intended users cannot read or do not read the language in the medium are examples of ineffective media channel selection in the communications process. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

59) Using the Internet as a communication medium when only a small percentage of an intended market has access to it is an example of an error related to A) feedback. B) decoding. C) message channel selection. D) encoding. E) message selection. Answer: C Explanation: Errors such as using the Internet as a medium when only a small percentage of an intended market has access to the Internet or using print media for a channel of communications when the majority of the intended users cannot read or do not read the language in the medium are examples of ineffective media channel selection in the communications process. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation 60) A manufacturer of sports bicycles uses various cycling legends and sports celebrities as brand ambassadors to promote its product in China. Bicycles in China are used mainly by the working class for commuting, not sports, so the promotional campaign was a failure. During which step of the international communications process did the manufacturer most likely go wrong? A) information source B) message channel C) encoding D) decoding E) noise cancellation Answer: B Explanation: The message channel conveys the encoded message to the receiver. Message channels must be carefully selected if an encoded message is to reach the consumer. In this case, the use of sports celebrities was ineffective with the intended audience. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

61) The ________ step in the international communications process refers to the information about the effectiveness of the message that flows from the receiver back to the information source for evaluation of the effectiveness of the process. A) message channel selection B) interpretation C) encoding D) decoding E) feedback Answer: E Explanation: The feedback step in the international communications process refers to the information about the effectiveness of the message that flows from the receiver (the intended target) back to the information source for evaluation of the effectiveness of the process. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 62) Which step of the international communications process is important as a check on the effectiveness of the other steps? A) selecting a proper message B) encoding the message C) selecting an appropriate channel of communication D) decoding the message E) feedback Answer: E Explanation: The feedback step of the communications process is important as a check on the effectiveness of the other steps. Companies that do not measure their communications efforts are likely to allow errors of source, encoding, media selection, decoding, or receiver to continue longer than necessary. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

63) Which statement about advertising laws is correct? A) Advertising of pharmaceuticals is unrestricted in most countries. B) Toy, tobacco, and liquor advertising is restricted in numerous countries. C) Advertising on television is unregulated in most countries. D) The Internet is the only medium where no restrictions exist in any country. E) Television ads are exempted from tax in all countries. Answer: B Explanation: Toy, tobacco, and liquor advertising is restricted in numerous countries. Advertising of pharmaceuticals and advertising on television is strictly controlled in many countries. Internet services are especially vulnerable as EU member states decide which area of regulation should apply to these services. In addition, some countries have special taxes that apply to advertising, which might restrict creative freedom in media selection. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) What is an example of comparative advertising? A) an ad using a scantily clad model to promote a soft drink B) an ad showing a celebrity smoking his preferred brand of cigarettes C) an ad showing a dog choosing one brand of dog food over another brand D) an ad showing the superiority of synthetic materials used in its products as compared to cotton E) an ad using shocking or taboo material to promote a product Answer: C Explanation: An ad showing a dog choosing one brand of dog food over another brand is an example of comparative advertising. Laws that control comparative advertising vary from country to country. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation

65) What is especially vulnerable as EU member states decide which area of regulation should apply to these services? A) newspaper advertising B) radio advertising C) outdoor services D) personal selling E) Internet services Answer: E Explanation: Internet services are especially vulnerable as EU member states decide which area of regulation should apply to these services. Barriers to pan-European services will arise if some member states opt to apply television-broadcasting rules to the Internet while other countries apply print-media advertising rules. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) Companies that rely on television infomercials and television shopping are restricted by the limitations placed on the ________ of television commercials permitted when their programs are classified as advertisements. A) length and number B) religious content C) subliminal messaging D) cost E) ethnic focus Answer: A Explanation: Companies that rely on television infomercials and television shopping are restricted by the limitations placed on the length and number of television commercials permitted when their programs are classified as advertisements. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

67) Advertising ________ in some countries can distort media choice by changing the cost ratios of various media. A) taxation B) language C) demographics D) cultural focus E) channels Answer: A Explanation: Some countries have special taxes that apply to advertising, which might restrict creative freedom in media selection. Advertising taxation can distort media choice by changing the cost ratios of various media. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) The only way to avoid linguistic problems in advertising communication is by A) creating an entirely new advertisement for the new market. B) using only English in all media promotions. C) developing a new version of the product for the new market. D) performing in-country testing with the target consumer group. E) using facial expressions and physical gestures in the advertisement. Answer: D Explanation: Advertising communications must be perfect, and linguistic differences at all levels cause problems. In-country testing with the target consumer group is the only way to avoid such problems. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Understand AACSB: Communication; Diversity Accessibility: Keyboard Navigation

69) ________ is especially important when an advertising budget is small, where there are severe production limitations, or where there are low literacy rates. A) Class distinction B) Politicization C) Standardization D) Creativity E) Following a formula Answer: D Explanation: Creativity is especially important when a budget is small or where there are severe production limitations, such as poor-quality printing and a lack of high-grade paper. Low literacy in many countries seriously impedes communications and calls for greater creativity and use of verbal media. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) Certain advertising media are forbidden by government edict to accept some advertising materials. Such restrictions are most prevalent in A) Internet forums. B) personal selling initiatives. C) radio and television broadcasting. D) trade shows and exhibitions. E) direct selling and sales promotions. Answer: C Explanation: In some countries, certain advertising media are forbidden by government edict to accept some advertising materials. Such restrictions are most prevalent in radio and television broadcasting. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) What is true of the newspaper industry? A) In many countries, newspapers hardly have any trouble achieving complete market coverage. B) Most U.S. cities have three or four major daily newspapers. C) In many countries, there is a time lag before advertisements can be run in a newspaper. D) Since there is an indication that the space for advertising is paid for, it is easy to tell exactly how much advertising appears in a given newspaper. E) Japan has more than 15 national daily newspapers, but the circulation numbers are low. Answer: C Explanation: Most U.S. cities have just one or two major daily newspapers, but in many countries, there are so many newspapers that an advertiser has trouble achieving even partial market coverage. In many countries, there is a long time lag before an advertisement can be run in a newspaper. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) ________ are considered to be major communications media in most countries due to their inherent entertainment value. A) Newspapers and magazines B) Radio and television C) Newspapers and billboards D) Billboards and television E) Radio and newspapers Answer: B Explanation: Possibly because of their inherent entertainment value, radio and television have become major communications media in almost all nations. Now high-definition television (HDTV) has taken off worldwide. In many countries, however, radio is a particularly important and vital advertising medium when it is the only one reaching large segments of the population. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

73) One of the drawbacks of satellite TV is A) the cost of creating a high quality ad for satellite television. B) the limited market penetration of satellite television. C) the number of intermediaries required for satellite service transmission. D) the government regulations placed on satellite advertising. E) governments' fear of a loss of control over their airwaves and messages. Answer: E Explanation: Advertisers and governments are both concerned about the impact of satellite TV. Governments are concerned because they fear further loss of control over their airwaves and the spread of "American cultural imperialism." Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation 74) _______ allows ESPN to fill blank walls, streets, or stadium sidings with computergenerated visuals that look like they belong in the scene. A) Self-extracting archive B) Princeton Video Imaging C) High Definition Television D) HighMAT (High Performance Media Access Technologies) E) Conditional Access System Answer: B Explanation: PVI (Princeton Video Imaging) is an innovation that will make regional advertising in diverse cultures easier than it presently is when using cable or satellite television. PVI allows ESPN, which offers this service, to fill visual real estate—blank walls, streets, stadium sidings—with computer-generated visuals that look like they belong in the scene. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation

75) Direct mail is an unpopular medium in Chile because A) the literacy level in Chile is extremely low. B) customers must pay for every item delivered by the letter carrier. C) it uses paper; hence, it is considered a threat to the environment. D) its reach is extremely limited. E) it is subject to complicated government regulations. Answer: B Explanation: In Chile, direct mail is virtually eliminated as an effective medium because the sender pays only part of the mailing fee; the letter carrier must collect additional postage for every item delivered. Obviously, advertisers cannot afford to alienate customers by forcing them to pay for unsolicited advertisements. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 76) Which medium suffer(s) from issues such as difficulty in assessing taxes, unfair competition, import duties, and privacy? A) the radio B) direct mail C) magazines D) newspapers E) the Internet Answer: E Explanation: As the Internet continues to grow and countries begin to assert control over what is now a medium with few restrictions, increasing limitations will be set. Beyond the control of undesirable information, issues such as pay-per-view, taxes, unfair competition, import duties, and privacy are being addressed all over the world. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation

77) Compensation arrangements for advertising agencies throughout the world are based on the U.S. system of ________ commissions. A) 15 percent B) 25 percent C) consistent D) no E) shared Answer: A Explanation: Compensation arrangements for advertising agencies throughout the world are based on the U.S. system of 15 percent commissions. However, agency commission patterns throughout the world are not as consistent as they are in the United States. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 78) In the context of consumer products, what is the major limitation of the Internet? A) knowledge of how to use the Internet B) accessibility outside the United States C) government regulations on the use of the Internet D) difficulty in tracking the effectiveness of advertisements on the Internet E) cost of using the Internet Answer: B Explanation: For consumer products, the major limitation of the Internet is coverage. However, this limitation is only temporary as new technology allows access to the Internet via television and as lower prices for personal computers expand the household base. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation

79) Blogs, virtual worlds, and video sharing are examples of media commonly known as A) global media. B) local media. C) social media. D) Texas Visual Imaging. E) widespread media. Answer: C Explanation: Social media (such as social networking, blogs, virtual worlds, and video sharing) can be powerful marketing tools, but marketers are just beginning to loosen control and let consumers interact with brands on their own terms. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation 80) Billboards are especially useful in countries: A) with high income levels. B) where the laws governing the Internet are very complicated. C) with high illiteracy rates. D) where sales promotions are ineffective. E) where people prefer buying in small quantities. Answer: C Explanation: Billboards are especially useful in countries with high illiteracy rates. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

81) In the context of international advertising, ________ is the neon capital of the world. A) Paris B) Hong Kong C) London D) Sydney E) Brasília Answer: B Explanation: Hong Kong is clearly the neon capital of the world, with Tokyo's Ginza and New York's Times Square running close seconds. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) In Spain, a new medium for advertising called Publicoche involves A) lasers projected onto clouds. B) private cars that are painted with advertisements. C) buses fitted with television sets showing promotional messages. D) financing of popular sporting and entertainment events. E) hot air balloons printed with promotional messages. Answer: B Explanation: In Spain, a new medium includes private cars that are painted with advertisements for products and serve as moving billboards as they travel around. This system, called Publicoche (derived from the words publicidad, meaning advertising, and coche, meaning car), has 75 cars in Madrid. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

83) In the context of international advertising, companies are moving from the commission system to a ________ system. A) tactical B) standardized C) reward-by-results D) self-regulation E) business-to-business Answer: C Explanation: Companies are moving from the commission system to a reward-by-results system, which details remuneration terms at the outset. If sales rise, the agency should be rewarded accordingly. This method of sharing in the gains or losses of profits generated by the advertising is gaining in popularity and may become the standard. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 84) A study of a representative sample of European consumers indicated that A) nearly 8 in 10 believed ads were often deceptive about product quality. B) most believed advertising was necessary for product purchase decisions. C) most considered ads enjoyable and entertaining. D) about 1 in 10 believed advertising meant higher prices for a product. E) advertising was a way to obtain valuable information about products. Answer: A Explanation: A study of a representative sample of European consumers indicated that only half of them believed advertisements gave consumers any useful information. Six of 10 believed that advertising meant higher prices (if a product is heavily advertised, it often sells for more than brands that are seldom or never advertised); nearly eight of 10 believed advertising often made them buy things they did not really need and that ads often were deceptive about product quality. In Hong Kong, Colombia, and Brazil, advertising fared much better than in Europe. The nonEuropeans praised advertising as a way to obtain valuable information about products. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

85) What is true of advertising agencies for international advertising? A) The cross-cultural communication between a foreign client and a local agency can be problematic. B) A multinational agency always has the best feel for a market. C) Only a multinational agency can provide the best cultural interpretation in a situation in which local modification is required. D) Only a local domestic agency can provide a company with a high level of sophistication. E) Agency commission patterns are consistent throughout the world. Answer: A Explanation: A local domestic agency may provide a company with the best cultural interpretation in situations in which local modification is sought, but the level of sophistication can be weak. Moreover, the cross-cultural communication between the foreign client and the local agency can be problematic. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 86) ________ in advertising is a thorny issue because most member countries of the European Commission have different interpretations of what constitutes a misleading advertisement. A) Discrimination B) Endorsement C) Deception D) Plagiarism E) Fear mongering Answer: C Explanation: European Commission officials are establishing directives to provide controls on advertising as cable and satellite broadcasting expands. Deception in advertising is a thorny issue because most member countries have different interpretations of what constitutes a misleading advertisement. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

87) The assault on advertising of ________ is escalating, as evidenced by the World Health Organization launching a global campaign against it. A) trans fat B) alcohol C) tobacco products D) pharmaceuticals E) animal-derived products Answer: C Explanation: The assault on advertising and promotion of tobacco products is escalating. In the United States, tobacco firms have agreed to curtail promotion as part of government-supported class-action lawsuits. Most significantly, the World Health Organization (WHO) has launched a global campaign against the tobacco industry. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 88) Skepticism and negative attitudes about advertising, along with poor practices by some advertisers, have resulted in the International Advertising Association A) producing public service announcements to improve their image. B) banning certain types of ads. C) hiring public relations professionals. D) asking governments to intervene. E) developing self-regulating codes of conduct. Answer: E Explanation: The advertising industry is sufficiently concerned with the negative attitudes and skepticism of consumers and governments and with the poor practices of some advertisers that the International Advertising Association and other national and international industry groups have developed a variety of self-regulating codes. Sponsors of these codes feel that unless the advertisers themselves come up with an effective framework for control, governments will intervene. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

89) Which country has the most egregious control over advertising, where each medium has its own censorship board that passes judgment on any advertising even before it is submitted for approval by the Ministry of Information? A) Germany B) France C) Myanmar D) Australia E) Argentina Answer: C Explanation: The most egregious control, however, may be in Myanmar (formerly Burma), where each medium has its own censorship board that passes judgment on any advertising even before it is submitted for approval by the Ministry of Information. There is even a censorship board for calendars. Difficulty: 1 Easy Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 90) What is the purpose of sales promotions? Describe 5 examples of sales promotions and give an example of each. Answer: Sales promotions are marketing activities that stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation. Cents-off, in-store demonstrations, samples, coupons, gifts, product tie-ins, contests, sweepstakes, sponsorship of special events such as concerts, the Olympics, fairs, and point-of-purchase displays are types of sales promotion devices designed to supplement advertising and personal selling in the promotional mix. They are short-term efforts directed to the consumer or retailer to achieve such specific objectives as consumer product trial or immediate purchase, consumer introduction to the store or brand, gaining retail point-of-purchase displays, encouraging stores to stock the product, and supporting and augmenting advertising and personal sales efforts. Students' examples will vary. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-01 Local market characteristics that affect the advertising and promotion of products. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) Describe the role of public relations (PR). Answer: Creating good relationships with the popular press and other media to help companies communicate messages to their publics—customers, the general public, and governmental regulators—is the role of public relations (PR). The job consists of not only encouraging the press to cover positive stories about companies but also managing unfavorable rumors, stories, and events. Difficulty: 2 Medium Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 92) List the seven steps in creating an international advertising campaign. Answer: The seven steps to be followed while creating an international advertising campaign are: Perform marketing research. Specify the goals of the communication. Develop the most effective message(s) for the market segments selected. Select effective media. Compose and secure a budget based on what is required to meet goals. Execute the campaign. Evaluate the campaign relative to the goals specified. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-02 The strengths and weaknesses of sales promotions and public relations in global marketing. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

93) Describe the seven essential elements of the international communications process that affect the accuracy of the message. Answer: The essential elements of a communication process are: An information source: An international marketing executive with a product message to communicate. Encoding: The message from the source converted into effective symbolism for transmission to a receiver. A message channel: The sales force and/or advertising media that convey the encoded message to the intended receiver. Decoding: The interpretation by the receiver of the symbolism transmitted from the information source. Receiver: Consumer action by those who receive the message and are the target for the thought transmitted. Feedback: Information about the effectiveness of the message that flows from the receiver (the intended target) back to the information source for evaluation of the effectiveness of the process. Noise: Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process and affect any or all of the other six steps. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 94) The encoding step has many factors that can affect the interpretation of the message. Explain with an example. Answer: At the encoding stage, factors such as color, timing, values, beliefs, humor, tastes, and appropriateness of spokespersons can cause an international marketer to symbolize the message incorrectly. For example, the marketer wants the product to convey coolness, so the color green is used; however, people in the tropics might decode green as dangerous or associate it with disease. Students' examples will vary. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-04 The communication process and advertising misfires. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

95) Language is one of the major barriers to effective communication through advertising. Explain with an example. Answer: Language is one of the major barriers to effective communication through advertising. The problem involves different languages of different countries, different languages or dialects within one country, and the subtler problems of linguistic nuance, argument style, vernacular, and even accent. Incautious handling of language can create problems in all countries. For example, Tropicana brand orange juice was advertised as jugo de China in Puerto Rico, but when transported to Miami's Cuban community, it failed. To the Puerto Rican, China translated into orange, but to the Cuban-American it was China the country—and the Cuban-Americans were not in the market for "communist" juice. Students' examples will vary. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 96) How does cultural diversity influence the IMC process? Give examples. Answer: The problems associated with communicating to people in diverse cultures present one of the great creative challenges in advertising. One advertising executive puts it bluntly: "International advertising is almost uniformly dreadful mostly because people don't understand language and culture." Communication is more difficult because cultural factors largely determine the way various phenomena are perceived. If the perceptual framework is different, perception of the message itself differs. Existing perceptions based on tradition and heritages often render advertising campaigns ineffective or worse. For example, Toyota introduced the Prado SUV in China only to learn that the name sounded like the Chinese word for "rule by force." This name reminded some Chinese of the 1937 invasion by Japan—not a nice memory at all. Students' examples will vary. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-05 The effects of a single European market on advertising. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

97) In an international advertising process, what four factors must be considered by an advertiser while selecting a medium? Describe them and give an example. Answer: In international advertising, an advertiser must consider the following factors while selecting a medium: Availability: One of the contrasts of international advertising is that some countries have too few advertising media and others have too many. In some countries, certain advertising media are forbidden by government edict to accept some advertising materials. Cost: Media prices are susceptible to negotiation in most countries. Agency space discounts are often split with the client to bring down the cost of media. The per contract cost varies widely from country to country. Coverage: Closely akin to the cost dilemma is the problem of coverage. Two points are particularly important: One relates to the difficulty of reaching certain sectors of the population with advertising and the other to the lack of information about coverage. Appropriateness of the media: Different types of communication media have different specific characteristics. These characteristics must be taken into consideration while selecting a medium for a particular target market. Students' examples will vary. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 98) Explain the significance of radio and television in international advertising. How has this changed over time? Answer: Possibly because of their inherent entertainment value, radio and television have become major communications media in almost all nations. Radio has been relegated to a subordinate position in the media race in countries where television facilities are well developed. In many countries, however, radio is a particularly important and vital advertising medium when it is the only one reaching large segments of the population. Television and radio advertising availability varies between countries. Some countries do not permit any commercial radio or television, but several of the traditional noncommercial countries have changed their policies in recent years because television production is so expensive. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

99) How might social media be used as a marketing tool? What do international advertisers need to do to take advantage of this medium? Answer: Word-of-mouth (WOM) advertising and peer recommendations have always been key influencers of brand choice, but the power of the Internet has changed the pace and reach of WOM. Social media (such as social networking, blogs, virtual worlds, and video sharing) can be powerful marketing tools, but marketers are just beginning to loosen control and let consumers interact with brands on their own terms. Consumer-generated content is having an impact on brands (both positive and negative), and new media are on the agendas of marketers of all products, not just those targeted at young people. Consumers will create content about brands whether the marketers of those brands like it or not. Thus, it is vital that marketers follow, and participate in, the conversations consumers are having online. Difficulty: 3 Hard Topic: Factors That Influence International Advertising and Promotion Strategies Learning Objective: 16-06 The effect of limited media, excessive media, and government regulations on advertising and promotion budgets. Bloom's: Understand AACSB: Technology Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 17 Personal Selling and Sales Management 1) The first step in managing a sales force is making a decision regarding its design. 2) For selling in relationship-oriented countries, a sales force consisting of American expatriates proves to be most efficient. 3) Only a limited number of American high-caliber sales personnel are willing to live abroad for extended periods of time as expatriates. 4) A chief disadvantage of an expatriate sales force is the high cost for a company. 5) Since expatriates are not locals, they often have a negative effect on the prestige of the company and its product line in the eyes of foreign customers. 6) With advances in communications technologies, virtual expatriates find it easy to maintain close contact with subordinates and customers. 7) Local salespeople are better able to lead a company through the maze of unfamiliar distribution systems and referral networks of a foreign country. 8) The main disadvantage of hiring local nationals for an international sales force is the tendency of headquarters personnel to ignore their advice. 9) In relationship-oriented cultures, sales representatives tend to be on the bottom rung of the social ladder. 10) For an American company, one of the disadvantages of recruiting a U.S. home-country national for a foreign sales assignment is the cost of double taxation. 11) Though maturity and emotional stability are essential, the transnational manager is rarely expected to have knowledge of many subjects, either on or off the job. 12) An international salesperson can be hampered by flexibility when working in a foreign country or in the home country. 13) The traits that make for successful sales representatives in the United States are the same as those that are important in other countries as well. 14) In the context of international sales management, managers' cultures affect their personnel decisions. 15) Training for expatriates focuses on the company, its products, technical information, and selling methods, while that for local personnel focuses on customs and foreign sales problems. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

16) Marketing is a business function requiring high motivation regardless of the location of the practitioner. 17) Social recognition is a more important motivating factor for an American sales representative compared to a Japanese salesperson. 18) Japanese sales representatives are motivated more by the social pressure of their peers than by the prospect of making more money individually. 19) In eastern European countries, compensation packages typically involve a substantially greater emphasis on performance-based incentives than in the United States. 20) Differences in languages and culture can make mutual understanding between foreign managers and sales representatives difficult. 21) Expatriate managers fear that they will lose opportunities for promotion because they will be forgotten by the home office while they are working in a foreign country. 22) Expatriates working in high-tax countries prefer direct income instead of fringe benefits as part of their compensation package. 23) Separation allowances are benefits paid when an expatriate manager leaves a company. 24) In Europe, external labor unions are involved in setting compensation rules for sales people. 25) In the U.S., poor performers typically stay with the company and are seldom fired. 26) The primary control tool used by American sales managers is the benefits system. 27) Jacob's wife never grew accustomed to his foreign assignment and was miserable, so Jacob requested a move back to the home country. This is a common reason for an expatriate's failure to function effectively in a foreign assignment. 28) Personal career planning for the expatriate is a significant strategy that helps companies prevent returnee attrition. 29) An expatriate with excellent management and technical skills is sure to excel in any environment, even if he or she lacks an understanding of cultural differences. 30) An expatriate with excellent cultural skills does not tolerate ambiguity and upholds the superiority of his or her culture. 31) Most companies today limit their search for senior-level executive talent to their home countries.

32) What is a company's most direct tie to the customer? A) the product B) the salesperson C) the parent company D) the retail outlet E) the distributor 33) What is the final link in a company's marketing and sales efforts? A) the chairperson B) the marketing manager C) the sales representative D) the customer E) the sales manager 34) Relationship marketing focuses on A) the short-term effort. B) maintaining an atmosphere of trust with the sales manager. C) involving all members of the sales team in the sale. D) treating each sale as a one-time event. E) building long-term alliances. 35) Countries such as Germany allow for greater use of expatriates in international sales forces. What is most likely the reason for this? A) Germany is a member of the World Trade Organization. B) Germany has a relationship-oriented culture. C) The German language is easy to master. D) Germany has an information-oriented culture. E) Germany is a member of the United Nations. 36) In countries like Japan, a sales force is likely to be most effective if it consists mostly of A) professional expatriates. B) local nationals. C) virtual expatriates. D) third-world nationals. E) expatriates from Asian countries. 37) A multinational company with its headquarters in the U.S. wants to sell its new hightechnology product in Germany. For the most effective selling, the sales force for this company would probably consist mostly of A) local German nationals. B) illegal aliens living in the US. C) temporary, freelancing German sales personnel. D) American expatriates. E) third-culture people from Japan.

38) The largest personnel requirement in foreign countries for most companies is in the A) management team. B) finance department. C) information technology team. D) human resources department. E) sales team. 39) An expatriate sales force is likely to be A) most efficient in relationship-based cultures. B) unsuitable when a company wants to sell high-technology products. C) lacking in knowledge regarding the product line of the company. D) received unfavorably in information-oriented cultures. E) the best choice when selling requires an extensive background of information. 40) When is an expatriate sales force most likely to have an advantage over a native sales force? A) when selling consulting services B) when selling in relationship-oriented countries C) when the product caters to a niche market D) when the product is highly technical in nature E) when selling does not require effective communication skills 41) What is an advantage of a sales force consisting of expatriate sales representatives? A) They possess greater technical training. B) They transcend cultural and legal barriers. C) They cost less to be maintained in a foreign location. D) The cultural gap can be easily narrowed. E) They have a better understanding of distribution channels. 42) What is a disadvantage associated with a sales force consisting of expatriate salespeople? A) adverse effect on the prestige of the product B) inability to effectively communicate and influence headquarters' personnel C) lack of technological expertise D) inadequate knowledge of the company E) large cultural barriers 43) What is the most likely reason for Americans to seek third-country nationals for their international sales forces? A) They transcend legal and cultural barriers. B) They are thoroughly knowledgeable about a country's business structure. C) They are often able to speak several languages. D) They cost less to maintain than a staff of local nationals. E) They can lead a company better through unfamiliar referral networks than local nationals.

44) What is a strategy that international companies use to encourage sales personnel to accept foreign assignments? A) International experience is considered important to join top management. B) It is made mandatory for all sales personnel to take up expatriate positions. C) Part of the headquarters of the company is set up at the foreign location. D) Companies unfailingly provide employment for the employee's spouse in a top position. E) Legal obligations are imposed on the expatriate sales representatives. 45) What is a characteristic of a professional expatriate? A) They work abroad for a period of one month and then return to the home office. B) They work for a foreign company in a third country for a short period. C) They work abroad in country after country for the greater part of their careers. D) They work in their home branches for most of their careers. E) They manage operations in other countries but do not move there. 46) Helmut, a German national, works as a sales manager for Grey Oil Corporation in the Middle East. Given the benefits associated with the job, he works on one foreign assignment after another and rarely returns to the headquarters in Germany. In view of the given information, we can say that Helmut is a A) repatriate manager. B) virtual expatriate. C) third-country national. D) professional expatriate. E) native salesperson. 47) What best defines virtual expatriates? A) They stay and work abroad for a short period of one to two months and then return to their home country. B) They work in a foreign culture and blend to such an extent that they may more closely resemble a local than an expatriate. C) They work abroad in one country after another for the greater part of their career. D) They are expatriates from their own countries working for a foreign company in a third country. E) They manage operations in foreign countries but do not move there. 48) Jorge, an American citizen, works as the sales manager at an office supply company. He is posted at the company headquarters in the U.S. and manages operations in China, making frequent and lengthy visits to conduct business meetings with his colleagues there. Jorge may be considered to be a A) repatriate. B) virtual expatriate. C) third-country national. D) professional expatriate. E) local sales manager.

49) What is an advantage of being a virtual expatriate? A) They can eliminate the problem of time zone differences. B) They can establish closer relationships with their customers in the foreign country. C) Their families do not have to be uprooted from their home country. D) They possess complete local knowledge about cultural practices in the foreign country. E) They can avoid cross-cultural communications problems with their foreign colleagues. 50) From an international firm's perspective, what is an advantage associated with virtual assignments? A) Sales personnel can avoid health risks involved in flying frequently to foreign countries. B) Customer relationship structures may be improved due to direct customer interaction. C) The extra expense involved in an actual executive move may be avoided. D) Problems related to low morale of personnel due to living in hotels can be avoided. E) Misunderstandings due to lack of cultural skills may be completely eliminated. 51) Horatio is a virtual expatriate based in the U.S., managing operations in France and Belgium for his company. What disadvantage of working as a virtual expatriate is Horatio likely to experience? A) He may find it difficult to build close contact with subordinates and customers. B) His family will need to be uprooted. C) He will risk losing out on promotions at corporate headquarters. D) He will likely lack the understanding of how home-office politics influence decisions. E) The top personnel at the headquarters will tend to ignore his advice. 52) The primary difference between professional expatriates and virtual expatriates is that A) professional expatriates can avoid misunderstandings that arise from cross-cultural communications. B) for virtual expatriates, building close contact with customers is much easier. C) professional expatriates do not incur any extra expense to the company. D) for virtual expatriates, establishing a good working relationship with subordinates is much easier. E) virtual expatriates work from their home branch and do not relocate to the assignment country. 53) When recruiting sales and marketing personnel for an international sales force, there is a preference in favor of the locals. The reason for this is most likely that local nationals A) transcend both cultural and legal barriers. B) have supreme technological expertise. C) are more highly trained than expatriates. D) have a better understanding of home-office politics. E) do not accept bribes.

54) What is an advantage of hiring local nationals in the sales force? A) They are more efficient in communicating with and influencing headquarters' personnel. B) They are more knowledgeable about a country's business structure and systems. C) They add to the prestige of the product line in the eyes of foreign customers. D) They are likely to have superior technical expertise. E) They do not accept any form of bribe. 55) What is an advantage that a sales force consisting of local nationals is likely to have over a sales force of expatriates? A) They are more efficient in communicating with and influencing headquarters' personnel. B) They cost the firm less to maintain. C) They add more to the prestige of the product line in the eyes of foreign customers. D) They have greater technical expertise. E) They are less likely to accept any form of bribe. 56) What is the main disadvantage of hiring local nationals in the sales force? A) Headquarters personnel tend to ignore the advice of local nationals. B) Most local nationals are costly to maintain. C) Poaching of experienced personnel by competitor companies increases. D) Cultural differences lead to communication issues with customers. E) Lack of familiarity with distribution systems and referral networks plagues local nationals. 57) What is most likely to be a reason that headquarters personnel tend to ignore the advice of local nationals? A) Foreign nationals are not keen on keeping up with current best practices. B) Foreign nationals lack the understanding of how home-office politics work. C) Foreign nationals have a good grasp of the local culture and prevalent practices. D) Foreign nationals cannot build close contact with subordinates and customers. E) Foreign nationals have superior technical expertise, but are not good at relationship management. 58) What is true of local nationals who are hired to sell a company's products? A) They are not keen on maintaining a cordial relationship at the home office. B) They lack the knowledge of local culture and prevalent practices. C) They are better able to lead a company through the maze of unfamiliar distribution systems. D) They do not communicate with subordinates and customers directly. E) They normally work for a foreign company in a third country. 59) In relationship-oriented cultures such as France, Mexico, and Japan, sales representatives A) are available to fill vacant positions perennially. B) tend not to be highly respected. C) are better paid than their U.S. counterparts. D) lack proper knowledge of their culture. E) are respected and held in high esteem.

60) What is considered to be the most common job in the United States despite being viewed negatively? A) government service B) attorney C) office management D) personal selling E) teaching 61) Expatriates from their own countries working for a foreign company in another country are called A) virtual expatriates. B) native salespeople. C) third-country nationals. D) professional expatriates. E) local nationals. 62) Doreen is a French citizen who has been working for a U.S. company in Spain for twenty years. Doreen may be considered to be a A) virtual expatriate. B) native salesperson. C) third-country national. D) professional expatriate. E) local national. 63) One feature of third-country nationals is A) U.S. firms have to pay double tax when hiring them. B) they are local nationals who work for a foreign company. C) they work at the company's headquarters and are located in their home country. D) they manage their foreign clients and subordinates from their home country. E) their nationality has little to do with where they work or for whom. 64) What is the most important quality of marketing personnel for a foreign assignment that a recruiter should consider? A) They should have little cultural empathy as this might distract them from their main purpose. B) When working in a foreign country, they must be capable of making decisions that are not influenced by the habits of the market. C) They should be able to represent a culturally superior image of their country and its products. D) They should be hypersensitive to the behavioral variations in different countries. E) They should possess a considerable breadth of knowledge of many subjects both on and off the job. 65) A marketer who expects to be effective in the international marketplace should A) be antagonistic toward other cultures. B) not let the local culture influence his or her decisions. C) practice cultural ethnocentrism. D) not let consumer behavior influence marketing decisions. E) have a positive outlook on an international assignment. 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

66) Cultural empathy involves A) being subservient to a superior culture. B) understanding another culture and not being antagonistic. C) believing that the people of inferior cultures should be enlightened. D) having the attitude that one's own culture is superior to others. E) being dissatisfied with one's own culture and adopting a new culture. 67) When hiring new personnel for international marketing, what is considered to be the best way to assess the traits necessary for success? A) paper-and-pencil ability tests B) interviews and role-playing exercises C) biographical information D) reference checks E) calligraphy analysis 68) Japanese sales representatives tend to be most satisfied with their jobs when A) their values are consistent with those of their company. B) they receive high salaries and many perks. C) they are better educated than their colleagues. D) their technological knowledge is superior to that of others. E) their ideas that do not conform to the company's goals are well-received. 69) What is most likely the reason that continual training is more important in foreign markets than in domestic ones? A) slow adaptation of foreign markets to innovative products B) technological inferiority of domestic products C) the need to establish the superiority of domestic cultures D) lack of technical knowledge among expatriate salespersons E) lack of routine contact with the parent company 70) The training of foreign employees is likely to be most effective when A) it is handled by trainers who communicate in languages alien to the employees. B) it is tailored to the employees' ways of learning and communicating. C) national differences are ignored during motivational sessions. D) the superiority of their culture is emphasized over others. E) it is different from the familiar ways of communicating. 71) What is likely to be the most effective method in making home-office personnel aware of the problems of foreign operations? A) providing cross-cultural training B) designing a theoretical course C) conducting in-house seminars D) holding corporate virtual reality training E) distributing marketing reading materials 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

72) Japanese and American salespersons are surprisingly similar except for one difference that Japanese rate as more important than their American counterparts. Identify this difference. A) job security B) promotion C) job satisfaction D) social recognition E) personal growth and development 73) Considering the specific characteristics of Japan's culture, what strategies would be most successful in motivating employees in Japanese organizations? A) individual commission systems B) group bonus systems C) company cars D) birthday gift vouchers E) best employee awards 74) What is the main reason for the failure of individual incentives to motivate employees in Japan? A) society's emphasis on paternalism and collectivism B) high corruption levels C) practice of cultural chauvinism D) a democratic form of government E) encouragement of individualism 75) Nontaxable perks such as a company vehicle given to an expatriate is an example of A) an overseas premium. B) a family compensation. C) a special assessment. D) a fringe benefit. E) a separation allowance. 76) Claudia is being transferred to a foreign assignment that will last 3 months. Her family is not accompanying her, so the company is paying her a premium, which is called a A) fringe benefit. B) pension plan. C) displacement reserve. D) special assessment. E) separation allowance. 77) What is actively involved in setting rules about compensation companywide in Europe? A) pension committees B) work councils C) external labor unions D) the European Union E) the World Trade Organization 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

78) A survey showed that most companies establish sales compensation practices locally (either at the country or regional levels). The program element most often determined at the global level is A) Program Design Principles. B) Pay Mix. C) Job Grades. D) Formula Mechanics. E) Performance Measures. 79) What strategy should be practiced when determining compensation globally? A) A similar framework should be created for jobs with different responsibilities. B) The support of senior sales executives should not be sought before taking action. C) Local managers should not decide the mix between base and incentive pay. D) Consistent communication and training themes should be used worldwide. E) The incentive plan should be designed centrally and dictated to local offices. 80) Unlike the Japanese, the American sales managers have less need to worry about the problem of motivating poor performers. What is the reason for this? A) The group incentive system balances pay differences and thus is motivating enough. B) Companies are more focused on long-term loyalty and are willing to compromise on performance initially. C) Sales personnel are shifted to areas where their performance levels can meet expectations. D) The base pay that is higher than their performance based incentive motivates them. E) The team usually does not have any low performers as they either quit or are fired. 81) What practice, with respect to motivating sales personnel, is most common in relationshiporiented countries like Japan? A) Companies lay greater emphasis on incentives that are based on individual performance. B) Companies do not allow local managers to decide the mix between base and incentive pay. C) Commissions are measured by sales revenues generated by each employee. D) Companies are not very tolerant of poor performers and fire them immediately. E) Companies motivate sales representatives through frequent interaction with supervisors. 82) The primary control tool used by American sales managers with sales representatives is the A) encumbrance system. B) quota system. C) incentive system. D) attraction of a foreign assignment. E) threat of foreign postings.

83) Qualified and ambitious sales personnel refuse to take up foreign assignments for fear of hampering their career development. This "out of sight, out of mind" fear is most closely linked to the problems of A) conflict of interests. B) acculturation. C) skill redundancy. D) naturalization. E) repatriation. 84) When Sandra was offered a transfer to the London office from New York, she worried that she would miss out on opportunities in the New York office when she returned because she hadn't been there. This is a common problem with A) conflict of interests. B) acculturation. C) skill redundancy. D) repatriation. E) assimilation. 85) What is likely the single most important reason for expatriate dissatisfaction? A) unsuccessful family adjustment B) cultural conflict in the foreign country C) noncooperation of foreign colleagues D) communication issues with home-country headquarters E) redundant skills in a foreign country 86) Which factor significantly differentiates companies with the least amount of returnee attrition from those with the highest attrition? A) specialized expatriate department B) personal career planning for expatriates C) continued cultural training D) protection from work councils E) family migration planning 87) Most expatriate failures are caused by the lack of A) management skills. B) technical skills. C) an understanding of cultural differences. D) knowledge of the product line. E) knowledge of the company. 88) What is a trait of people with good cultural skills? A) They have a clear set of principles and do not tolerate ambiguity. B) They take pride in their culture and practice cultural ethnocentrism. C) They monitor the behavior of their employees and judge them accordingly. D) They convey a sincere interest in people and their culture. E) They try to propagate their culture and insist that others follow them. 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

89) In the past, most chief executives came from one of three backgrounds. What is one of these? A) accounting B) information technology C) law D) marketing E) public relations 90) A foreign managerial posting is becoming increasingly viewed as A) a negative for advancement. B) a necessary evil that can't be avoided. C) an important stepping stone to executive positions. D) a cherished experience. E) an experience to be avoided at all costs. 91) What decisions must be made in designing an international sales force, and what are the complications that tend to arise? 92) Describe the advantages and disadvantages of using an expatriate sales force. 93) What are virtual expatriates, and what are the disadvantages associated with using these sales managers? 94) What are third-country nationals (TCNs)? Why do American companies favor third-country nationals over expatriates from other English-speaking countries for overseas assignments? 95) What are the eight specific characteristics and skills a company should look for when selecting sales and marketing personnel for international marketing positions? 96) What should be the nature of a training program for international marketing personnel? 97) What is the reason for the failure of individual incentives to motivate employees in Japan? 98) Discuss how compensation plans of American companies vary substantially around the world. 99) Describe three reasons for the low morale and growing amount of attrition among returning expatriates. 100) How does the family impact the success of an expatriate manager? 101) In the context of international marketing, how important is a second language for a manager?

International Marketing, 18e (Cateora) Chapter 17 Personal Selling and Sales Management 1) The first step in managing a sales force is making a decision regarding its design. Answer: TRUE Explanation: The first step in managing a sales force is its design. Based on analyses of current and potential customers, the selling environment, competition, and the firm's resources and capabilities, decisions must be made regarding the numbers, characteristics, and assignments of sales personnel. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-02 The considerations in designing an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) For selling in relationship-oriented countries, a sales force consisting of American expatriates proves to be most efficient. Answer: FALSE Explanation: Selling in information-oriented cultures such as Germany allows for greater use of expatriates. However, relationship-oriented countries such as Japan will require the most complete local knowledge possessed only by natives. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-02 The considerations in designing an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Only a limited number of American high-caliber sales personnel are willing to live abroad for extended periods of time as expatriates. Answer: TRUE Explanation: The chief disadvantages of an expatriate sales force are the high cost, cultural and legal barriers, and the limited number of high-caliber personnel willing to live abroad for extended periods. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) A chief disadvantage of an expatriate sales force is the high cost for a company. Answer: TRUE Explanation: The chief disadvantages of an expatriate sales force are the high cost, cultural and legal barriers, and the limited number of high-caliber personnel willing to live abroad for extended periods. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Since expatriates are not locals, they often have a negative effect on the prestige of the company and its product line in the eyes of foreign customers. Answer: FALSE Explanation: The expatriate salesperson may have the advantages of greater technical training, better knowledge of the company and its product line, and proven dependability. Because they are not locals, expatriates sometimes add to the prestige of the product line in the eyes of foreign customers. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) With advances in communications technologies, virtual expatriates find it easy to maintain close contact with subordinates and customers. Answer: FALSE Explanation: Virtual expatriates manage operations in other countries but do not move there. They stay in hotels, make long visits, and maintain their families at home. Close contact with subordinates and customers is tougher for virtual expatriates. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) Local salespeople are better able to lead a company through the maze of unfamiliar distribution systems and referral networks of a foreign country. Answer: TRUE Explanation: Usually more knowledgeable about a country's business structure and systems than an expatriate would be, local salespeople are better able to lead a company through the maze of unfamiliar distribution systems and referral networks. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) The main disadvantage of hiring local nationals for an international sales force is the tendency of headquarters personnel to ignore their advice. Answer: TRUE Explanation: The main disadvantage of hiring local nationals is the tendency of headquarters personnel to ignore their advice. Even though most foreign nationals are careful to keep relationships at the home office warm, their influence is often reduced by their limited English communication skills and lack of understanding of how home-office politics influence decision making. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) In relationship-oriented cultures, sales representatives tend to be on the bottom rung of the social ladder. Answer: TRUE Explanation: In the more relationship-oriented cultures such as France, Mexico, and Japan, sales representatives tend to be on the bottom rung of the social ladder. Thus, recruiting the brightest people to fill sales positions in foreign operations can be very difficult indeed. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) For an American company, one of the disadvantages of recruiting a U.S. home-country national for a foreign sales assignment is the cost of double taxation. Answer: TRUE Explanation: American companies often seek third-country nationals (TCNs) from other English-speaking countries to avoid the double taxation costs of their American managers. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Though maturity and emotional stability are essential, the transnational manager is rarely expected to have knowledge of many subjects, either on or off the job. Answer: FALSE Explanation: Managers or salespeople operating in foreign countries need considerable breadth of knowledge of many subjects both on and off the job. The ability to speak one or more other languages is always preferable. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) An international salesperson can be hampered by flexibility when working in a foreign country or in the home country. Answer: FALSE Explanation: An international salesperson must have a high level of flexibility, whether working in a foreign country or at home. Expatriates working in a foreign country must be particularly sensitive to the habits of the market; those working at home for a foreign company must adapt to the requirements and ways of the parent company. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) The traits that make for successful sales representatives in the United States are the same as those that are important in other countries as well. Answer: FALSE Explanation: There is evidence that some traits that make for successful sales representatives in the United States may not be important in other countries. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) In the context of international sales management, managers' cultures affect their personnel decisions. Answer: TRUE Explanation: Evidence indicates that a manager's culture affects personnel decisions. One study reports "that managers given an identical [personnel selection] problem do not make the same decisions nor do they value the criteria often used in recruitment and promotion decisions equally." Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) Training for expatriates focuses on the company, its products, technical information, and selling methods, while that for local personnel focuses on customs and foreign sales problems. Answer: FALSE Explanation: Training for expatriates focuses on the customs and the special foreign sales problems that will be encountered, whereas local personnel require greater emphasis on the company, its products, technical information, and selling methods. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-05 The special training needs of international personnel. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) Marketing is a business function requiring high motivation regardless of the location of the practitioner. Answer: TRUE Explanation: Motivation is especially complicated because the firm is dealing with different cultures, different sources, and different philosophies. Marketing is a business function requiring high motivation regardless of the location of the practitioner. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) Social recognition is a more important motivating factor for an American sales representative compared to a Japanese salesperson. Answer: FALSE Explanation: In one study, sales representatives in comparable Japanese and American sales organizations were asked to allocate 100 points across an array of potential rewards from work. The only real differences between the two groups were in social recognition, which the Japanese rated as more important. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) Japanese sales representatives are motivated more by the social pressure of their peers than by the prospect of making more money individually. Answer: TRUE Explanation: Due to Japan's emphasis on paternalism and collectivism and its system of lifetime employment and seniority, motivation through individual incentives does not work well because Japanese employees seem to derive the greatest satisfaction from being comfortable members of a group. Japanese sales representatives are motivated more by the social pressure of their peers than by the prospect of making more money based on individual effort. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

19) In eastern European countries, compensation packages typically involve a substantially greater emphasis on performance-based incentives than in the United States. Answer: FALSE Explanation: Compensation packages in eastern European countries typically involve a substantially greater emphasis on base pay than in the United States, and performance-based incentives have been found to be less effective. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) Differences in languages and culture can make mutual understanding between foreign managers and sales representatives difficult. Answer: TRUE Explanation: Communications are important in maintaining high levels of motivation; foreign managers need to know that the home office is interested in their operations, and in turn, they want to know what is happening in the parent country. Differences in languages, culture, and communication styles can make mutual understanding between managers and sales representatives more difficult. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) Expatriate managers fear that they will lose opportunities for promotion because they will be forgotten by the home office while they are working in a foreign country. Answer: TRUE Explanation: Because promotion and the opportunity to improve status are important motivators, a company needs to make clear the opportunities for growth within the firm. One of the greatest fears of expatriate managers, which can be easily allayed, is that they will be forgotten by the home office. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) Expatriates working in high-tax countries prefer direct income instead of fringe benefits as part of their compensation package. Answer: FALSE Explanation: Fringe benefits play a major role in many countries. Those working in high-tax countries prefer liberal expense accounts and fringe benefits that are nontaxable (such as company cars) instead of direct income subject to high taxes. Fringe benefit costs are high in Europe, ranging from 35 to 60 percent of salary. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 23) Separation allowances are benefits paid when an expatriate manager leaves a company. Answer: FALSE Explanation: In general, short-term assignments involve payments of overseas premiums (sometimes called separation allowances if the family does not go along), all excess expenses, and allowances for tax differentials. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) In Europe, external labor unions are involved in setting compensation rules for sales people. Answer: FALSE Explanation: In Europe, work councils (that is, internal labor union committees) are very much involved in setting rules about compensation companywide, even for salespeople. In Austria and Germany, for example, work councils not only codetermine compensation plans but also must approve them before implementation. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) In the U.S., poor performers typically stay with the company and are seldom fired. Answer: FALSE Explanation: In the United States, poor performers either quit (because they are not making any money), or they are fired. In Japan, the poor performers stay with the company and are seldom fired. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) The primary control tool used by American sales managers is the benefits system. Answer: FALSE Explanation: The primary control tool used by American sales managers is the incentive system. Because of the Internet and smartphones, more and more American sales representatives operate out of offices in their homes and see supervisors infrequently. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) Jacob's wife never grew accustomed to his foreign assignment and was miserable, so Jacob requested a move back to the home country. This is a common reason for an expatriate's failure to function effectively in a foreign assignment. Answer: TRUE Explanation: A study of personnel directors of over 300 international firms found that the inability of the manager's spouse to adjust to a different physical or cultural environment was the primary reason for an expatriate's failure to function effectively in a foreign assignment. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

28) Personal career planning for the expatriate is a significant strategy that helps companies prevent returnee attrition. Answer: TRUE Explanation: Companies with the least amount of returnee attrition differ from those with the highest attrition in one significant way: personal career planning for the expatriate. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) An expatriate with excellent management and technical skills is sure to excel in any environment, even if he or she lacks an understanding of cultural differences. Answer: FALSE Explanation: Most expatriate failures are not caused by lack of management or technical skills but rather by lack of an understanding of cultural differences and their effect on management skills. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) An expatriate with excellent cultural skills does not tolerate ambiguity and upholds the superiority of his or her culture. Answer: FALSE Explanation: Tolerating ambiguity and coping with cultural differences and the frustration that frequently develops when things are different and circumstances change are qualities of an expatriate with good cultural skills. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) Most companies today limit their search for senior-level executive talent to their home countries. Answer: FALSE Explanation: Fewer companies today limit their search for senior-level executive talent to their home countries. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-09 The changing profile of the global sales and marketing manager. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) What is a company's most direct tie to the customer? A) the product B) the salesperson C) the parent company D) the retail outlet E) the distributor Answer: B Explanation: The salesperson is a company's most direct tie to the customer; in the eyes of most customers, the salesperson is the company. As presenter of company offerings and gatherer of customer information, the sales representative is the final link in the culmination of a company's marketing and sales efforts. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-01 The role of interpersonal selling in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) What is the final link in a company's marketing and sales efforts? A) the chairperson B) the marketing manager C) the sales representative D) the customer E) the sales manager Answer: C Explanation: As presenter of company offerings and gatherer of customer information, the sales representative is the final link in the culmination of a company's marketing and sales efforts. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-01 The role of interpersonal selling in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) Relationship marketing focuses on A) the short-term effort. B) maintaining an atmosphere of trust with the sales manager. C) involving all members of the sales team in the sale. D) treating each sale as a one-time event. E) building long-term alliances. Answer: E Explanation: Relationship marketing, particularly across borders, where culture can both complicate and assist in the selling task, is built on effective communications between the seller and buyer. It focuses on building long-term alliances rather than treating each sale as a one-time event. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-01 The role of interpersonal selling in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) Countries such as Germany allow for greater use of expatriates in international sales forces. What is most likely the reason for this? A) Germany is a member of the World Trade Organization. B) Germany has a relationship-oriented culture. C) The German language is easy to master. D) Germany has an information-oriented culture. E) Germany is a member of the United Nations. Answer: D Explanation: Selling in information-oriented cultures such as Germany allows for greater use of expatriates. Whereas, relationship-oriented countries such as Japan will require the most complete local knowledge possessed only by natives. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-02 The considerations in designing an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 36) In countries like Japan, a sales force is likely to be most effective if it consists mostly of A) professional expatriates. B) local nationals. C) virtual expatriates. D) third-world nationals. E) expatriates from Asian countries. Answer: B Explanation: Relationship-oriented countries such as Japan will require the most complete local knowledge possessed only by natives. Whereas, selling in information-oriented cultures such as Germany allows for greater use of expatriates. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-02 The considerations in designing an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) A multinational company with its headquarters in the U.S. wants to sell its new hightechnology product in Germany. For the most effective selling, the sales force for this company would probably consist mostly of A) local German nationals. B) illegal aliens living in the US. C) temporary, freelancing German sales personnel. D) American expatriates. E) third-culture people from Japan. Answer: D Explanation: Selling high-technology products may allow for the greater use of American expatriates, whereas selling consulting services will tend to require more participation by native sales representatives. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-02 The considerations in designing an international sales force. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 38) The largest personnel requirement in foreign countries for most companies is in the A) management team. B) finance department. C) information technology team. D) human resources department. E) sales team. Answer: E Explanation: The largest personnel requirement abroad for most companies is the sales force, recruited from three sources: expatriates, local nationals, and third-country nationals. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) An expatriate sales force is likely to be A) most efficient in relationship-based cultures. B) unsuitable when a company wants to sell high-technology products. C) lacking in knowledge regarding the product line of the company. D) received unfavorably in information-oriented cultures. E) the best choice when selling requires an extensive background of information. Answer: E Explanation: When products are highly technical, or when selling requires an extensive background of information and applications, an expatriate sales force remains the best choice. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) When is an expatriate sales force most likely to have an advantage over a native sales force? A) when selling consulting services B) when selling in relationship-oriented countries C) when the product caters to a niche market D) when the product is highly technical in nature E) when selling does not require effective communication skills Answer: D Explanation: The number of companies relying on expatriate personnel is increasing as the volume of world trade increases and as more companies use locals to fill marketing positions. However, when products are highly technical, or when selling requires an extensive background of information and applications, an expatriate sales force remains the best choice. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) What is an advantage of a sales force consisting of expatriate sales representatives? A) They possess greater technical training. B) They transcend cultural and legal barriers. C) They cost less to be maintained in a foreign location. D) The cultural gap can be easily narrowed. E) They have a better understanding of distribution channels. Answer: A Explanation: The expatriate salesperson may have the advantages of greater technical training, better knowledge of the company and its product line, and proven dependability. Because they are not locals, expatriates sometimes add to the prestige of the product line in the eyes of foreign customers. And perhaps most important, expatriates usually are able to effectively communicate with and influence headquarters' personnel. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) What is a disadvantage associated with a sales force consisting of expatriate salespeople? A) adverse effect on the prestige of the product B) inability to effectively communicate and influence headquarters' personnel C) lack of technological expertise D) inadequate knowledge of the company E) large cultural barriers Answer: E Explanation: The chief disadvantages of an expatriate sales force are the high cost, cultural and legal barriers, and the limited number of high-caliber personnel willing to live abroad for extended periods. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) What is the most likely reason for Americans to seek third-country nationals for their international sales forces? A) They transcend legal and cultural barriers. B) They are thoroughly knowledgeable about a country's business structure. C) They are often able to speak several languages. D) They cost less to maintain than a staff of local nationals. E) They can lead a company better through unfamiliar referral networks than local nationals. Answer: C Explanation: Third-country nationals (TCNs) are expatriates from their own countries working for a foreign company in a third country. Third-country nationals often are sought because they speak several languages and know an industry or foreign country well. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) What is a strategy that international companies use to encourage sales personnel to accept foreign assignments? A) International experience is considered important to join top management. B) It is made mandatory for all sales personnel to take up expatriate positions. C) Part of the headquarters of the company is set up at the foreign location. D) Companies unfailingly provide employment for the employee's spouse in a top position. E) Legal obligations are imposed on the expatriate sales representatives. Answer: A Explanation: Companies with well-planned career development programs have the least difficulty. Indeed, the best international companies make it crystal clear that a ticket to top management is an overseas stint. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) What is a characteristic of a professional expatriate? A) They work abroad for a period of one month and then return to the home office. B) They work for a foreign company in a third country for a short period. C) They work abroad in country after country for the greater part of their careers. D) They work in their home branches for most of their careers. E) They manage operations in other countries but do not move there. Answer: C Explanation: Some expatriates have one-time assignments (which may last for years), after which they return to the parent company; others are essentially professional expatriates, working abroad in country after country. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) Helmut, a German national, works as a sales manager for Grey Oil Corporation in the Middle East. Given the benefits associated with the job, he works on one foreign assignment after another and rarely returns to the headquarters in Germany. In view of the given information, we can say that Helmut is a A) repatriate manager. B) virtual expatriate. C) third-country national. D) professional expatriate. E) native salesperson. Answer: D Explanation: Helmut is a professional expatriate because he works on foreign assignments one after the other and rarely returns to his headquarters in Germany. Some expatriates have onetime assignments, after which they return to the parent company; others are essentially professional expatriates, working abroad in country after country. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

47) What best defines virtual expatriates? A) They stay and work abroad for a short period of one to two months and then return to their home country. B) They work in a foreign culture and blend to such an extent that they may more closely resemble a local than an expatriate. C) They work abroad in one country after another for the greater part of their career. D) They are expatriates from their own countries working for a foreign company in a third country. E) They manage operations in foreign countries but do not move there. Answer: E Explanation: The Internet and other advances in communications technologies, along with the growing reluctance of executives to move abroad, are creating a new breed of expatriate, the virtual one. Virtual expatriates manage operations in other countries but do not move there. They stay in hotels, make long visits, and maintain their families at home. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) Jorge, an American citizen, works as the sales manager at an office supply company. He is posted at the company headquarters in the U.S. and manages operations in China, making frequent and lengthy visits to conduct business meetings with his colleagues there. Jorge may be considered to be a A) repatriate. B) virtual expatriate. C) third-country national. D) professional expatriate. E) local sales manager. Answer: B Explanation: Jorge is a virtual expatriate because he works out of his home country but makes lengthy visits for meetings with colleagues and managing operations in China. Virtual expatriates manage operations in other countries but do not move there. They stay in hotels, make long visits, and maintain their families at home. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

49) What is an advantage of being a virtual expatriate? A) They can eliminate the problem of time zone differences. B) They can establish closer relationships with their customers in the foreign country. C) Their families do not have to be uprooted from their home country. D) They possess complete local knowledge about cultural practices in the foreign country. E) They can avoid cross-cultural communications problems with their foreign colleagues. Answer: C Explanation: Virtual expatriates' families do not have to be uprooted, and executives can stay in closer touch with the home office. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) From an international firm's perspective, what is an advantage associated with virtual assignments? A) Sales personnel can avoid health risks involved in flying frequently to foreign countries. B) Customer relationship structures may be improved due to direct customer interaction. C) The extra expense involved in an actual executive move may be avoided. D) Problems related to low morale of personnel due to living in hotels can be avoided. E) Misunderstandings due to lack of cultural skills may be completely eliminated. Answer: C Explanation: From a firm's perspective, a virtual assignment is often the only option and often a good way to avoid the extra expenses of an actual executive move. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) Horatio is a virtual expatriate based in the U.S., managing operations in France and Belgium for his company. What disadvantage of working as a virtual expatriate is Horatio likely to experience? A) He may find it difficult to build close contact with subordinates and customers. B) His family will need to be uprooted. C) He will risk losing out on promotions at corporate headquarters. D) He will likely lack the understanding of how home-office politics influence decisions. E) The top personnel at the headquarters will tend to ignore his advice. Answer: A Explanation: Close contact with subordinates and customers is tougher for virtual expatriates. However, virtual expatriates' families do not have to be uprooted, and executives can stay in closer touch with the home office. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 52) The primary difference between professional expatriates and virtual expatriates is that A) professional expatriates can avoid misunderstandings that arise from cross-cultural communications. B) for virtual expatriates, building close contact with customers is much easier. C) professional expatriates do not incur any extra expense to the company. D) for virtual expatriates, establishing a good working relationship with subordinates is much easier. E) virtual expatriates work from their home branch and do not relocate to the assignment country. Answer: E Explanation: Virtual expatriates manage operations in other countries but do not move there. On the other hand, professional expatriates work abroad in country after country. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) When recruiting sales and marketing personnel for an international sales force, there is a preference in favor of the locals. The reason for this is most likely that local nationals A) transcend both cultural and legal barriers. B) have supreme technological expertise. C) are more highly trained than expatriates. D) have a better understanding of home-office politics. E) do not accept bribes. Answer: A Explanation: The historical preference for expatriate managers and salespeople from the home country is giving way to a preference for local nationals. At the sales level, the picture is clearly biased in favor of the locals because they transcend both cultural and legal barriers. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) What is an advantage of hiring local nationals in the sales force? A) They are more efficient in communicating with and influencing headquarters' personnel. B) They are more knowledgeable about a country's business structure and systems. C) They add to the prestige of the product line in the eyes of foreign customers. D) They are likely to have superior technical expertise. E) They do not accept any form of bribe. Answer: B Explanation: Usually more knowledgeable about a country's business structure and systems than an expatriate would be, local salespeople are better able to lead a company through the maze of unfamiliar distribution systems and referral networks. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) What is an advantage that a sales force consisting of local nationals is likely to have over a sales force of expatriates? A) They are more efficient in communicating with and influencing headquarters' personnel. B) They cost the firm less to maintain. C) They add more to the prestige of the product line in the eyes of foreign customers. D) They have greater technical expertise. E) They are less likely to accept any form of bribe. Answer: B Explanation: At the sales level, the picture is clearly biased in favor of the locals because they transcend both cultural and legal barriers. Usually more knowledgeable about a country's business structure and systems than an expatriate would be, local salespeople are better able to lead a company through the maze of unfamiliar distribution systems and referral networks. Pools of qualified foreign personnel available in some places cost less to maintain than a staff of expatriates. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) What is the main disadvantage of hiring local nationals in the sales force? A) Headquarters personnel tend to ignore the advice of local nationals. B) Most local nationals are costly to maintain. C) Poaching of experienced personnel by competitor companies increases. D) Cultural differences lead to communication issues with customers. E) Lack of familiarity with distribution systems and referral networks plagues local nationals. Answer: A Explanation: The main disadvantage of hiring local nationals is the tendency of headquarters personnel to ignore their advice. Even though most foreign nationals are careful to keep relationships at the home office warm, their influence is often reduced by their limited English communication skills and lack of understanding of how home-office politics influence decision making. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) What is most likely to be a reason that headquarters personnel tend to ignore the advice of local nationals? A) Foreign nationals are not keen on keeping up with current best practices. B) Foreign nationals lack the understanding of how home-office politics work. C) Foreign nationals have a good grasp of the local culture and prevalent practices. D) Foreign nationals cannot build close contact with subordinates and customers. E) Foreign nationals have superior technical expertise, but are not good at relationship management. Answer: B Explanation: The main disadvantage of hiring local nationals is the tendency of headquarters personnel to ignore their advice. Even though most foreign nationals are careful to keep relationships at the home office warm, their influence is often reduced by their limited English communication skills and lack of understanding of how home-office politics influence decision making. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) What is true of local nationals who are hired to sell a company's products? A) They are not keen on maintaining a cordial relationship at the home office. B) They lack the knowledge of local culture and prevalent practices. C) They are better able to lead a company through the maze of unfamiliar distribution systems. D) They do not communicate with subordinates and customers directly. E) They normally work for a foreign company in a third country. Answer: C Explanation: Usually more knowledgeable about a country's business structure and systems than an expatriate would be, local salespeople are better able to lead a company through the maze of unfamiliar distribution systems and referral networks. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) In relationship-oriented cultures such as France, Mexico, and Japan, sales representatives A) are available to fill vacant positions perennially. B) tend not to be highly respected. C) are better paid than their U.S. counterparts. D) lack proper knowledge of their culture. E) are respected and held in high esteem. Answer: B Explanation: In relationship-oriented cultures such as France, Mexico, and Japan, sales representatives tend to be on the bottom rung of the social ladder. Thus, recruiting the brightest people to fill sales positions in foreign operations can be very difficult. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) What is considered to be the most common job in the United States despite being viewed negatively? A) government service B) attorney C) office management D) personal selling E) teaching Answer: D Explanation: Personal selling is the most common job in the United States. The United States has been described as "a nation of salesmen." Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) Expatriates from their own countries working for a foreign company in another country are called A) virtual expatriates. B) native salespeople. C) third-country nationals. D) professional expatriates. E) local nationals. Answer: C Explanation: The internationalization of business has created a pool of third-country nationals (TCNs), expatriates from their own countries working for a foreign company in a third country. The TCNs are a group whose nationality has little to do with where they work or for whom. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) Doreen is a French citizen who has been working for a U.S. company in Spain for twenty years. Doreen may be considered to be a A) virtual expatriate. B) native salesperson. C) third-country national. D) professional expatriate. E) local national. Answer: C Explanation: Doreen, a French citizen who has been working for a U.S. company in Spain is a third-country national. The internationalization of business has created a pool of third-country nationals (TCNs), expatriates from their own countries working for a foreign company in a third country. The TCNs are a group whose nationality has little to do with where they work or for whom. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

63) One feature of third-country nationals is A) U.S. firms have to pay double tax when hiring them. B) they are local nationals who work for a foreign company. C) they work at the company's headquarters and are located in their home country. D) they manage their foreign clients and subordinates from their home country. E) their nationality has little to do with where they work or for whom. Answer: E Explanation: The internationalization of business has created a pool of third-country nationals (TCNs), expatriates from their own countries working for a foreign company in a third country. Their nationality has little to do with where they work or for whom. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) What is the most important quality of marketing personnel for a foreign assignment that a recruiter should consider? A) They should have little cultural empathy as this might distract them from their main purpose. B) When working in a foreign country, they must be capable of making decisions that are not influenced by the habits of the market. C) They should be able to represent a culturally superior image of their country and its products. D) They should be hypersensitive to the behavioral variations in different countries. E) They should possess a considerable breadth of knowledge of many subjects both on and off the job. Answer: E Explanation: Managers or salespeople operating in foreign countries need considerable breadth of knowledge of many subjects both on and off the job. The ability to speak one or more other languages is always preferable. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) A marketer who expects to be effective in the international marketplace should A) be antagonistic toward other cultures. B) not let the local culture influence his or her decisions. C) practice cultural ethnocentrism. D) not let consumer behavior influence marketing decisions. E) have a positive outlook on an international assignment. Answer: E Explanation: The marketer who expects to be effective in the international marketplace needs to have a positive outlook on an international assignment. People who do not like what they are doing and where they are doing it stand little chance of success, particularly in a foreign country. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) Cultural empathy involves A) being subservient to a superior culture. B) understanding another culture and not being antagonistic. C) believing that the people of inferior cultures should be enlightened. D) having the attitude that one's own culture is superior to others. E) being dissatisfied with one's own culture and adopting a new culture. Answer: B Explanation: Successful adaptation in international affairs is based on a combination of attitude and effort. Cultural empathy is clearly a part of the basic orientation because anyone who is antagonistic or confused about the environment is unlikely to be effective. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) When hiring new personnel for international marketing, what is considered to be the best way to assess the traits necessary for success? A) paper-and-pencil ability tests B) interviews and role-playing exercises C) biographical information D) reference checks E) calligraphy analysis Answer: B Explanation: Most of the necessary traits for international marketing can be assessed during interviews and perhaps during role-playing exercises. Paper-and-pencil ability tests, biographical information, and reference checks are of secondary importance. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) Japanese sales representatives tend to be most satisfied with their jobs when A) their values are consistent with those of their company. B) they receive high salaries and many perks. C) they are better educated than their colleagues. D) their technological knowledge is superior to that of others. E) their ideas that do not conform to the company's goals are well-received. Answer: A Explanation: One study compared sales representatives in the electronics industries in Japan and the United States. Americans who cared more about money and were more educated tended to perform better and be more satisfied with their sales jobs. Conversely, the Japanese sales representatives tended to be more satisfied with their jobs when their values were consistent with those of their company. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) What is most likely the reason that continual training is more important in foreign markets than in domestic ones? A) slow adaptation of foreign markets to innovative products B) technological inferiority of domestic products C) the need to establish the superiority of domestic cultures D) lack of technical knowledge among expatriate salespersons E) lack of routine contact with the parent company Answer: E Explanation: Continual training may be more important in foreign markets than in domestic ones because of the lack of routine contact with the parent company and its marketing personnel. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-05 The special training needs of international personnel. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) The training of foreign employees is likely to be most effective when A) it is handled by trainers who communicate in languages alien to the employees. B) it is tailored to the employees' ways of learning and communicating. C) national differences are ignored during motivational sessions. D) the superiority of their culture is emphasized over others. E) it is different from the familiar ways of communicating. Answer: B Explanation: Training of foreign employees must be tailored to the recipients' ways of learning and communicating. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-05 The special training needs of international personnel. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) What is likely to be the most effective method in making home-office personnel aware of the problems of foreign operations? A) providing cross-cultural training B) designing a theoretical course C) conducting in-house seminars D) holding corporate virtual reality training E) distributing marketing reading materials Answer: A Explanation: The best companies provide home-office personnel with cross-cultural training and send them abroad periodically to increase their awareness of the problems of the foreign operations. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-05 The special training needs of international personnel. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 72) Japanese and American salespersons are surprisingly similar except for one difference that Japanese rate as more important than their American counterparts. Identify this difference. A) job security B) promotion C) job satisfaction D) social recognition E) personal growth and development Answer: D Explanation: In one study, sales representatives in comparable Japanese and American sales organizations were asked to allocate 100 points across an array of potential rewards from work. The only real differences between the two groups were in social recognition, which, predictably, the Japanese rated as more important. However, the authors of the study concluded that though individual values for rewards may be similar, the social and competitive contexts still require different motivational systems. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) Considering the specific characteristics of Japan's culture, what strategies would be most successful in motivating employees in Japanese organizations? A) individual commission systems B) group bonus systems C) company cars D) birthday gift vouchers E) best employee awards Answer: B Explanation: Japanese employees seem to derive the greatest satisfaction from being comfortable members of a group. Japanese bonus systems are therefore based on group effort, and individual commission systems are rare. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) What is the main reason for the failure of individual incentives to motivate employees in Japan? A) society's emphasis on paternalism and collectivism B) high corruption levels C) practice of cultural chauvinism D) a democratic form of government E) encouragement of individualism Answer: A Explanation: With Japan's emphasis on paternalism and collectivism and its system of lifetime employment and seniority, motivation through individual incentives does not work well because Japanese employees seem to derive the greatest satisfaction from being comfortable members of a group. Japanese bonus systems are therefore based on group effort, and individual commission systems are rare. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) Nontaxable perks such as a company vehicle given to an expatriate is an example of A) an overseas premium. B) a family compensation. C) a special assessment. D) a fringe benefit. E) a separation allowance. Answer: D Explanation: Expatriates working in high-tax countries prefer liberal expense accounts and fringe benefits that are nontaxable (such as company cars). Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) Claudia is being transferred to a foreign assignment that will last 3 months. Her family is not accompanying her, so the company is paying her a premium, which is called a A) fringe benefit. B) pension plan. C) displacement reserve. D) special assessment. E) separation allowance. Answer: E Explanation: Short-term assignments involve payments of overseas premiums (sometimes called separation allowances if the family does not go along), all excess expenses, and allowances for tax differentials. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

77) What is actively involved in setting rules about compensation companywide in Europe? A) pension committees B) work councils C) external labor unions D) the European Union E) the World Trade Organization Answer: B Explanation: In Europe, work councils (that is, internal labor union committees) are very much involved in setting rules about compensation companywide, even for salespeople. In Austria and Germany, for example, work councils not only codetermine compensation plans but also must approve them before implementation. Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) A survey showed that most companies establish sales compensation practices locally (either at the country or regional levels). The program element most often determined at the global level is A) Program Design Principles. B) Pay Mix. C) Job Grades. D) Formula Mechanics. E) Performance Measures. Answer: A Explanation: The only program elements more often determined at the global level are Program Design Principles (53.9 percent) and Program Approval (52.3 percent). Difficulty: 1 Easy Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) What strategy should be practiced when determining compensation globally? A) A similar framework should be created for jobs with different responsibilities. B) The support of senior sales executives should not be sought before taking action. C) Local managers should not decide the mix between base and incentive pay. D) Consistent communication and training themes should be used worldwide. E) The incentive plan should be designed centrally and dictated to local offices. Answer: D Explanation: In the context of global compensation, it is recommended to allow the local managers to decide the mix of incentive versus base pay; use consistent training and communication schemes worldwide; and don't assume cultural differences can be managed through the incentive plan. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) Unlike the Japanese, the American sales managers have less need to worry about the problem of motivating poor performers. What is the reason for this? A) The group incentive system balances pay differences and thus is motivating enough. B) Companies are more focused on long-term loyalty and are willing to compromise on performance initially. C) Sales personnel are shifted to areas where their performance levels can meet expectations. D) The base pay that is higher than their performance based incentive motivates them. E) The team usually does not have any low performers as they either quit or are fired. Answer: E Explanation: According to a study, the distribution of performance of American salespersons was as follows—a few high, most in the middle, but almost no low performers. In the United States, poor performers either quit (because they are not making any money), or they are fired. Thus, sales managers in Japan have a problem their American counterparts do not: how to motivate poor performers. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) What practice, with respect to motivating sales personnel, is most common in relationshiporiented countries like Japan? A) Companies lay greater emphasis on incentives that are based on individual performance. B) Companies do not allow local managers to decide the mix between base and incentive pay. C) Commissions are measured by sales revenues generated by each employee. D) Companies are not very tolerant of poor performers and fire them immediately. E) Companies motivate sales representatives through frequent interaction with supervisors. Answer: E Explanation: Corporate culture and frequent interactions with peers and supervisors are the means of motivation and control of sales representatives in relationship-oriented cultures like Japan. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) The primary control tool used by American sales managers with sales representatives is the A) encumbrance system. B) quota system. C) incentive system. D) attraction of a foreign assignment. E) threat of foreign postings. Answer: C Explanation: The primary control tool used by American sales managers is the incentive system. Because of the Internet and smartphones, more and more American sales representatives operate out of offices in their homes and see supervisors infrequently Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) Qualified and ambitious sales personnel refuse to take up foreign assignments for fear of hampering their career development. This "out of sight, out of mind" fear is most closely linked to the problems of A) conflict of interests. B) acculturation. C) skill redundancy. D) naturalization. E) repatriation. Answer: E Explanation: The "out of sight, out of mind" fear is closely linked to the problems of repatriation. Without evidence of advance planning to protect career development, better qualified and ambitious personnel may decline offers to go abroad. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) When Sandra was offered a transfer to the London office from New York, she worried that she would miss out on opportunities in the New York office when she returned because she hadn't been there. This is a common problem with A) conflict of interests. B) acculturation. C) skill redundancy. D) repatriation. E) assimilation. Answer: D Explanation: The "out of sight, out of mind" fear is closely linked to the problems of repatriation. Without evidence of advance planning to protect career development, better qualified and ambitious personnel may decline offers to go abroad. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

85) What is likely the single most important reason for expatriate dissatisfaction? A) unsuccessful family adjustment B) cultural conflict in the foreign country C) noncooperation of foreign colleagues D) communication issues with home-country headquarters E) redundant skills in a foreign country Answer: A Explanation: There is increasing evidence that unsuccessful family adjustment is the single most important reason for expatriate dissatisfaction and the resultant request for return home. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 86) Which factor significantly differentiates companies with the least amount of returnee attrition from those with the highest attrition? A) specialized expatriate department B) personal career planning for expatriates C) continued cultural training D) protection from work councils E) family migration planning Answer: B Explanation: Companies with the least amount of returnee attrition differ from those with the highest attrition in one significant way: personal career planning for the expatriate. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) Most expatriate failures are caused by the lack of A) management skills. B) technical skills. C) an understanding of cultural differences. D) knowledge of the product line. E) knowledge of the company. Answer: C Explanation: Most expatriate failures are not caused by lack of management or technical skills but rather by lack of an understanding of cultural differences and their effect on management skills. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) What is a trait of people with good cultural skills? A) They have a clear set of principles and do not tolerate ambiguity. B) They take pride in their culture and practice cultural ethnocentrism. C) They monitor the behavior of their employees and judge them accordingly. D) They convey a sincere interest in people and their culture. E) They try to propagate their culture and insist that others follow them. Answer: D Explanation: People with cultural skills can communicate respect and convey verbally and nonverbally a positive regard and sincere interest in people and their culture. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) In the past, most chief executives came from one of three backgrounds. What is one of these? A) accounting B) information technology C) law D) marketing E) public relations Answer: D Explanation: Until recently the road to the top was well marked. Surveys of chief executives consistently reported that more than three-quarters had finance, manufacturing, or marketing backgrounds. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-09 The changing profile of the global sales and marketing manager. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) A foreign managerial posting is becoming increasingly viewed as A) a negative for advancement. B) a necessary evil that can't be avoided. C) an important stepping stone to executive positions. D) a cherished experience. E) an experience to be avoided at all costs. Answer: C Explanation: A foreign managerial posting is becoming increasingly viewed as an important stepping stone to executive positions. Difficulty: 2 Medium Topic: Personal Selling and Sales Management Learning Objective: 17-09 The changing profile of the global sales and marketing manager. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) What decisions must be made in designing an international sales force, and what are the complications that tend to arise? Answer: The first step in managing a sales force is its design. Coordinating efforts of account managers, both global and local, is becoming more complex. Based on analyses of current and potential customers, the selling environment, competition, and the firm's resources and capabilities, decisions must be made regarding the numbers, characteristics, and assignments of sales personnel. All these design decisions are made more challenging by the wide variety of pertinent conditions and circumstances in international markets. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-02 The considerations in designing an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) Describe the advantages and disadvantages of using an expatriate sales force. Answer: Among the advantages of hiring an expatriate are greater technical training, better knowledge of the company and its product line, and proven dependability of an expatriate salesperson. Since they are not locals, an expatriate sales force sometimes adds to the prestige of the product line in the eyes of foreign customers. Moreover, expatriates usually are able to effectively communicate with and influence headquarters' personnel. The chief disadvantages of an expatriate sales force are the high cost, cultural and legal barriers, and the limited number of high-caliber personnel willing to live abroad for extended periods. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) What are virtual expatriates, and what are the disadvantages associated with using these sales managers? Answer: Virtual expatriates manage operations in other countries but do not move there. They stay in hotels, make long visits, and maintain their families at home. Some spend up to 75 percent of their working time traveling. Close contact with subordinates and customers is tougher for virtual expatriates. Moreover, they are vulnerable to foreign bugs that are often more virulent and easier to catch on long international flights. Crime and violence against expatriates and travelers in foreign cities is a real hazard, traffic and short-hop flights in less developed countries are dangerous, and living in hotels is lonely. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) What are third-country nationals (TCNs)? Why do American companies favor third-country nationals over expatriates from other English-speaking countries for overseas assignments? Answer: The internationalization of business has created a pool of third-country nationals (TCNs), expatriates from their own countries working for a foreign company in a third country. The TCNs are a group whose nationality has little to do with where they work or for whom. Overall, the development of TCN executives reflects not only a growing internationalization of business but also an acknowledgment that personal skills and motivations are not the exclusive property of one nation. These TCNs often are sought because they speak several languages and know an industry or foreign country well. American companies often seek TCNs from other English-speaking countries to avoid the double taxation costs of their American managers. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-03 The steps to recruiting three types of international salespeople. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) What are the eight specific characteristics and skills a company should look for when selecting sales and marketing personnel for international marketing positions? Answer: To select personnel for international marketing positions effectively, management must define precisely what is expected of its people. International personnel requirements and preferences vary considerably. However, some basic requisites leading to effective performance should be considered. These characteristics or skills are (1) maturity, (2) emotional stability, (3) breadth of knowledge, (4) positive outlook, (5) flexibility, (6) cultural empathy, (7) energetic, and (8) enjoy travel. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-04 Selection criteria for international sales and marketing positions. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) What should be the nature of a training program for international marketing personnel? Answer: Before any training can be effective, open-minded attitudes must be established. The nature of a training program depends largely on both the home culture of the salesperson and the culture of the business system in the foreign market. Also important is whether expatriate or local personnel will be representing the firm. Training for expatriates focuses on the customs and the special foreign sales problems that will be encountered, whereas local personnel require greater emphasis on the company, its products, technical information, and selling methods. Continual training may be more important in foreign markets than in domestic ones because of the lack of routine contact with the parent company and its marketing personnel. In addition, training of foreign employees must be tailored to the recipients' ways of learning and communicating. For example, the Dilbert cartoon character's theme that worked so well in ethics training courses with a company's American employees did not translate well in many of its foreign offices. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-05 The special training needs of international personnel. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) What is the reason for the failure of individual incentives to motivate employees in Japan? Answer: Japan's emphasis on paternalism and collectivism and its system of lifetime employment and seniority are the main reasons why motivation through individual incentives does not work well. Japanese employees seem to derive the greatest satisfaction from being comfortable members of a group. Thus, an offer of an individual financial reward for outstanding individual effort could be turned down because an employee would prefer not to appear different from peers and possibly attract their resentment. Japanese bonus systems are therefore based on group effort, and individual commission systems are rare. Japanese sales representatives are motivated more by the social pressure of their peers than by the prospect of making more money based on individual effort. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-06 Motivation techniques for international sales representatives. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) Discuss how compensation plans of American companies vary substantially around the world. Answer: Compensation plans of American companies vary substantially around the world, reflecting the economic, legal, and cultural differences in the diverse markets served. Asia and Western Europe require the most localization, while practices in the emerging markets are more pliable. European managers tend to use larger incentive components in countries with high personal income taxes, as the higher taxes negate the incentive to perform. In Europe, work councils are very much involved in setting rules about compensation companywide, even for salespeople. In Austria and Germany, for example, work councils not only codetermine compensation plans but also must approve them before implementation. Meanwhile, in Japan, cultural differences play a key role. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-07 How to design compensation systems for an international sales force. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) Describe three reasons for the low morale and growing amount of attrition among returning expatriates. Answer: Low morale and a growing amount of attrition among returning expatriates have many causes. Some complaints and problems are family related, whereas others are career related. The family-related problems generally pertain to financial and lifestyle readjustments. Family dissatisfaction, which causes stress within the family on returning home, is not as severe a problem as career-related complaints. A returning expatriate's dissatisfaction with the perceived future is usually the reason many resign their positions after returning to the United States. The problem is not unique to U.S. citizens; Japanese companies have similar difficulties with their personnel. The most frequently heard complaint involves the lack of a detailed plan for the expatriate's career when returning home. New home-country assignments are frequently mundane and do not reflect the experience gained or the challenges met during foreign assignment. Some feel their time out of the mainstream of corporate affairs has made them technically obsolete and thus ineffective in competing immediately on return. Finally, there is some loss of status, requiring an ego adjustment when an executive returns home. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 100) How does the family impact the success of an expatriate manager? Answer: The most important reasons a growing number of companies are including an evaluation of an employee's family among selection criteria are the high cost of sending an expatriate abroad and increasing evidence that unsuccessful family adjustment is the single most important reason for expatriate dissatisfaction and the resultant request for return home. In fact, a study of personnel directors of over 300 international firms found that the inability of the manager's spouse to adjust to a different physical or cultural environment was the primary reason for an expatriate's failure to function effectively in a foreign assignment. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-08 How to prepare Americans for foreign assignments. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

101) In the context of international marketing, how important is a second language for a manager? Answer: Opinions are mixed on the importance of a second language for a career in international business. Proponents of language skills argue that learning a language improves cultural understanding and business relationships. Others point out that to be taken seriously in the business community, the expatriate must be at least conversational in the host country's language. Some recruiters want candidates who speak at least one foreign language, even if the language will not be needed in a particular job. Although most companies offer short, intensive language-training courses for managers being sent abroad, many are making stronger efforts to recruit people who are bilingual or multilingual. Difficulty: 3 Hard Topic: Personal Selling and Sales Management Learning Objective: 17-09 The changing profile of the global sales and marketing manager. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 18 Pricing for International Markets 1) Setting the right price for a product can be the key to success or failure in international markets. 2) Companies that use pricing to achieve marketing objectives use pricing as a static element. 3) A product sold in one country may be exported to another and undercut the prices charged in that country. 4) The possibility of a parallel market occurs when price differences are less than the cost of transportation between two markets. 5) To restrict the gray market, companies must establish and monitor controls that effectively police sales channels. 6) Companies should use the full-cost pricing approach when it has high fixed costs relative to its variable costs. 7) In countries where large shares of the population are moving into middle-income classes, penetration pricing will depress market growth. 8) Deflation results in ever-decreasing prices, creating a positive result for consumers, but putting pressure on everyone in the supply chain to lower costs. 9) With deflation, consumers face ever-rising prices that eventually exclude many of them from the market. 10) When the U.S. dollar strengthens, U.S. exports will decrease. 11) Price escalation could lead to the sales of exported goods being confined to a limited segment of wealthy, price-insensitive customers. 12) The international marketer must rely on experience and marketing research to determine middleman costs because no convenient source of data on middleman costs is available. 13) Eliminating costly functional features of a product or lowering overall product quality can reduce price escalation. 14) Longer channels of distribution are more useful for keeping prices under control than shorter channels of distribution. 15) Involving fewer middlemen in distribution means higher overall taxes. 16) In a free trade zone, payment of import duties is postponed until the product leaves the free trade zone and enters the country. 1 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

17) For countervailing duties to be invoked, it must be shown that prices are higher in the importing country than in the exporting country. 18) Gerard was concerned that he would not be able to get maintenance and servicing on equipment used in his overseas operation. Leasing the equipment would be the best option for Gerard. 19) Countertrading does not benefit countries that face a shortage of hard currencies with which to trade. 20) Barter houses help countries negotiate prices for imports and exports and also provide facilities for cash payments and receipts. 21) Administered pricing is an attempt to establish prices for an entire market. 22) Paul's oil delivery company was struggling to make ends meet, so it conspired with the other oil delivery companies in the area to set prices, allocate market territories, and redistribute profits. By controlling the market in this way, the companies created a cartel. 23) Cartels have the ability to maintain control of markets for indefinite periods. 24) Domestic cartelization is legal in the United States. 25) Letters of credit shift the buyer's credit risk to the bank issuing the letter of credit. 26) An irrevocable, confirmed letter of credit means that a U.S. bank accepts responsibility to pay the seller regardless of the financial situation of the buyer or foreign bank. 27) Except for cash in advance, letters of credit afford the greatest degree of protection for the seller. 28) The portion of international business handled on a cash-in-advance basis is not large and this is typically used when credit is doubtful. 29) In bills of exchange, the buyer assumes all the risk until the payment is made. 30) Sales on open accounts are recommended when shipping is hazardous. 31) Assuming that an international marketer has produced the right product, used the proper channel of distribution, and promoted the goods correctly, the effort will fail if the international marketer fails to A) inform the host government about all its marketing objectives. B) set the right price for the goods or services. C) set the import tariff for the goods or services. D) form a joint venture in order to sell the product. E) work on a franchise basis in the country. 2 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

32) In general, price decisions are viewed in two ways: pricing as a static element in a business decision, and pricing A) that depends on factors that are often beyond the control of a company. B) as more a phenomenon of luck than planning. C) as an active instrument of accomplishing marketing objectives. D) that is determined by local sales managers. E) that is static no matter the market. 33) What is most likely to be true of a company that views prices as an active instrument of accomplishing marketing objectives? A) The company sets prices to achieve specific objectives. B) The company follows market prices to achieve specific objectives. C) The company exports only excess inventory. D) The company views its export sales as an insignificant source of revenue. E) The company places a low priority on foreign business. 34) A company that views pricing as a static element in a business decision most probably A) places a high priority on foreign business. B) sets prices to achieve specific objectives such as targeted return on profit. C) views export sales as active contributions to sales volume. D) views domestic sales as an insignificant source of revenue. E) places a low priority on foreign business. 35) Gift Group Inc., an importing organization in New York, buys perfume from a company in France for $13 a unit. Unknown to the French company, Gift Group sells this product in the United States for $19 a unit. This leads to a loss of revenue for the French company as it also sells its perfume in the United States but for a higher price of $22. What concept does this demonstrate?? A) black-listed importing B) indirect importing C) circular importing D) co-mingled importing E) parallel importing 36) ________ distribution, a practice often used by companies to maintain high retail margins to encourage retailers to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing. A) Exclusive B) Speculative C) Intensive D) Lateral E) Dual

37) Firms that are unfamiliar with overseas marketing and firms that produce industrial goods orient their pricing solely on the basis of A) cultural differences in perceptions of pricing. B) market segmentation from market to market. C) the costs of production of the goods. D) market segmentation from country to country. E) competitive pricing in the market. 38) In ________ pricing, a firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets. A) full-cost B) fixed-cost C) variable-cost D) demand-based E) premium 39) Marianne's Chocolates sell well in the U.S. at a price of $24 per pound, and she has overproduced one kind of chocolate bar. Marianne has decided to see if she can sell them in Mexico, so she sets a price that is just over her cost. She figures if she makes even a little money, it would be worth it. Marianne is using ________ pricing. A) full-cost B) fixed-cost C) variable-cost D) demand-based E) premium 40) What characterizes the variable-cost pricing approach? A) Prices are often set on a cost-plus basis, that is, total costs plus a profit margin. B) No unit of a similar product is different from any other unit in terms of cost. C) Each unit must bear its full share of the total fixed and variable cost. D) This approach is suitable when a company has high variable costs relative to its fixed costs. E) Any contribution to fixed cost after variable costs are covered is profit to the company. 41) ________ pricing is a practical approach to use when a company has high fixed costs and unused production capacity. A) Full-cost B) Cost-plus C) Marginal-cost D) Demand-based E) Premium

42) Companies that use ________ pricing insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost. A) full-cost B) fixed-cost C) variable-cost D) demand-based E) premium 43) Which approach to pricing is most suitable when a company has high variable costs relative to its fixed costs? A) full-cost pricing B) marginal-cost pricing C) static-cost pricing D) demand-based pricing E) premium pricing 44) A company uses ________ when the objective is to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for the value received. A) penetration pricing B) everyday low pricing C) predatory pricing D) price skimming E) psychological pricing 45) If the supply of a product in a market is limited, a company may follow a ________ approach to maximize revenue and to match demand to supply. A) penetration B) psychological pricing C) variable-cost pricing D) predatory pricing E) price skimming 46) A ________ policy is used to stimulate market and sales growth by deliberately offering products at low prices. A) penetration pricing B) variable-cost pricing C) premium pricing D) price skimming E) full-cost pricing

47) Cosmeticon, a U.S.-based firm, has recently started exporting cosmetics to India. Cosmeticon has introduced a new range of mineral-based makeup products for the first time in the Indian market. As Cosmeticon has no competitors in this segment of the Indian cosmetics market, it has set a very high price for its products in order to reach the premium, price insensitive segment of the market. This is an example of A) penetration pricing policy. B) psychological pricing policy. C) bundling. D) price skimming. E) cost-based pricing policy. 48) In most cases, the reason products cost relatively little in one country and cost more in another is the A) profiteering measures taken by exporting companies. B) consistency in perception of quality in all countries. C) inelastic demand of most consumer goods. D) requirement that all export goods must use set skimmed price. E) higher costs of exporting. 49) What results from the added costs incurred as a result of exporting products from one country to another? A) price deflation B) penetration pricing C) price escalation D) price gouging E) predatory pricing 50) A(n) ________ duty is a flat charge per physical unit imported. A) ad valorem B) compound C) prohibitive D) alternative E) specific 51) ________ duties are levied as a percentage of the value of the goods imported. A) Specific B) Protective C) Prohibitive D) Ad valorem E) Compound 52) What primary discriminatory tax must be taken into account in foreign competition? A) transfer taxes B) tariffs C) tolls D) excise taxes E) inflation taxes 6 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

53) In a deflationary market, in order to win the trust of consumers, it is essential for a company to A) engage in forfaiting agreements with consumers. B) spend more on advertising and stall the production of products. C) allow prices to escalate and target the price insensitive segment of the market. D) keep prices low and raise brand value. E) form a cartel to control the dynamics of the market. 54) When the value of the dollar is weak relative to the buyer's currency, sellers usually use ________ pricing. A) competition-based B) demand-based C) premium D) psychological E) cost-plus 55) When the Indian rupee depreciated against the U.S. dollar, PC manufacturers who were dependent on imported components had to either absorb the increased cost or A) raise the quantity of inputs they used in production. B) give discounts to their customers. C) increase the wages that they paid to labor. D) increase the production of PCs. E) raise the price of PCs. 56) When a company exports a product from the United States to another country, the company is most likely to be unable to determine the ultimate price of a product if A) the channels of distribution are short. B) the number of middlemen in its distribution channels is low. C) large orders are placed by retailers. D) marketing and distribution channel infrastructures are well developed. E) the middleman markups are not standardized. 57) What is the most probable reason a manufacturer would choose to conduct its manufacturing operations in a third country? A) to standardize middlemen margins B) to reduce the credit risk of the seller C) to increase the capital–labor ratio D) to avoid antidumping duties E) to reduce manufacturing costs

58) Lower prices to the buyer may also mean lower tariffs, because most tariffs are levied on a(n) ________ basis. A) specific B) alternative C) accrual D) shorter, lower E) ad valorem 59) The creation of a free trade zone may lead to A) a decline in exports. B) an increase in taxes and duties levied on a product. C) a reduction in the price escalation. D) a decline in imports. E) an increase in labor costs and overheads. 60) By shipping unassembled goods to a free trade zone (FTZ) in an importing country, a marketer can typically lower costs because A) labor costs are higher in the importing country. B) the final prices of the goods are adjusted for inflation. C) use of unassembled goods gives the marketer immunity from dumping penalties. D) duties are typically assessed at lower rates for unassembled goods. E) local content used in production is low. 61) A marketer may face lower costs by shipping unassembled goods to a free trade zone (FTZ) in an importing country because A) locally produced components may not be used in production. B) labor costs may be lower in the importing country. C) FTZs levy higher taxes and surcharges on imported goods. D) ocean transportation rates may not be affected by the weight and volume of the components. E) duties may be assessed at a higher rate for unassembled goods. 62) The costs of production may be lowered if a firm ships unassembled goods to a free trade zone (FTZ) in an importing country because A) wages and other overheads may be higher in an FTZ. B) locally produced components do not qualify for tariffs. C) unassembled goods may qualify for lower freight rates. D) the finished goods cannot be exported to other countries. E) goods imported in an FTZ qualify for the same level of tariffs as other imported goods. 63) Dumping has been defined as the situation in which a product is sold in the international market A) at a price below the cost of production. B) only to the premium, price insensitive segment of the market. C) where the demand for the product is lower than in the domestic market. D) at a higher price than in the domestic market. E) at the same price as in the domestic market. 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

64) What is the function of a countervailing duty? A) balance revenues against costs B) restrict the amount a country will import C) increase revenues from parallel imports D) increase the amount a country will export E) permit the use of foreign currency within the country 65) A ________, which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation. A) trigger volume B) trigger price C) minimum access volume D) market access opportunity E) substantial cause 66) For ________ duties to be levied on a product, it must be shown that prices are lower in the importing country than in the exporting country and that producers in the importing country are being directly harmed by the dumping of the product. A) countertrade B) domestic protection C) countervailing D) foreign practice E) import restriction 67) Dumping in the world markets is most likely to increase when A) domestic production capacity is low. B) demand in the home country is low. C) demand in the foreign country is low. D) foreign production capacity is high. E) cost of production is low. 68) Assembly in the importing country is a way companies attempt to lower prices and avoid dumping charges. These assembly plants are known as ________ plants. A) antidumping B) screwdriver C) import-oriented D) export-oriented E) automated 69) An important selling technique to alleviate high prices and capital shortages for capital equipment is the ________ system. A) leasing B) antidumping C) direct buy-back D) consignment E) rental 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

70) What would be considered an advantage of leasing equipment rather than owning it? A) Lease revenue tends to fluctuate greatly. B) Leased equipment rarely breaks down. C) Leasing helps guarantee better maintenance on overseas equipment. D) Leasing keeps companies from using experimental equipment. E) Leasing is less risky than outright sale of equipment. 71) When Burger Boys an American fast-food company, wanted to market its burgers and fries in France, it was asked to import French mustard to the United States in return. This is an example of A) bargaining. B) countervailing duties. C) buy-back. D) countertrade. E) bribery. 72) The use of countertrade in international trade A) allows trade with countries short of hard currency. B) reduces a firm's competitive advantage. C) increases the tax liabilities of trading firms. D) leads to a loss of revenue. E) is considered unethical. 73) A crucial problem confronting a seller in a countertrade negotiation is determining the ________ for the goods offered as payment. A) delivery method B) warranties C) insurance premiums D) potential demand E) the cost 74) What do barter houses do? A) They specialize in trading goods acquired through barter arrangements. B) They negotiate barter arrangements with countries that accept the U.S. currency as a countertrade. C) They specialize in bartering with third countries for unused raw materials. D) They direct bartered goods to the World Trade Organization for its approval. E) They review disputes in barter arrangements at the request of the International Court of Justice. 75) ________ are the primary outside source of aid for companies affected by the uncertainty of a countertrade. A) Trade unions B) Barter houses C) Industry associations D) Swap centers E) Satellite towns 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

76) What is true of price quotations for international sale? A) Price quotations can be made only if it is shown that prices are lower in the importing country than in the exporting country. B) Price quotations must specify the currency to be used, credit terms of the transaction, and documents required. C) The price quotation and contract should define only the quantity of goods and not necessarily the quality. D) Price quotations must be quoted only in terms of electronic trade dollars. E) Price quotations need to specify the transportation charges but need not necessarily state what type of documentation needs to be used. 77) In general, the end goal of all ________ activities is to reduce the impact of price competition or eliminate it. A) reciprocal pricing B) administered pricing C) free trade D) export-oriented trade E) price skimming 78) What is an example of a price-fixing arrangement most directly associated with international marketing? A) price escalation B) barter houses C) letters of credit D) cartels E) countertrade 79) A ________ exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce. A) cabal B) monopoly C) cartel D) producers' association E) competitive market 80) OPEC is an example of a ________; it can control the price of oil by controlling the market. A) cabal B) monopoly C) cartel D) producers' association E) competitive market

81) What is the typical payment procedure for established customers where the goods are delivered and the customer is billed on an end-of-the-month basis. A) an open account B) a letter of credit C) a bill of exchange D) cash in advance E) forfaiting 82) A(n) ________ means that once the seller has accepted the credit, the buyer cannot alter it in any way without permission of the seller. A) open account B) letter of credit C) bill of lading D) bill of regression E) sales agreement 83) A ________, which shifts the buyer's credit risk to the bank, is not a guarantee of payment to the seller. Rather, payment is tendered only if the seller complies exactly with its terms. A) open account B) letter of credit C) bill of lading D) bill of regression E) credit agreement 84) With ________, the seller assumes all risk until the actual dollars are received. A) open accounts B) irrevocable letters of credit C) bills of exchange D) factoring agreements E) forfaiting contracts 85) A company manufactures extremely specialized equipment for medical imaging. Because of its value, when the company exports this equipment overseas to hospitals, it generally requires ________, which is a nonrefundable deposit. A) a letter of credit B) a dollar draft C) a forfaiting contract D) cash in advance E) an open account 86) ________ leave sellers in a position where most of the problems of international commercial finance work to their disadvantage. A) Letters of credit B) Dollar drafts C) Forfaiting contracts D) Cash in advance agreements E) Open accounts 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

87) In a(n) ________ transaction, the seller makes a one-time arrangement with a bank or other financial institution to take over responsibility for collecting the account receivable. A) forfaiting B) factoring C) barter D) cash-in-advance payment E) open account 88) Sales on open accounts are A) very common as a method of payment in foreign trade. B) generally recommended when special merchandise is ordered by the buyer. C) not generally recommended when there is political unrest in the importer's country. D) recommended when the country of the importer imposes difficult exchange restrictions. E) less risky for the seller when it involves new buyers. 89) In ________, a company has an ongoing relationship with a bank that routinely buys its short-term accounts receivable at a discount. A) forfaiting B) factoring C) a barter transaction D) a cash-in-advance transaction E) an open accounts transaction 90) Differentiate the two ways price decisions are viewed. 91) Describe what happens in parallel importing. What are the advantages and disadvantages of this practice? 92) What is the difference between variable-cost pricing and full-cost pricing? When would a company choose one over the other? 93) What are common reasons why price escalation occurs in international marketing? 94) What is a tariff? What are the three basic ways in which tariffs may be levied? 95) What is a countertrade? What are the advantages and disadvantages of countertrading? 96) Making price quotations for international sales requires including a number of elements that may not be relevant in domestic pricing. Explain the process and what must be considered. 97) What is administered pricing, and how does it differ from price fixing? How is it arranged in international markets? 98) Discuss the meaning and nature of cartels. Are these groups beneficial? State an example. 99) What is the difference between forfaiting and factoring? 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

International Marketing, 18e (Cateora) Chapter 18 Pricing for International Markets 1) Setting the right price for a product can be the key to success or failure in international markets. Answer: TRUE Explanation: Setting the right price for a product or service can be the key to success or failure in international markets. Even when the international marketer produces the right product, promotes it correctly, and initiates the proper channel of distribution, the effort fails if the product is not properly priced. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-01 Components of pricing as competitive tools in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) Companies that use pricing to achieve marketing objectives use pricing as a static element. Answer: FALSE Explanation: Price decisions are viewed two ways: pricing as an active instrument of accomplishing marketing objectives, or pricing as a static element in a business decision. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-01 Components of pricing as competitive tools in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) A product sold in one country may be exported to another and undercut the prices charged in that country. Answer: TRUE Explanation: Because of the different prices possible in different country markets, a product sold in one country may be exported to another and undercut the prices charged in that country. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) The possibility of a parallel market occurs when price differences are less than the cost of transportation between two markets. Answer: FALSE Explanation: A parallel market (gray market) exists when products intended to be sold in one market, exclusively at a particular low price, are sold in a second market (usually illegally) where market prices are higher. The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) To restrict the gray market, companies must establish and monitor controls that effectively police sales channels. Answer: FALSE Explanation: Companies that are serious about restricting the gray market must establish and monitor controls that effectively police distribution channels. In some countries they may get help from the courts. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) Companies should use the full-cost pricing approach when it has high fixed costs relative to its variable costs. Answer: FALSE Explanation: Companies following the full-cost pricing philosophy insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost. This approach is suitable when a company has high variable costs relative to its fixed costs. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

7) In countries where large shares of the population are moving into middle-income classes, penetration pricing will depress market growth. Answer: FALSE Explanation: In country markets experiencing rapid and sustained economic growth, and where large shares of the population are moving into middle-income classes, penetration pricing may be used to stimulate market growth even with minimum competition. Penetration pricing may be a more profitable strategy than skimming if it maximizes revenues as a base for fighting the competition that is sure to come. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) Deflation results in ever-decreasing prices, creating a positive result for consumers, but putting pressure on everyone in the supply chain to lower costs. Answer: TRUE Explanation: Deflation results in ever-decreasing prices, creating a positive result for consumers, but both put pressure to lower costs on everyone in the supply chain. In a deflationary market, it is essential for a company to keep prices low and raise brand value to win the trust of consumers. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 9) With deflation, consumers face ever-rising prices that eventually exclude many of them from the market. Answer: FALSE Explanation: Deflation results in ever-decreasing prices, creating a positive result for consumers, but putting pressure to lower costs on everyone in the supply chain. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

10) When the U.S. dollar strengthens, U.S. exports will decrease. Answer: TRUE Explanation: The weaker U.S. dollar, compared with most of the world's stronger currencies, that existed in mid-2003 stimulated exports from the United States. Consequently, when the dollar strengthens, U.S. exports will soften. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Price escalation could lead to the sales of exported goods being confined to a limited segment of wealthy, price-insensitive customers. Answer: TRUE Explanation: Unless some of the costs that create price escalation can be reduced, the marketer is faced with a price that may confine sales to a limited segment of wealthy, price-insensitive customers. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 12) The international marketer must rely on experience and marketing research to determine middleman costs because no convenient source of data on middleman costs is available. Answer: TRUE Explanation: The international marketer must rely on experience and marketing research to ascertain middleman costs because no convenient source of data on middleman costs is available. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

13) Eliminating costly functional features of a product or lowering overall product quality can reduce price escalation. Answer: TRUE Explanation: Eliminating costly functional features or even lowering overall product quality is a method of minimizing price escalation. For example, the quality and additional features required for the more developed home market may not be necessary in countries that have not attained the same level of development or consumer demand. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Longer channels of distribution are more useful for keeping prices under control than shorter channels of distribution. Answer: FALSE Explanation: Shorter channels can help keep prices under control. Designing a channel that has fewer middlemen may lower distribution costs by reducing or eliminating middleman markups. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) Involving fewer middlemen in distribution means higher overall taxes. Answer: FALSE Explanation: Besides eliminating markups, fewer middlemen may mean lower overall taxes. Some countries levy a value-added tax on goods as they pass through channels. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

16) In a free trade zone, payment of import duties is postponed until the product leaves the free trade zone and enters the country. Answer: TRUE Explanation: In a free port or FTZ, payment of import duties is postponed until the product leaves the FTZ area and enters the country. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 17) For countervailing duties to be invoked, it must be shown that prices are higher in the importing country than in the exporting country. Answer: FALSE Explanation: For countervailing duties to be invoked, it must be shown that prices are lower in the importing country than in the exporting country and that producers in the importing country are being directly harmed by the dumping. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) Gerard was concerned that he would not be able to get maintenance and servicing on equipment used in his overseas operation. Leasing the equipment would be the best option for Gerard. Answer: TRUE Explanation: Leasing helps guarantee better maintenance and service on overseas equipment. Difficulty: 2 Medium Topic: Requirements of a Globally Dispersed Production System Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

19) Countertrading does not benefit countries that face a shortage of hard currencies with which to trade. Answer: FALSE Explanation: Corporate debts to suppliers, payments and services, even taxes—all have a noncash component or are entirely bartered. Many countries constantly face a shortage of hard currencies with which to trade and thus resort to countertrades when possible. Difficulty: 1 Easy Topic: Countertrade Learning Objective: 18-04 Countertrading and its place in international marketing practices. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 20) Barter houses help countries negotiate prices for imports and exports and also provide facilities for cash payments and receipts. Answer: FALSE Explanation: Barter houses specialize in trading goods acquired through barter arrangements and are the primary outside source of aid for companies beset by the uncertainty of a countertrade. Difficulty: 1 Easy Topic: Countertrade Learning Objective: 18-04 Countertrading and its place in international marketing practices. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 21) Administered pricing is an attempt to establish prices for an entire market. Answer: TRUE Explanation: Administered pricing is an attempt to establish prices for an entire market. Such prices may be arranged through the cooperation of competitors; through national, state, or local governments; or by international agreement. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

22) Paul's oil delivery company was struggling to make ends meet, so it conspired with the other oil delivery companies in the area to set prices, allocate market territories, and redistribute profits. By controlling the market in this way, the companies created a cartel. Answer: TRUE Explanation: A cartel exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 23) Cartels have the ability to maintain control of markets for indefinite periods. Answer: FALSE Explanation: One important aspect of cartels is their inability to maintain control of markets for indefinite periods. Greed by cartel members and other problems generally weaken the control of the cartel. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) Domestic cartelization is legal in the United States. Answer: FALSE Explanation: The legality of cartels globally at present is not clearly defined. Domestic cartelization is illegal in the United States. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

25) Letters of credit shift the buyer's credit risk to the bank issuing the letter of credit. Answer: TRUE Explanation: Letters of credit shift the buyer's credit risk to the bank issuing the letter of credit. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 26) An irrevocable, confirmed letter of credit means that a U.S. bank accepts responsibility to pay the seller regardless of the financial situation of the buyer or foreign bank. Answer: TRUE Explanation: An irrevocable, confirmed letter of credit means that a U.S. bank accepts responsibility to pay regardless of the financial situation of the buyer or foreign bank. From the seller's viewpoint, this step eliminates the foreign political risk and replaces the commercial risk of the buyer's bank with that of the confirming bank. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) Except for cash in advance, letters of credit afford the greatest degree of protection for the seller. Answer: TRUE Explanation: Except for cash in advance, letters of credit afford the greatest degree of protection for the seller. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) The portion of international business handled on a cash-in-advance basis is not large and this is typically used when credit is doubtful. Answer: TRUE Explanation: The portion of international business handled on a cash-in-advance basis is not large. Cash places unpopular burdens on the customer and typically is used when credit is doubtful. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) In bills of exchange, the buyer assumes all the risk until the payment is made. Answer: FALSE Explanation: In letters of credit, the credit of one or more banks is involved, but with bills of exchange (also known as dollar drafts), the seller assumes all risk until the actual dollars are received. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) Sales on open accounts are recommended when shipping is hazardous. Answer: FALSE Explanation: Sales on open accounts are generally not recommended when the practice of the trade is to use some other method, when special merchandise is ordered, when shipping is hazardous, when the country of the importer imposes difficult exchange restrictions, or when political unrest requires additional caution. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

31) Assuming that an international marketer has produced the right product, used the proper channel of distribution, and promoted the goods correctly, the effort will fail if the international marketer fails to A) inform the host government about all its marketing objectives. B) set the right price for the goods or services. C) set the import tariff for the goods or services. D) form a joint venture in order to sell the product. E) work on a franchise basis in the country. Answer: B Explanation: Even when the international marketer produces the right product, promotes it correctly, and initiates the proper channel of distribution, the effort fails if the product is not properly priced. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-01 Components of pricing as competitive tools in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 32) In general, price decisions are viewed in two ways: pricing as a static element in a business decision, and pricing A) that depends on factors that are often beyond the control of a company. B) as more a phenomenon of luck than planning. C) as an active instrument of accomplishing marketing objectives. D) that is determined by local sales managers. E) that is static no matter the market. Answer: C Explanation: In general, price decisions are viewed two ways: pricing as an active instrument of accomplishing marketing objectives, or pricing as a static element in a business decision. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-01 Components of pricing as competitive tools in international marketing. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) What is most likely to be true of a company that views prices as an active instrument of accomplishing marketing objectives? A) The company sets prices to achieve specific objectives. B) The company follows market prices to achieve specific objectives. C) The company exports only excess inventory. D) The company views its export sales as an insignificant source of revenue. E) The company places a low priority on foreign business. Answer: A Explanation: If prices are viewed as an active instrument, the company sets prices (rather than following market prices) to achieve specific objectives, such as returns on profit or targeted sales volumes. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-01 Components of pricing as competitive tools in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) A company that views pricing as a static element in a business decision most probably A) places a high priority on foreign business. B) sets prices to achieve specific objectives such as targeted return on profit. C) views export sales as active contributions to sales volume. D) views domestic sales as an insignificant source of revenue. E) places a low priority on foreign business. Answer: E Explanation: The company that follows pricing as a static element probably exports only excess inventory, places a low priority on foreign business, and views its export sales as passive contributions to sales volume. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-01 Components of pricing as competitive tools in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

35) Gift Group Inc., an importing organization in New York, buys perfume from a company in France for $13 a unit. Unknown to the French company, Gift Group sells this product in the United States for $19 a unit. This leads to a loss of revenue for the French company as it also sells its perfume in the United States but for a higher price of $22. What concept does this demonstrate?? A) black-listed importing B) indirect importing C) circular importing D) co-mingled importing E) parallel importing Answer: E Explanation: Because of the different prices possible in different country markets, a product sold in one country may be exported to another and undercut the prices charged in that country, known as a parallel market. As Gift Group has bought perfume from the French company and sold it in the United States for a lower price than what the French company sells it for in order to undercut them, it is practicing parallel importing. Difficulty: 3 Hard Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 36) ________ distribution, a practice often used by companies to maintain high retail margins to encourage retailers to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing. A) Exclusive B) Speculative C) Intensive D) Lateral E) Dual Answer: A Explanation: Exclusive distribution, a practice often used by companies to maintain high retail margins to encourage retailers to provide extra service to customers, to stock large assortments, or to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

37) Firms that are unfamiliar with overseas marketing and firms that produce industrial goods orient their pricing solely on the basis of A) cultural differences in perceptions of pricing. B) market segmentation from market to market. C) the costs of production of the goods. D) market segmentation from country to country. E) competitive pricing in the market. Answer: C Explanation: Firms unfamiliar with overseas marketing and firms producing industrial goods orient their pricing solely on a cost basis. Firms that employ pricing as part of the strategic mix, however, are aware of such alternatives as market segmentation from country to country or market to market, competitive pricing in the marketplace, price for stability of operations, and other market-oriented pricing factors, including cultural differences in perceptions of pricing. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 38) In ________ pricing, a firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets. A) full-cost B) fixed-cost C) variable-cost D) demand-based E) premium Answer: C Explanation: In variable-cost pricing, a firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

39) Marianne's Chocolates sell well in the U.S. at a price of $24 per pound, and she has overproduced one kind of chocolate bar. Marianne has decided to see if she can sell them in Mexico, so she sets a price that is just over her cost. She figures if she makes even a little money, it would be worth it. Marianne is using ________ pricing. A) full-cost B) fixed-cost C) variable-cost D) demand-based E) premium Answer: C Explanation: In variable-cost pricing, the firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets. Such firms regard foreign sales as bonus sales and assume that any return over their variable cost makes a contribution to net profit. Variable-cost pricing is a practical approach to pricing when a company has high fixed costs and unused production capacity. Any contribution to fixed cost after variable costs are covered is profit to the company. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 40) What characterizes the variable-cost pricing approach? A) Prices are often set on a cost-plus basis, that is, total costs plus a profit margin. B) No unit of a similar product is different from any other unit in terms of cost. C) Each unit must bear its full share of the total fixed and variable cost. D) This approach is suitable when a company has high variable costs relative to its fixed costs. E) Any contribution to fixed cost after variable costs are covered is profit to the company. Answer: E Explanation: Variable-cost (or marginal-cost) pricing is a practical approach to pricing when a company has high fixed costs and unused production capacity. Any contribution to fixed cost after variable costs are covered is profit to the company. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

41) ________ pricing is a practical approach to use when a company has high fixed costs and unused production capacity. A) Full-cost B) Cost-plus C) Marginal-cost D) Demand-based E) Premium Answer: C Explanation: Marginal-cost (or variable-cost) pricing is a practical approach to pricing when a company has high fixed costs and unused production capacity. Any contribution to fixed cost after variable costs are covered is profit to the company. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 42) Companies that use ________ pricing insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost. A) full-cost B) fixed-cost C) variable-cost D) demand-based E) premium Answer: A Explanation: Companies following the full-cost pricing philosophy insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

43) Which approach to pricing is most suitable when a company has high variable costs relative to its fixed costs? A) full-cost pricing B) marginal-cost pricing C) static-cost pricing D) demand-based pricing E) premium pricing Answer: A Explanation: Full-cost pricing is suitable when a company has high variable costs relative to its fixed costs. Companies following the full-cost pricing philosophy insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) A company uses ________ when the objective is to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for the value received. A) penetration pricing B) everyday low pricing C) predatory pricing D) price skimming E) psychological pricing Answer: D Explanation: A company uses skimming when the objective is to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for the value received. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

45) If the supply of a product in a market is limited, a company may follow a ________ approach to maximize revenue and to match demand to supply. A) penetration B) psychological pricing C) variable-cost pricing D) predatory pricing E) price skimming Answer: E Explanation: If limited supply exists, a company may follow a skimming approach to maximize revenue and to match demand to supply. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 46) A ________ policy is used to stimulate market and sales growth by deliberately offering products at low prices. A) penetration pricing B) variable-cost pricing C) premium pricing D) price skimming E) full-cost pricing Answer: A Explanation: A penetration pricing policy is used to stimulate market and sales growth by deliberately offering products at low prices. Said another way, the price has to be set at a point at which the consumer will perceive value received, and the price must be within reach of the target market. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

47) Cosmeticon, a U.S.-based firm, has recently started exporting cosmetics to India. Cosmeticon has introduced a new range of mineral-based makeup products for the first time in the Indian market. As Cosmeticon has no competitors in this segment of the Indian cosmetics market, it has set a very high price for its products in order to reach the premium, price insensitive segment of the market. This is an example of A) penetration pricing policy. B) psychological pricing policy. C) bundling. D) price skimming. E) cost-based pricing policy. Answer: D Explanation: A company uses skimming when the objective is to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for the value received. When a company is the only seller of a new or innovative product, a skimming price may be used to maximize profits until competition forces a lower price. Difficulty: 3 Hard Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 48) In most cases, the reason products cost relatively little in one country and cost more in another is the A) profiteering measures taken by exporting companies. B) consistency in perception of quality in all countries. C) inelastic demand of most consumer goods. D) requirement that all export goods must use set skimmed price. E) higher costs of exporting. Answer: E Explanation: People traveling abroad often are surprised to find goods that are relatively inexpensive in their home country priced outrageously high in other countries. Because of the natural tendency to assume that such prices are a result of profiteering, manufacturers often resolve to begin exporting to crack these new, profitable foreign markets only to find that, in most cases, the higher prices reflect the higher costs of exporting. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

49) What results from the added costs incurred as a result of exporting products from one country to another? A) price deflation B) penetration pricing C) price escalation D) price gouging E) predatory pricing Answer: C Explanation: Price escalation is the added costs incurred as a result of exporting products from one country to another. Specifically, the term relates to situations in which ultimate prices are raised by shipping costs, insurance, financing costs, packing, tariffs, longer channels of distribution, larger middleman margins, special taxes, administrative costs, and exchange rate fluctuations. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 50) A(n) ________ duty is a flat charge per physical unit imported. A) ad valorem B) compound C) prohibitive D) alternative E) specific Answer: E Explanation: A specific duty is a flat charge per physical unit imported, such as 15 cents per bushel of rye. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

51) ________ duties are levied as a percentage of the value of the goods imported. A) Specific B) Protective C) Prohibitive D) Ad valorem E) Compound Answer: D Explanation: Ad valorem duties are levied as a percentage of the value of the goods imported, such as 20 percent of the value of imported watches. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 52) What primary discriminatory tax must be taken into account in foreign competition? A) transfer taxes B) tariffs C) tolls D) excise taxes E) inflation taxes Answer: B Explanation: Tariffs are the primary discriminatory tax that must be taken into account in reckoning with foreign competition. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

53) In a deflationary market, in order to win the trust of consumers, it is essential for a company to A) engage in forfaiting agreements with consumers. B) spend more on advertising and stall the production of products. C) allow prices to escalate and target the price insensitive segment of the market. D) keep prices low and raise brand value. E) form a cartel to control the dynamics of the market. Answer: D Explanation: In a deflationary market, it is essential for a company to keep prices low and raise brand value to win the trust of consumers. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 54) When the value of the dollar is weak relative to the buyer's currency, sellers usually use ________ pricing. A) competition-based B) demand-based C) premium D) psychological E) cost-plus Answer: E Explanation: When the value of the dollar is weak relative to the buyer's currency (i.e., it takes fewer units of the foreign currency to buy a dollar), companies generally employ cost-plus pricing. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

55) When the Indian rupee depreciated against the U.S. dollar, PC manufacturers who were dependent on imported components had to either absorb the increased cost or A) raise the quantity of inputs they used in production. B) give discounts to their customers. C) increase the wages that they paid to labor. D) increase the production of PCs. E) raise the price of PCs. Answer: E Explanation: When the rupee in India depreciated significantly against the U.S. dollar, PC manufacturers faced a serious pricing problem. Because the manufacturers were dependent on imported components, their options were to absorb the increased cost or raise the price of PCs. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 56) When a company exports a product from the United States to another country, the company is most likely to be unable to determine the ultimate price of a product if A) the channels of distribution are short. B) the number of middlemen in its distribution channels is low. C) large orders are placed by retailers. D) marketing and distribution channel infrastructures are well developed. E) the middleman markups are not standardized. Answer: E Explanation: Channel length and marketing patterns vary widely, but in most countries, channels are longer and middleman margins higher than is customary in the United States. The diversity of channels used to reach markets and the lack of standardized middleman markups leave many producers unaware of the ultimate price of a product. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

57) What is the most probable reason a manufacturer would choose to conduct its manufacturing operations in a third country? A) to standardize middlemen margins B) to reduce the credit risk of the seller C) to increase the capital–labor ratio D) to avoid antidumping duties E) to reduce manufacturing costs Answer: E Explanation: One of the important reasons for manufacturing in a third country is an attempt to reduce manufacturing costs and thus price escalation. Difficulty: 2 Medium Topic: Factors Affecting the Location of Production Activities Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) Lower prices to the buyer may also mean lower tariffs, because most tariffs are levied on a(n) ________ basis. A) specific B) alternative C) accrual D) shorter, lower E) ad valorem Answer: E Explanation: Lowering manufacturing costs can often have a double benefit: The lower price to the buyer may also mean lower tariffs, because most tariffs are levied on an ad valorem basis. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

59) The creation of a free trade zone may lead to A) a decline in exports. B) an increase in taxes and duties levied on a product. C) a reduction in the price escalation. D) a decline in imports. E) an increase in labor costs and overheads. Answer: C Explanation: Utilizing FTZs can to some extent control price escalation resulting from the layers of taxes, duties, surcharges, freight charges, and so forth. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 60) By shipping unassembled goods to a free trade zone (FTZ) in an importing country, a marketer can typically lower costs because A) labor costs are higher in the importing country. B) the final prices of the goods are adjusted for inflation. C) use of unassembled goods gives the marketer immunity from dumping penalties. D) duties are typically assessed at lower rates for unassembled goods. E) local content used in production is low. Answer: D Explanation: By shipping unassembled goods to an FTZ in an importing country, a marketer can lower costs in a variety of ways. Tariffs may be lower because duties are typically assessed at a lower rate for unassembled versus assembled goods. Difficulty: 2 Medium Topic: Factors Affecting the Location of Production Activities Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

61) A marketer may face lower costs by shipping unassembled goods to a free trade zone (FTZ) in an importing country because A) locally produced components may not be used in production. B) labor costs may be lower in the importing country. C) FTZs levy higher taxes and surcharges on imported goods. D) ocean transportation rates may not be affected by the weight and volume of the components. E) duties may be assessed at a higher rate for unassembled goods. Answer: B Explanation: By shipping unassembled goods to an FTZ in an importing country, a marketer can lower costs in a variety of ways. If labor costs are lower in the importing country, substantial savings may be realized in the final product cost. Difficulty: 2 Medium Topic: Factors Affecting the Location of Production Activities Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 62) The costs of production may be lowered if a firm ships unassembled goods to a free trade zone (FTZ) in an importing country because A) wages and other overheads may be higher in an FTZ. B) locally produced components do not qualify for tariffs. C) unassembled goods may qualify for lower freight rates. D) the finished goods cannot be exported to other countries. E) goods imported in an FTZ qualify for the same level of tariffs as other imported goods. Answer: C Explanation: By shipping unassembled goods to an FTZ in an importing country, a marketer can lower costs in a variety of ways. Ocean transportation rates are affected by weight and volume; thus unassembled goods may qualify for lower freight rates. Difficulty: 2 Medium Topic: Factors Affecting the Location of Production Activities Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

63) Dumping has been defined as the situation in which a product is sold in the international market A) at a price below the cost of production. B) only to the premium, price insensitive segment of the market. C) where the demand for the product is lower than in the domestic market. D) at a higher price than in the domestic market. E) at the same price as in the domestic market. Answer: A Explanation: An export practice, generally prohibited by laws and subject to penalties and fines, defined by some as the selling of products in foreign markets below the cost of production and by others as the selling of products at below the prices of the same goods in the home market. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 64) What is the function of a countervailing duty? A) balance revenues against costs B) restrict the amount a country will import C) increase revenues from parallel imports D) increase the amount a country will export E) permit the use of foreign currency within the country Answer: B Explanation: A countervailing duty or minimum access volume (MAV), which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

65) A ________, which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation. A) trigger volume B) trigger price C) minimum access volume D) market access opportunity E) substantial cause Answer: C Explanation: A countervailing duty or minimum access volume (MAV), which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 66) For ________ duties to be levied on a product, it must be shown that prices are lower in the importing country than in the exporting country and that producers in the importing country are being directly harmed by the dumping of the product. A) countertrade B) domestic protection C) countervailing D) foreign practice E) import restriction Answer: C Explanation: For countervailing duties to be invoked, it must be shown that prices are lower in the importing country than in the exporting country and that producers in the importing country are being directly harmed by the dumping. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

67) Dumping in the world markets is most likely to increase when A) domestic production capacity is low. B) demand in the home country is low. C) demand in the foreign country is low. D) foreign production capacity is high. E) cost of production is low. Answer: B Explanation: Dumping is rarely an issue when world markets are strong. In the 1980s and 1990s, dumping became a major issue for a large number of industries when excess production capacity relative to home-country demand caused many companies to price their goods on a marginal-cost basis. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 68) Assembly in the importing country is a way companies attempt to lower prices and avoid dumping charges. These assembly plants are known as ________ plants. A) antidumping B) screwdriver C) import-oriented D) export-oriented E) automated Answer: B Explanation: Assembly in the importing country is a way companies attempt to lower prices and avoid dumping charges. However, these screwdriver plants, as they are often called, are subject to dumping charges if the price differentials reflect more than the cost savings that result from assembly in the importing country. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

69) An important selling technique to alleviate high prices and capital shortages for capital equipment is the ________ system. A) leasing B) antidumping C) direct buy-back D) consignment E) rental Answer: A Explanation: An important selling technique to alleviate high prices and capital shortages for capital equipment or high-priced durable goods is the leasing system. The concept of equipment leasing has become increasingly important as a means of selling capital equipment in overseas markets. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 70) What would be considered an advantage of leasing equipment rather than owning it? A) Lease revenue tends to fluctuate greatly. B) Leased equipment rarely breaks down. C) Leasing helps guarantee better maintenance on overseas equipment. D) Leasing keeps companies from using experimental equipment. E) Leasing is less risky than outright sale of equipment. Answer: C Explanation: Just as contracts for domestic and overseas leasing arrangements are similar, so are the basic motivations and the shortcomings. For example, leasing helps guarantee better maintenance and service on overseas equipment. Difficulty: 2 Medium Topic: Factors to Consider When Developing International Product Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

71) When Burger Boys an American fast-food company, wanted to market its burgers and fries in France, it was asked to import French mustard to the United States in return. This is an example of A) bargaining. B) countervailing duties. C) buy-back. D) countertrade. E) bribery. Answer: D Explanation: Countertrade is a pricing tool that every international marketer must be ready to employ, and the willingness to accept a countertrade will often give the company a competitive advantage. In this case, Burger Boys has accepted the countertrade of importing French mustard into the United States in exchange for selling its food in France. Difficulty: 2 Medium Topic: Countertrade Learning Objective: 18-04 Countertrading and its place in international marketing practices. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 72) The use of countertrade in international trade A) allows trade with countries short of hard currency. B) reduces a firm's competitive advantage. C) increases the tax liabilities of trading firms. D) leads to a loss of revenue. E) is considered unethical. Answer: A Explanation: Countries that face a shortage of hard currencies with which to trade can resort to countertrades when possible. Difficulty: 2 Medium Topic: Countertrade Learning Objective: 18-04 Countertrading and its place in international marketing practices. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

73) A crucial problem confronting a seller in a countertrade negotiation is determining the ________ for the goods offered as payment. A) delivery method B) warranties C) insurance premiums D) potential demand E) the cost Answer: D Explanation: The crucial problem confronting a seller in a countertrade negotiation is determining the value of and potential demand for the goods offered as payment. Difficulty: 1 Easy Topic: Countertrade Learning Objective: 18-04 Countertrading and its place in international marketing practices. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 74) What do barter houses do? A) They specialize in trading goods acquired through barter arrangements. B) They negotiate barter arrangements with countries that accept the U.S. currency as a countertrade. C) They specialize in bartering with third countries for unused raw materials. D) They direct bartered goods to the World Trade Organization for its approval. E) They review disputes in barter arrangements at the request of the International Court of Justice. Answer: A Explanation: Barter houses specialize in trading goods acquired through barter arrangements and are the primary outside source of aid for companies beset by the uncertainty of a countertrade. Difficulty: 2 Medium Topic: Countertrade Learning Objective: 18-04 Countertrading and its place in international marketing practices. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

75) ________ are the primary outside source of aid for companies affected by the uncertainty of a countertrade. A) Trade unions B) Barter houses C) Industry associations D) Swap centers E) Satellite towns Answer: B Explanation: Barter houses specialize in trading goods acquired through barter arrangements and are the primary outside source of aid for companies beset by the uncertainty of a countertrade. Difficulty: 1 Easy Topic: Countertrade Learning Objective: 18-04 Countertrading and its place in international marketing practices. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 76) What is true of price quotations for international sale? A) Price quotations can be made only if it is shown that prices are lower in the importing country than in the exporting country. B) Price quotations must specify the currency to be used, credit terms of the transaction, and documents required. C) The price quotation and contract should define only the quantity of goods and not necessarily the quality. D) Price quotations must be quoted only in terms of electronic trade dollars. E) Price quotations need to specify the transportation charges but need not necessarily state what type of documentation needs to be used. Answer: B Explanation: In quoting the price of goods for international sale, a contract may include specific elements affecting the price, such as credit, sales terms, and transportation. Parties to the transaction must be certain that the quotation settled on appropriately locates responsibility for the goods during transportation and spells out who pays transportation charges and from what point. Price quotations must also specify the currency to be used, credit terms, and the type of documentation required. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

77) In general, the end goal of all ________ activities is to reduce the impact of price competition or eliminate it. A) reciprocal pricing B) administered pricing C) free trade D) export-oriented trade E) price skimming Answer: B Explanation: Administered pricing is an attempt to establish prices for an entire market. In general, the end goal of all administered pricing activities is to reduce the impact of price competition or eliminate it. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 78) What is an example of a price-fixing arrangement most directly associated with international marketing? A) price escalation B) barter houses C) letters of credit D) cartels E) countertrade Answer: D Explanation: Any type of price-fixing arrangement can be adapted to international business, but of all the forms mentioned, cartels are the most directly associated with international marketing. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

79) A ________ exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce. A) cabal B) monopoly C) cartel D) producers' association E) competitive market Answer: C Explanation: A cartel exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 80) OPEC is an example of a ________; it can control the price of oil by controlling the market. A) cabal B) monopoly C) cartel D) producers' association E) competitive market Answer: C Explanation: A cartel exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce. Difficulty: 1 Easy Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

81) What is the typical payment procedure for established customers where the goods are delivered and the customer is billed on an end-of-the-month basis. A) an open account B) a letter of credit C) a bill of exchange D) cash in advance E) forfaiting Answer: A Explanation: In U.S. domestic trade, the typical payment procedure for established customers is an open account—that is, the goods are delivered, and the customer is billed on an end-of-themonth basis. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 82) A(n) ________ means that once the seller has accepted the credit, the buyer cannot alter it in any way without permission of the seller. A) open account B) letter of credit C) bill of lading D) bill of regression E) sales agreement Answer: B Explanation: A letter of credit means that once the seller has accepted the credit, the buyer cannot alter it in any way without the permission of the seller. They are financing devices that, when opened by a buyer of goods, allow the seller to draw a draft against the bank issuing the credit and receive dollars by presenting proper shipping documents. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

83) A ________, which shifts the buyer's credit risk to the bank, is not a guarantee of payment to the seller. Rather, payment is tendered only if the seller complies exactly with its terms. A) open account B) letter of credit C) bill of lading D) bill of regression E) credit agreement Answer: B Explanation: The international department of a major U.S. bank cautions that a letter of credit is not a guarantee of payment to the seller. Rather, payment is tendered only if the seller complies exactly with the terms of the letter of credit. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 84) With ________, the seller assumes all risk until the actual dollars are received. A) open accounts B) irrevocable letters of credit C) bills of exchange D) factoring agreements E) forfaiting contracts Answer: C Explanation: Bills of exchange (also known as dollar drafts) are forms of international commercial payment drawn by sellers on foreign buyers; in transactions based on bills of exchange, the seller assumes all risk until the actual dollars are received, making them riskier for the seller than letters of credit. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

85) A company manufactures extremely specialized equipment for medical imaging. Because of its value, when the company exports this equipment overseas to hospitals, it generally requires ________, which is a nonrefundable deposit. A) a letter of credit B) a dollar draft C) a forfaiting contract D) cash in advance E) an open account Answer: D Explanation: Complicated machinery or equipment manufactured to specification or special design would necessitate some portion to be cash in advance, which would be, in fact, a nonrefundable deposit. Difficulty: 2 Medium Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 86) ________ leave sellers in a position where most of the problems of international commercial finance work to their disadvantage. A) Letters of credit B) Dollar drafts C) Forfaiting contracts D) Cash in advance agreements E) Open accounts Answer: E Explanation: Open accounts leave sellers in a position where most of the problems of international commercial finance work to their disadvantage. Internationally, open accounts are reserved for well-established customers, and cash in advance is required of only the poorest credit risks or when the character of the merchandise is such that not fulfilling the terms of the contract may result in a heavy loss. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

87) In a(n) ________ transaction, the seller makes a one-time arrangement with a bank or other financial institution to take over responsibility for collecting the account receivable. A) forfaiting B) factoring C) barter D) cash-in-advance payment E) open account Answer: A Explanation: Inconvertible currencies and cash-short customers can kill an international sale if the seller cannot offer long-term financing. Unless the company has large cash reserves to finance its customers, a deal may be lost. Forfaiting is a financing technique for such a situation. The seller makes a one-time arrangement with a bank or other financial institution to take over responsibility for collecting the account receivable. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 88) Sales on open accounts are A) very common as a method of payment in foreign trade. B) generally recommended when special merchandise is ordered by the buyer. C) not generally recommended when there is political unrest in the importer's country. D) recommended when the country of the importer imposes difficult exchange restrictions. E) less risky for the seller when it involves new buyers. Answer: C Explanation: Sales on open accounts are generally not recommended when the practice of the trade is to use some other method, when special merchandise is ordered, when shipping is hazardous, when the country of the importer imposes difficult exchange restrictions, or when political unrest requires additional caution. Difficulty: 2 Medium Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

89) In ________, a company has an ongoing relationship with a bank that routinely buys its short-term accounts receivable at a discount. A) forfaiting B) factoring C) a barter transaction D) a cash-in-advance transaction E) an open accounts transaction Answer: B Explanation: In factoring, a company has an ongoing relationship with a bank that routinely buys its short-term accounts receivable at a discount—in other words, the bank acts as a collections department for its client. Difficulty: 1 Easy Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 90) Differentiate the two ways price decisions are viewed. Answer: In general, price decisions are viewed two ways: pricing as an active instrument of accomplishing marketing objectives, or pricing as a static element in a business decision. If prices are viewed as an active instrument, the company sets prices (rather than following market prices) to achieve specific objectives, whether targeted returns on profit, targeted market sales volumes, or some other specific goals. The company that follows the second approach, pricing as a static element, probably exports only excess inventory, places a low priority on foreign business, and views its export sales as passive contributions to sales volume. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-01 Components of pricing as competitive tools in international marketing. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

91) Describe what happens in parallel importing. What are the advantages and disadvantages of this practice? Answer: Parallel importing occurs when importers buy products from distributors in one country and sell them in another country to distributors who are not part of the manufacturer's regular distribution system. Exclusive distribution, a practice often used by companies to maintain high retail margins to encourage retailers to provide extra service to customers, to stock large assortments, or to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing. Parallel imports can do long-term damage in the market for trademarked products. Customers who unknowingly buy unauthorized imports have no assurance of the quality of the item they buy, of warranty support, or of authorized service or replacement parts. Furthermore, when a product fails, the consumer blames the owner of the trademark, and the quality image of the product is sullied. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 92) What is the difference between variable-cost pricing and full-cost pricing? When would a company choose one over the other? Answer: In variable-cost pricing, the firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets. Such firms regard foreign sales as bonus sales and assume that any return over their variable cost makes a contribution to net profit. These firms may be able to price most competitively in foreign markets, but because they are selling products abroad at lower net prices than they are selling them in the domestic market, they may be subject to charges of dumping. In that case, they open themselves to antidumping tariffs or penalties that take away from their competitive advantage. Companies following the full-cost pricing philosophy insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost. This approach is suitable when a company has high variable costs relative to its fixed costs. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-02 How to control pricing in parallel import or gray markets. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

93) What are common reasons why price escalation occurs in international marketing? Answer: Excess profits exist in some international markets, but generally the cause of the disproportionate difference in price between the exporting country and the importing country, here termed price escalation, is the added costs incurred as a result of exporting products from one country to another. Specifically, the term relates to situations in which ultimate prices are raised by shipping costs, insurance, packing, tariffs, longer channels of distribution, larger middlemen margins, special taxes, administrative costs, and exchange rate fluctuations. The majority of these costs arise as a direct result of moving goods across borders from one country to another and often combine to escalate the final price to a level considerably higher than in the domestic market. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 94) What is a tariff? What are the three basic ways in which tariffs may be levied? Answer: A tariff, or duty, is a special form of taxation. Tariffs and other forms of import taxes serve to discriminate against all foreign goods. A tariff may be levied for the purpose of protecting a market or for increasing government revenue. A tariff is a fee charged when goods are brought into a country from another country. The level of tariff is typically expressed as the rate of duty and may be levied as specific, ad valorem, or compound. A specific duty is a flat charge per physical unit imported. Ad valorem duties are levied as a percentage of the value of the goods imported. Compound duties include both a specific and an ad valorem charge. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-03 Price escalation and how to minimize its effect. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

95) What is a countertrade? What are the advantages and disadvantages of countertrading? Answer: Countertrade is a pricing tool that every international marketer must be ready to employ, and the willingness to accept a countertrade will often give the company a competitive advantage. The crucial problem confronting a seller in a countertrade negotiation is determining the value of and potential demand for the goods offered as payment. Frequently there is inadequate time to conduct a market analysis; in fact, it is not unusual to have sales negotiations almost completed before countertrade is introduced as a requirement in the transaction. Difficulty: 2 Medium Topic: Countertrade Learning Objective: 18-04 Countertrading and its place in international marketing practices. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 96) Making price quotations for international sales requires including a number of elements that may not be relevant in domestic pricing. Explain the process and what must be considered. Answer: In quoting the price of goods for international sale, a contract may include specific elements affecting the price, such as credit, sales terms, and transportation. Parties to the transaction must be certain that the quotation settled on appropriately locates responsibility for the goods during transportation and spells out who pays transportation charges and from what point. Price quotations must also specify the currency to be used, credit terms, and the type of documentation required. Finally, the price quotation and contract should define quantity and quality. A quantity definition might be necessary because different countries use different units of measurement. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

97) What is administered pricing, and how does it differ from price fixing? How is it arranged in international markets? Answer: Administered pricing is an attempt to establish prices for an entire market. Such prices may be arranged through the cooperation of competitors; through national, state, or local governments; or by international agreement. The legality of administered pricing arrangements of various kinds differs from country to country and from time to time. In general, the end goal of all administered pricing activities is to reduce the impact of price competition or eliminate it. Price fixing by business is not viewed as an acceptable practice (at least in the domestic market), but when governments enter the field of price administration, they presume to do it for the general welfare to lessen the effects of "destructive" competition. Economists, the traditional champions of pure competition, acknowledge that perfect competition is unlikely and agree that some form of workable competition must be developed. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 98) Discuss the meaning and nature of cartels. Are these groups beneficial? State an example. Answer: A cartel exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce. The cartel association may use formal agreements to set prices, establish levels of production and sales for the participating companies, allocate market territories, and even redistribute profits. The economic role of cartels is debatable, but their proponents argue that they eliminate cutthroat competition and rationalize business, permitting greater technical progress and lower prices to consumers. However, most experts doubt that the consumer benefits very often from cartels. One important aspect of cartels is their inability to maintain control for indefinite periods. Greed by cartel members and other problems generally weaken the control of the cartel. The students' examples will vary. An international cartel that has a direct impact on international trade exists among the world's shipping companies. They do not refer to themselves as a cartel but rather operate under such innocuous names as "The Trans-Atlantic Conference Agreement." Regardless of the name, they set the rates on about 70 percent of the cargo shipped between the United States and northern Europe. Shipping between the United States and Latin American ports and between the United States and Asian ports also is affected by shipping cartels. Difficulty: 2 Medium Topic: Elements That Influence International Pricing Strategies Learning Objective: 18-05 The mechanics of price quotations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) What is the difference between forfaiting and factoring? Answer: Forfaiting is similar to factoring, but it is not the same. In factoring, a company has an ongoing relationship with a bank that routinely buys its short-term accounts receivable at a discount—in other words, the bank acts as a collections department for its client. In forfaiting, however, the seller makes a one-time arrangement with a bank to buy a specific account receivable. Difficulty: 2 Medium Topic: Currency Management and Business Strategy in the Global Monetary System Learning Objective: 18-06 The mechanics of getting paid. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

International Marketing, 18e (Cateora) Chapter 19 Inventive Negotiations with International Customers, Partners, and Regulators 1) In the age of the Internet and virtual conferencing, face-to-face negotiations are rare. 2) Individual personalities and backgrounds are of no relevance at the international negotiation table. 3) Age and experience are known to affect the negotiation behaviors of individuals. 4) Generalizations about the negotiation style of a region are usually correct. 5) Japan's negotiation style is unique. On almost every dimension of negotiation style considered in a study of 17 countries, the Japanese are on or near the end of the scale. 6) Cultural differences cause four kinds of problems in international business negotiations, and these problems occur at the levels of language, nonverbal behaviors, verbal styles, and values. 7) Cultural differences in nonverbal behaviors are almost always hidden below our awareness. 8) Americans are lacking in foreign language skills more than most countries in international business negotiations. 9) Disagreements among foreign team members, in the form of side conversations, are often followed by concessions to the other negotiating party. 10) Verbal tactics used during negotiations differ vastly across diverse cultures. 11) The variation across cultures is greater when comparing linguistic aspects of language than when the verbal content of negotiations is considered. 12) The Japanese business negotiation style comprises an infrequent use of no and you and facial gazing, as well as more frequent silent periods. 13) The behavior of the businesspeople in Asian countries tends to be similar in style. 14) The style of United Kingdom negotiators is the most aggressive of all cultures. 15) Israeli business negotiators use the lowest percentage of self-disclosure, yet they also use, by far, the highest percentages of promises and recommendations. 16) The British, German, and American businesspeople are found to fall in the middle of most scales for dimensions of negotiating behaviors.

17) Five values—relationships, objectivity, competitiveness, equality, and punctuality—that are held strongly and deeply by most Americans seem to frequently cause misunderstandings and bad feelings in international business negotiations. 18) In the context of international business negotiations, in most places in the world, collectivistic, high-context cultures do not consider personalities and substance as separate issues. 19) Objectivity is key for negotiators working in China. 20) The egalitarian values of American society dictate that American sellers give complete deference to the needs and wishes of buyers. 21) American buyers achieve better results than Japanese buyers. 22) The Japanese tend to emphasize hierarchical relationships that leads to hampered internal communications. 23) When faced with a complex negotiation task, most Asians divide the large task up into a series of smaller tasks. 24) The single most important activity of international business negotiations is summarizing. 25) Due to the great differences in the roles played by women across cultures, gender should be used as a selection criterion for international negotiation teams. 26) Bargaining skill is at the top of almost everyone's list of negotiator traits. 27) Thorough preliminary research eliminates the need for negotiators to focus on key facts to reconfirm at the negotiation table. 28) The first stage of the business negotiation process is nontask sounding, which includes all those activities that might be described as establishing rapport or getting to know one another. 29) Since formality is a way of life in the United States, even the smallest contracts between companies often involves a formal signing ceremony. 30) In high-context cultures, personal relationships are crucial and high-level business executives stay in touch with their foreign counterparts. 31) The Japanese approach to international business negotiations tends to be innovative in spite of their collectivist tendencies.

32) In international business, global marketing strategies are almost always implemented through ________ with business partners and customers from foreign countries. A) telephone conversations B) face-to-face negotiations C) video chats D) mail and courier E) e-mail 33) Which image is a cultural stereotype that is most likely attributed to American negotiators by foreign business negotiators? A) cowboy B) suave, smooth-talker C) pretentious connoisseur D) "stiff upper lip" E) samurai 34) If a negotiator from another country were to label Spanish negotiators as bulls and associate the Swiss with the image of a lamb, these are examples of A) national icons. B) linguistic identifiers. C) social hierarchy. D) class distinction. E) cultural stereotypes. 35) When it comes to international negotiation, A) regional generalizations very often are not correct. B) the Japanese tend to be in the middle of the scale on almost every dimension of negotiation style. C) the negotiation styles of the Koreans and Japanese are the same in every dimension. D) on almost every dimension of negotiation style considered, the Americans are on or near the end of the scale. E) Asian negotiation styles tend to be collectively similar across all dimensions. 36) Four kinds of problems are caused by cultural differences in international business negotiations: language, nonverbal behaviors, thinking and decision-making processes, and A) communication channels. B) values. C) social responsibility. D) communication style. E) stereotypes.

37) On a tour to Australia in 1992, George Bush Sr. flashed the victory sign at the Australian public, with the palm facing inwards, which was considered a rude gesture. This is an example of cultural differences causing problems at the level of A) thinking processes. B) values. C) language. D) nonverbal behaviors. E) decision-making processes. 38) When Sandra was negotiating with Jamal, she looked him in the eye and shook his hand firmly. Jamal felt uncomfortable and didn't entirely trust Sandra after that, although he could not actually articulate why. This is likely because cultural differences in nonverbal behaviors A) are almost always hidden below our awareness. B) were not important to Sandra. C) only apply to social behaviors; business behaviors are universal. D) are less important than verbal behaviors. E) were not important to Jamal. 39) What is the most common complaint heard from American managers in terms of the negotiation behavior of foreign clients? A) the insistence on exchanging business cards to establish the rank of the negotiators B) the overt emphasis laid on punctuality and the tendency to waste time C) the lack of feedback, positive as well as negative, regarding the negotiations D) foreign clients and partners breaking into side conversations in their native languages E) frequent instances of facial gazing and touching that distract their counterparts 40) What is the most likely reason for side conversations among foreign negotiators in their native languages? A) stalling the negotiations B) sorting out a translation problem C) diverting attention from an actual issue D) sharing secrets E) gesturing disapproval 41) Which group of negotiators is considered to be the most reticent about giving information about themselves (self-disclosure)? A) Israelis B) Canadians C) Germans D) Americans E) Chinese

42) Which culture is considered to be the least aggressive, or most polite, in its negotiation behavior? A) French B) German C) Chinese D) Taiwanese E) Japanese 43) Which statement is true about the negotiation behavior of Korean negotiators? A) They use more silent periods than any other group. B) They ask the greatest number of questions. C) They are the most reticent about disclosing information. D) They use the word no and interrupt more frequently than the Japanese. E) They use the lowest percentage of aggressive persuasive tactics. 44) The negotiation style of the Russians is found to be quite similar in many respects to that of the A) Germans. B) Japanese. C) British. D) Koreans. E) Israelis. 45) Israeli negotiators are most likely to be blamed for the "pushy" stereotype often used by Americans to describe their Israeli counterparts because they A) interrupt one another more frequently than any other group. B) use the lowest percentage of self-disclosures. C) use the highest percentage of promises and recommendations. D) use the highest percentage of punishments than any other group. E) use a higher percentage of commands than any other group. 46) Spanish negotiators use a high percentage of commands, as demonstrated by which behavior? A) extensive use of silent periods B) highest incidence of touching another negotiator C) greeting callers on the phone with "diga" (speak) D) shunning eye contact with others E) greeting others with a "hola" or "bueno" 47) Which group of negotiators was found to have the most aggressive negotiation style? A) Spaniards B) Israelis C) Americans D) Koreans E) French 5 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

48) Which statement reflects the American notion of the importance of objectivity? A) American business is the hotbed of nepotism. B) Americans place emphasis on economics and performance rather than people. C) In business, favoritism matters and it is key to a successful negotiation. D) Americans have little regard for decisions based upon the bottom line. E) American business is heavily skewed against meritocracy. 49) In Japanese business organizations, subordinates do not share bad news with their superiors. This lack of internal communications can be attributed to A) the Japanese emphasis on individualism. B) the Japanese emphasis on hierarchical relationships. C) the Japanese emphasis on competition and individualism. D) the insistence on solving problems at the point of origin and not escalating them. E) Guanxi, the Japanese practice of personal connections. 50) According to foreign negotiators, which negotiation tactic is the most useful when dealing with Americans? A) offering cutbacks on deals B) including higher-level executives in talks C) providing lots of self-disclosures D) high first-offers, followed immediately with deeply discounted second-offers E) taking time with the negotiations 51) Which approach is usually adopted by Westerners when faced with a complex negotiation task? A) dividing the large task into a series of smaller tasks B) analyzing the task in a holistic manner with foreign and domestic experts C) discussing all issues at once, in no apparent order D) making larger than normal concessions in a bid to push the deal through E) buying time by tackling peripheral issues first, and then tackling the main task 52) What is true regarding the decision-making processes in international business negotiations? A) Asian negotiators prefer to break up a complex, large task into a series of smaller tasks. B) The American approach to a complex negotiation task is to discuss all issues at once, in no apparent order. C) American negotiators tend to make larger concessions after agreements are announced. D) Americans tackle issues such as prices, delivery, and warranty one at a time, with the final agreement being the sum of smaller agreements. E) The Western sequential approach and the Eastern holistic approach to decision-making are found to complement each other.

53) What is true of the decision-making process with respect to the American and Japanese negotiators? A) The Western sequential approach and the Eastern holistic approach are found to mix well. B) Americans often make unnecessary concessions right before agreements are announced by the Japanese. C) All issues are discussed at once by the Americans, in no apparent order, and concessions are made on all issues at the end of the discussion. D) American managers find it easy to measure the progress of negotiations with their Japanese counterparts. E) When negotiating with the Japanese, Americans find that the progress of negotiations is closely linked to the number of issues resolved. 54) Which statement reflects the decision-making style of the Americans in business negotiations? A) A business negotiation is an opportunity to develop a business relationship with the goal of long-term mutual benefit. B) The economic issues are the context, not the content, of the business negotiation talks. C) A business negotiation is a problem-solving activity, the best deal for both parties being the solution. D) Business issues are discussed at once, in no apparent order, and concessions are made on all issues at the end of the discussion. E) Interpersonal and interorganizational bonds take precedence over the bottom line in business negotiations. 55) What do Americans consider to be a signal of progress in a business negotiations with foreigners? A) absence of questions on specific areas of a deal B) a hardening of attitudes and positions on some issues C) a lesser frequency of talk among themselves in their own language D) higher-level foreigners being included in the discussions E) decreased bargaining and use of the higher-level and formal channels of communication 56) Fred, a purchasing manager at a department store in the United States, is engaged in negotiations with a Brazilian supplier. What behavior would indicate that Fred has been making progress in the negotiations with the Brazilians? A) decreased bargaining by the Brazilians B) the involvement of Brazilian executives of lower ranks to continue the discussions C) a noticeable decrease in instances of private conversations among the Brazilians D) questions by Brazilians that focus primarily on the more general areas of the deal E) a softening of attitudes and positions by the Brazilians on some of the issues

57) What is the first step toward initiating efficient and effective international business negotiations? A) managing preliminaries such as training and location of talks B) preparing and manipulating negotiation settings C) selecting an appropriate negotiation team D) managing the process of negotiations E) following up on procedures and practices 58) Global business success is the result of many factors, including A) standardization rather than customization of negotiation procedures across all cultures. B) the emergence of the English language as the chief medium of negotiations. C) increased homogenization of cultures across the world. D) the availability of large numbers of skillful international negotiators. E) avoidance of the use of technology in all areas related to business negotiations. 59) Which trait is important for marketing executives involved in international negotiations and technical experts who accompany them? A) optimism B) altruism C) resistance D) culturally apathy E) aggressiveness 60) In studies conducted at Ford Motor Company and AT&T, three traits were found to be important predictors of negotiator success with international clients and partners, including A) ability to function without team assistance. B) influence at headquarters. C) appreciation of external factors in negotiations. D) ability to command attention from an audience. E) willingness to take on additional responsibilities. 61) Americans often make the mistake of going it alone against a greater number of foreigners in business negotiations. This is likely related to what American trait? A) collectivism B) chivalry C) information-orientation D) pragmatism E) independence 62) What factor can get in the way of American team negotiations? A) cultural heritage of interdependence and collectivism B) emphasis on careful note taking and training via observation C) compensation schemes that overly emphasize individual performance D) preference for split commissions for negotiation teams E) hierarchical structures of American organizations 8 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

63) In relationship-oriented cultures, ________ speaks quite loudly in both persuasion and the demonstration of interest in a business relationship. A) the bottom line B) profit C) team strength D) secrecy E) rank 64) The single most important activity of international business negotiations is A) organization. B) listening. C) presentation. D) etiquette. E) self-disclosure. 65) An international business negotiator's primary job is collecting information with the goal of enhancing creativity. Which step may be taken during a meeting to ensure that the negotiator is able to do his job well? A) appointing different members of the team to provide self-disclosures and appropriate replies to queries B) bringing along junior executives for the purpose of training through observation and participation C) providing additional information to the other party when all the members fall silent during the meeting D) assigning one team member the sole responsibility of taking careful notes and not worrying about speaking E) including higher-rank executives and using informal channels of communication 66) Why is it important to bring along a senior executive to an international business negotiation? A) Influence at headquarters is crucial to success. B) The flexible position of the organization is indicated. C) The specific technical details of the deal can be discussed. D) Information can be collected through note taking with the goal of enhancing creativity. E) A larger number of nodding heads can reduce influence. 67) ________ should not be used as a selection criterion for international negotiation teams. A) Stamina B) Maturity C) Ethnicity D) Breadth of knowledge E) Gender

68) In the context of international business negotiations, even in countries where women do not participate in management, American female negotiators are first treated as A) distractions. B) ignorant people. C) inappropriate. D) foreigners. E) inexperienced people. 69) With respect to the roles of men and women in international business negotiations, A) in general, women are more comfortable speaking up in a meeting than men to maintain intimacy with their foreign counterparts. B) men are more comfortable talking one-on-one than women, owing to the social stigma associated with such practices. C) the negotiation style of American women is a lot closer to that of the Japanese than that of American men. D) in countries where women do not participate in management, American female negotiators are first considered incompetent. E) it is not particularly important for female executives to establish personal rapport at restaurants and other informal settings. 70) In the context of international negotiations, what is found to be lacking in the curricula of most schools of diplomacy? A) language skills B) diplomatic history and international relations C) foreign policies D) social and diplomatic skills E) cultural differences in communication styles 71) Ford's program for managers working with Japanese, "Managing Negotiations: Japan," includes A) classes in the Japanese language. B) training in overcoming Japanese cultural traits. C) tapes of past negotiation mistakes. D) face-to-face practice with Japanese negotiators. E) rehearsals of upcoming negotiations. 72) What action must be taken by a negotiator before international negotiations begin? A) asking questions on specific areas of the deal B) planning concession strategies C) making concessions before reaching an agreement D) rushing the foreign negotiator to come to a decision E) relying only on information obtained from external sources

73) Mike had been negotiating with a Japanese company for distribution rights for five days. He was afraid he was going to lose the contract, so at the last minute he decided to lower the price. They accepted the next day. What mistake did Mike make? A) He should have come in with a low price at the outset. B) He should have had a written concession plan before he began the negotiation. C) He should have given the Japanese negotiators a menu of options including the lower price. D) He should have avoided all concessions. E) He should have deferred to his superiors. 74) What skills typically top the list of international negotiator traits? A) preparation and planning B) observational and oratory C) linguistic and social D) persuasion and intellectual E) informational and interpretation 75) In Getting to Yes, the notion of ________ relates to how power in negotiations is best measured. A) what you negotiate is what you get B) a face-to-face communication C) the best alternative to a negotiated agreement D) the failure to listen during negotiations E) a standard for business negotiations 76) Even small companies can possess great power in negotiations if they have A) little influence at headquarters. B) a larger negotiating team. C) more to lose and less to gain from a deal. D) more good alternatives than their large-company counterparts. E) the advantage of negotiating in a foreign land. 77) Which aspect of the negotiation setting is an important consideration as it may eventually determine legal jurisdiction if disputes arise? A) preliminary research B) communications channels C) number of participants D) number of translators E) location

78) Which statement regarding the physical arrangements of an international negotiation setting is true? A) Russians prefer to talk to everyone separately, and once everyone agrees, to schedule inclusive meetings. B) Japanese tend toward a cumulative approach, meeting with one party and reaching an agreement, then both parties calling on a third party. C) In high-context cultures, the physical arrangements of rooms are taken casually. D) Americans tend to want to get everyone together to quickly reach an agreement even if opinions and positions are divergent. E) Americans adopt a formal approach to seating and room arrangement. 79) Which method is the most efficient way to communicate with clients and partners in places like Mexico, Malaysia, and China? A) conversation over a long dinner B) negotiation through video-conferencing C) conversation over a phone call D) negotiation through e-mail E) negotiation with lower- and mid-ranking executives 80) Which aspect of international business negotiations is considered to be the most difficult? A) agreeing on the number of participants in the negotiation B) finding the best alternative to a negotiated agreement C) actual conduct of the face-to-face meeting D) deciding on the location and physical arrangements E) selection of the appropriate negotiation team 81) ________ includes all those activities that might be described as establishing rapport, but it does not include information related to the "business" of a meeting. A) Persuasion B) Concessions and agreement C) Negotiation setting D) Task-related exchange of information E) Nontask sounding 82) An American buyer is negotiating with a British supplier for the purchase of raw materials for production of heavy machinery in the United States. Before exchanging any information pertaining to the business of the meeting, he spends a few minutes talking to the British negotiator on topics such as World Cup soccer, the recently concluded general elections, and the English weather. The American buyer is engaging in the first stage of a business negotiation known as A) chit chat. B) nontask sounding. C) setting an agenda. D) assessment of business terms. E) appraisal of current affairs. 12 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

83) What is one of the objectives of engaging in nontask sounding? A) determining if a client's attention is focused on business B) obtaining negative feedback on information supplied C) draining information from one's negotiation counterparts D) handling objections E) preventing loss of face 84) What aspect of nontask sounding most likely differs between the Americans and the Chinese? A) topic of discussion B) determining the trustworthiness of a client C) learning about the culture of a client D) duration of the nontask sounding process E) goals and objectives 85) Which method can be used to minimize the inevitable errors that crop up while exchanging information across language barriers? A) using silent periods more frequently B) prolonging the duration of nontask sounding C) using more promises and recommendations instead of threats and warnings D) agreeing to use a common language for communication E) using multiple communication channels during presentations 86) ________ negotiators are often reluctant to voice objections during negotiations lest they damage the all-important personal relationships. A) Mexican B) American C) German D) British E) Israeli 87) ________ negotiators are more likely to provide brutally frank negative feedback to foreign presenters. A) American B) Japanese C) Chinese D) German E) Mexican 88) In business negotiations, the most powerful persuasive tactic is to A) provide more promises and recommendations. B) enforce more punishments and use more commands. C) use more self-disclosures. D) ask more questions. E) offer more rewards and normative appeals. 13 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

89) What is one of the two obstacles to inventive negotiation techniques for Japanese negotiators? A) individualism B) civility C) frankness D) hierarchy E) relative integration 90) What step should be taken once negotiators have "gotten to yes" in order to generate new ideas and improve the business relationship? A) change the provisions of the signed contract. B) conduct a formal signing ceremony. C) schedule a review of the agreement. D) maintain a flow of communication through letters. E) push for signing of the next business deal. 91) Explain the meaning of this sentence: Negotiations are not conducted between national stereotypes. 92) What are the four kinds of problems caused by cultural differences in international business negotiations? Give examples of how misunderstandings could occur for each one. 93) Give a brief description of the styles of negotiation of the Japanese, the Koreans, and the French. 94) Compare and contrast approaches to complex negotiation tasks between Westerners and Asians. 95) How should American businesspeople approach the decision-making process in negotiations with their Asian counterparts? What are the important signals of progress in a business negotiation? 96) Name three traits that are important when selecting international business negotiators, and explain why how these traits may increase the chances for success. 97) Name three reasons why team work is particularly important for American negotiators. 98) List the seven aspects of the negotiation setting that must be manipulated ahead of time, if possible. 99) Compare the American and Japanese approaches during the four stages of business negotiations. 100) What is the importance of follow-up communications and procedures in international business negotiations, and what are some ways to manage this? 14 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

International Marketing, 18e (Cateora) Chapter 19 Inventive Negotiations with International Customers, Partners, and Regulators 1) In the age of the Internet and virtual conferencing, face-to-face negotiations are rare. Answer: FALSE Explanation: Face-to-face negotiations are an omnipresent activity in international commerce. In international business, strategic plans are almost always implemented through face-to-face negotiations with business partners and customers from foreign countries. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-01 The problems associated with cultural stereotypes. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 2) Individual personalities and backgrounds are of no relevance at the international negotiation table. Answer: FALSE Explanation: Individual personalities and backgrounds and a variety of situational factors heavily influence behavior at the negotiation table—and it is the manager's responsibility to consider these factors. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-01 The problems associated with cultural stereotypes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Age and experience are known to affect the negotiation behaviors of individuals. Answer: TRUE Explanation: Age and experience can make important differences in terms of negotiation behaviors. For example, an older Chinese executive with no experience in dealing with foreigners is likely to behave quite differently from her young assistant with undergraduate and MBA degrees from American universities. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-01 The problems associated with cultural stereotypes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

4) Generalizations about the negotiation style of a region are usually correct. Answer: FALSE Explanation: Regional generalizations very often are not correct. For example, Japanese and Korean negotiation styles are quite similar in some ways, but in other ways, they could not be more different. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-02 How culture influences behaviors at the negotiation table. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Japan's negotiation style is unique. On almost every dimension of negotiation style considered in a study of 17 countries, the Japanese are on or near the end of the scale. Answer: TRUE Explanation: Japan is an exceptional place: On almost every dimension of negotiation style considered, the Japanese are on or near the end of the scale. Sometimes Americans are on the other end. But actually, most of the time Americans are somewhere in the middle. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-02 How culture influences behaviors at the negotiation table. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 6) Cultural differences cause four kinds of problems in international business negotiations, and these problems occur at the levels of language, nonverbal behaviors, verbal styles, and values. Answer: FALSE Explanation: Cultural differences cause four kinds of problems in international business negotiations, and these problems occur at the levels of language, nonverbal behaviors, values, and thinking and decision-making processes. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-02 How culture influences behaviors at the negotiation table. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

7) Cultural differences in nonverbal behaviors are almost always hidden below our awareness. Answer: TRUE Explanation: Cultural differences in nonverbal behaviors are almost always hidden below our awareness. That is to say, in a face-to-face negotiation, participants nonverbally—and more subtly—give off and take in a great deal of information. Some experts argue that this information is more important than verbal information. Almost all this signaling goes on below our levels of consciousness. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-03 Common kinds of problems that crop up during international business negotiations. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 8) Americans are lacking in foreign language skills more than most countries in international business negotiations. Answer: TRUE Explanation: Americans are clearly near the bottom of the languages skills list. However, American undergrads recently have begun to see the light and are flocking to language classes and study-abroad programs. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 9) Disagreements among foreign team members, in the form of side conversations, are often followed by concessions to the other negotiating party. Answer: TRUE Explanation: The usual purpose of side conversations is to straighten out a translation problem or the side conversation can regard a disagreement among the foreign team members. Both circumstances should be seen as positive signs by Americans—that is, getting translations straight enhances the efficiency of the interactions, and concessions often follow internal disagreements. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 3 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

10) Verbal tactics used during negotiations differ vastly across diverse cultures. Answer: FALSE Explanation: In a study, the verbal behaviors of negotiators in 15 of the 21 cultures (six negotiators in each of the 15 groups) were videotaped. Overall, the verbal tactics used were surprisingly similar across the diverse cultures. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 11) The variation across cultures is greater when comparing linguistic aspects of language than when the verbal content of negotiations is considered. Answer: TRUE Explanation: The variation across cultures is greater when comparing linguistic aspects of language and nonverbal behaviors than when the verbal content of negotiations is considered. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 12) The Japanese business negotiation style comprises an infrequent use of no and you and facial gazing, as well as more frequent silent periods. Answer: TRUE Explanation: The Japanese style of interaction is among the least aggressive (or most polite). Particularly indicative of their polite conversational style is their infrequent use of no and you and facial gazing, as well as more frequent silent periods. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

13) The behavior of the businesspeople in Asian countries tends to be similar in style. Answer: FALSE Explanation: The behavior of the businesspeople in Taiwan is quite different from that in China and Japan but similar to that in Korea. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 14) The style of United Kingdom negotiators is the most aggressive of all cultures. Answer: FALSE Explanation: The style of French negotiators is perhaps the most aggressive of all the groups. In particular, they use the highest percentage of threats and warnings. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 15) Israeli business negotiators use the lowest percentage of self-disclosure, yet they also use, by far, the highest percentages of promises and recommendations. Answer: TRUE Explanation: The behaviors of Israeli negotiators are distinctive in three respects. They use the lowest percentage of self-disclosures, apparently holding their cards relatively closely. Yet they also use, by far, the highest percentages of promises and recommendations. They are also at the end of the scale for the percentage of normative appeals at 5 percent, with the most frequent references being to competitors' offers. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

16) The British, German, and American businesspeople are found to fall in the middle of most scales for dimensions of negotiating behaviors. Answer: TRUE Explanation: Like the Germans and the British, the Americans fall in the middle of most continua. They did interrupt one another less frequently than all the others, but that was their sole distinction. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 17) Five values—relationships, objectivity, competitiveness, equality, and punctuality—that are held strongly and deeply by most Americans seem to frequently cause misunderstandings and bad feelings in international business negotiations. Answer: TRUE Explanation: These five values are held strongly and deeply by most Americans and seem to frequently cause misunderstandings and bad feelings in international business negotiations. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) In the context of international business negotiations, in most places in the world, collectivistic, high-context cultures do not consider personalities and substance as separate issues. Answer: TRUE Explanation: Every negotiator has two kinds of interests: in the substance and in the relationship. In most places in the world, particularly in collectivistic, high-context cultures, personalities and substance are not separate issues and cannot be made so. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

19) Objectivity is key for negotiators working in China. Answer: FALSE Explanation: Guanxi, the Chinese word for personal connections, is key for negotiators working in China. Long-term reciprocity is the basis of commercial interactions there, and Western concepts like objectivity almost always take a back seat. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 20) The egalitarian values of American society dictate that American sellers give complete deference to the needs and wishes of buyers. Answer: FALSE Explanation: By nature, Americans have little understanding of the Japanese practice of giving complete deference to the needs and wishes of buyers. That is not the way things work in America. American sellers tend to treat American buyers more as equals, and the egalitarian values of American society support this behavior. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 21) American buyers achieve better results than Japanese buyers. Answer: FALSE Explanation: Not only do Japanese buyers achieve better results than American buyers, but compared with American sellers ($4,350), Japanese sellers also get more of the commercial pie ($4,430). Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

22) The Japanese tend to emphasize hierarchical relationships that leads to hampered internal communications. Answer: TRUE Explanation: The Japanese emphasis on hierarchical relationships seems to hamper internal communications; subordinates don't pass along bad news, for example. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 23) When faced with a complex negotiation task, most Asians divide the large task up into a series of smaller tasks. Answer: FALSE Explanation: When faced with a complex negotiation task, most Westerners divide the large task up into a series of smaller tasks. In Asia, however, a different approach is more often taken wherein all the issues are discussed at once, in no apparent order, and concessions are made on all issues at the end of the discussion. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 24) The single most important activity of international business negotiations is summarizing. Answer: FALSE Explanation: The single most important activity of negotiations is listening. A negotiator's primary job is collecting information with the goal of enhancing creativity. This goal may mean assigning one team member the sole responsibility of taking careful notes and not worrying about speaking during the meetings. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation

25) Due to the great differences in the roles played by women across cultures, gender should be used as a selection criterion for international negotiation teams. Answer: FALSE Explanation: Gender should not be used as a selection criterion for international negotiation teams, despite the great differences in the roles of women across cultures. Even in countries where women do not participate in management, American female negotiators are treated as foreigners first. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 26) Bargaining skill is at the top of almost everyone's list of negotiator traits. Answer: FALSE Explanation: Preparation and planning skill is at the top of almost everyone's list of negotiator traits, yet it seems many Americans are still planning strategies during over-ocean flights when they should be trying to rest. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) Thorough preliminary research eliminates the need for negotiators to focus on key facts to reconfirm at the negotiation table. Answer: FALSE Explanation: No matter how thorough the preliminary research, negotiators should always make a list of key facts to reconfirm at the negotiation table. Information gathered about foreign customers and markets almost always includes errors, and things can change during those long airline flights. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

28) The first stage of the business negotiation process is nontask sounding, which includes all those activities that might be described as establishing rapport or getting to know one another. Answer: TRUE Explanation: The first stage, nontask sounding, includes activities that might be described as establishing rapport or getting to know one another, but not information related to the "business" of a meeting. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) Since formality is a way of life in the United States, even the smallest contracts between companies often involves a formal signing ceremony. Answer: FALSE Explanation: Informality being a way of life in the United States, even the largest contracts between companies are often sent through the mail for signature. But when a major agreement is reached with foreign companies, their executives may expect a formal signing ceremony involving CEOs of the respective companies. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-09 The importance of follow-up communications and procedures. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 30) In high-context cultures, personal relationships are crucial and high-level business executives stay in touch with their foreign counterparts. Answer: TRUE Explanation: Follow-up communications are an important part of business negotiations with partners and clients from most foreign countries. Particularly in high-context cultures, where personal relationships are crucial, high-level executives must stay in touch with their counterparts. Letters, pictures, and mutual visits remain important long after contracts are signed. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-09 The importance of follow-up communications and procedures. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

31) The Japanese approach to international business negotiations tends to be innovative in spite of their collectivist tendencies. Answer: TRUE Explanation: The more we hear about innovation and creative processes, the more we are beginning to appreciate that the Japanese approach to international business negotiations, by nature, uses many of the techniques commonly emphasized in any discussion of inventive processes. The Japanese have been able to build a successful society, despite their lack of natural resources and relative isolation. Japanese society has its own obstacles to invention—hierarchy and collectivism are two. But, they have developed a negotiation style that in many ways obviates such disadvantages. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-10 The basics of inventive international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 32) In international business, global marketing strategies are almost always implemented through ________ with business partners and customers from foreign countries. A) telephone conversations B) face-to-face negotiations C) video chats D) mail and courier E) e-mail Answer: B Explanation: Face-to-face negotiations are an omnipresent activity in international commerce. Once global marketing strategies have been formulated, once marketing research has been conducted to support those strategies, and once product/service, pricing, promotion, and place decisions have been made, then the focus of managers turns to implementation of the plans. In international business, such plans are almost always implemented through face-to-face negotiations with business partners and customers from foreign countries. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-01 The problems associated with cultural stereotypes. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

33) Which image is a cultural stereotype that is most likely attributed to American negotiators by foreign business negotiators? A) cowboy B) suave, smooth-talker C) pretentious connoisseur D) "stiff upper lip" E) samurai Answer: A Explanation: The images of John Wayne, the cowboy, and the samurai, the fierce warrior, often are used as cultural stereotypes in discussions of international business negotiations. Such representations almost always convey a grain of truth—an American cowboy kind of competitiveness versus a samurai kind of organizational (company) loyalty. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-01 The problems associated with cultural stereotypes. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 34) If a negotiator from another country were to label Spanish negotiators as bulls and associate the Swiss with the image of a lamb, these are examples of A) national icons. B) linguistic identifiers. C) social hierarchy. D) class distinction. E) cultural stereotypes. Answer: E Explanation: Negotiations are not conducted between national stereotypes; negotiations are conducted between people, and cultural factors often make huge differences. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-01 The problems associated with cultural stereotypes. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

35) When it comes to international negotiation, A) regional generalizations very often are not correct. B) the Japanese tend to be in the middle of the scale on almost every dimension of negotiation style. C) the negotiation styles of the Koreans and Japanese are the same in every dimension. D) on almost every dimension of negotiation style considered, the Americans are on or near the end of the scale. E) Asian negotiation styles tend to be collectively similar across all dimensions. Answer: A Explanation: Looking broadly across the several cultures, two important lessons stand out. The first is that regional generalizations very often are not correct. For example, Japanese and Korean negotiation styles are quite similar in some ways, but in other ways, they could not be more different. The second lesson learned from this study is that Japan is an exceptional place: On almost every dimension of negotiation style considered, the Japanese are on or near the end of the scale. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-02 How culture influences behaviors at the negotiation table. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 36) Four kinds of problems are caused by cultural differences in international business negotiations: language, nonverbal behaviors, thinking and decision-making processes, and A) communication channels. B) values. C) social responsibility. D) communication style. E) stereotypes. Answer: B Explanation: Cultural differences cause four kinds of problems in international business negotiations: language, nonverbal behaviors, values, and thinking and decision-making processes. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-02 How culture influences behaviors at the negotiation table. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

37) On a tour to Australia in 1992, George Bush Sr. flashed the victory sign at the Australian public, with the palm facing inwards, which was considered a rude gesture. This is an example of cultural differences causing problems at the level of A) thinking processes. B) values. C) language. D) nonverbal behaviors. E) decision-making processes. Answer: D Explanation: In this case, the gesture by George Bush Sr. is an example of cultural differences causing problems at the level of nonverbal behaviors. When the nonverbal signals from foreign partners are different, negotiators are most likely to misinterpret them without even being conscious of the mistake. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-03 Common kinds of problems that crop up during international business negotiations. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 38) When Sandra was negotiating with Jamal, she looked him in the eye and shook his hand firmly. Jamal felt uncomfortable and didn't entirely trust Sandra after that, although he could not actually articulate why. This is likely because cultural differences in nonverbal behaviors A) are almost always hidden below our awareness. B) were not important to Sandra. C) only apply to social behaviors; business behaviors are universal. D) are less important than verbal behaviors. E) were not important to Jamal. Answer: A Explanation: Cultural differences in nonverbal behaviors are almost always hidden below our awareness. When the nonverbal signals from foreign partners are different, negotiators are most likely to misinterpret them without even being conscious of the mistake. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-03 Common kinds of problems that crop up during international business negotiations. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

39) What is the most common complaint heard from American managers in terms of the negotiation behavior of foreign clients? A) the insistence on exchanging business cards to establish the rank of the negotiators B) the overt emphasis laid on punctuality and the tendency to waste time C) the lack of feedback, positive as well as negative, regarding the negotiations D) foreign clients and partners breaking into side conversations in their native languages E) frequent instances of facial gazing and touching that distract their counterparts Answer: D Explanation: The most common complaint heard from American managers regards foreign clients and partners breaking into side conversations in their native languages. At best, this is seen as impolite, and quite often American negotiators are likely to attribute something sinister to the content of the foreign talk—"They're plotting or telling secrets." Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 40) What is the most likely reason for side conversations among foreign negotiators in their native languages? A) stalling the negotiations B) sorting out a translation problem C) diverting attention from an actual issue D) sharing secrets E) gesturing disapproval Answer: B Explanation: The usual purpose of side conversations among foreign negotiators in their native languages is to straighten out a translation problem. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

41) Which group of negotiators is considered to be the most reticent about giving information about themselves (self-disclosure)? A) Israelis B) Canadians C) Germans D) Americans E) Chinese Answer: A Explanation: The Israelis are the most reticent about giving information, with a score of 30 percent in a study of verbal behaviors of negotiators. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 42) Which culture is considered to be the least aggressive, or most polite, in its negotiation behavior? A) French B) German C) Chinese D) Taiwanese E) Japanese Answer: E Explanation: Consistent with most descriptions of Japanese negotiation behavior, their style of interaction is among the least aggressive (or most polite). Threats, commands, and warnings appear to be deemphasized in favor of more positive promises, recommendations, and commitments. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

43) Which statement is true about the negotiation behavior of Korean negotiators? A) They use more silent periods than any other group. B) They ask the greatest number of questions. C) They are the most reticent about disclosing information. D) They use the word no and interrupt more frequently than the Japanese. E) They use the lowest percentage of aggressive persuasive tactics. Answer: D Explanation: Korean negotiators used considerably more punishments and commands than did the Japanese. Koreans used the word no and interrupted more than three times as frequently as the Japanese. Moreover, no silent periods occurred between Korean negotiators. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 44) The negotiation style of the Russians is found to be quite similar in many respects to that of the A) Germans. B) Japanese. C) British. D) Koreans. E) Israelis. Answer: B Explanation: The Russians' style is quite different from that of any other European group, and, indeed, is quite similar in many respects to the style of the Japanese. They use no and you infrequently and use the most silent periods of any group. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

45) Israeli negotiators are most likely to be blamed for the "pushy" stereotype often used by Americans to describe their Israeli counterparts because they A) interrupt one another more frequently than any other group. B) use the lowest percentage of self-disclosures. C) use the highest percentage of promises and recommendations. D) use the highest percentage of punishments than any other group. E) use a higher percentage of commands than any other group. Answer: A Explanation: The Israeli negotiators interrupt one another much more frequently than negotiators from any other group. This important nonverbal behavior is most likely to blame for the "pushy" stereotype often used by Americans to describe their Israeli negotiation partners. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 46) Spanish negotiators use a high percentage of commands, as demonstrated by which behavior? A) extensive use of silent periods B) highest incidence of touching another negotiator C) greeting callers on the phone with "diga" (speak) D) shunning eye contact with others E) greeting others with a "hola" or "bueno" Answer: C Explanation: Diga is perhaps a good metaphor for the Spanish approach to negotiations. When you make a phone call in Madrid, the usual greeting on the other end is not hola ("hello") but instead diga ("speak"). The Spaniards use the highest percentage of commands of any of the groups and give comparatively little information. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

47) Which group of negotiators was found to have the most aggressive negotiation style? A) Spaniards B) Israelis C) Americans D) Koreans E) French Answer: E Explanation: The style of the French negotiators was perhaps the most aggressive of all the groups. In particular, they used the highest percentage of threats and warnings. They also used interruptions, facial gazing, and no and you very frequently compared with the other groups. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 48) Which statement reflects the American notion of the importance of objectivity? A) American business is the hotbed of nepotism. B) Americans place emphasis on economics and performance rather than people. C) In business, favoritism matters and it is key to a successful negotiation. D) Americans have little regard for decisions based upon the bottom line. E) American business is heavily skewed against meritocracy. Answer: B Explanation: "Americans make decisions based upon the bottom line and on cold, hard facts." "Americans don't play favorites." "Economics and performance count, not people." "Business is business." Such statements well reflect American notions of the importance of objectivity. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

49) In Japanese business organizations, subordinates do not share bad news with their superiors. This lack of internal communications can be attributed to A) the Japanese emphasis on individualism. B) the Japanese emphasis on hierarchical relationships. C) the Japanese emphasis on competition and individualism. D) the insistence on solving problems at the point of origin and not escalating them. E) Guanxi, the Japanese practice of personal connections. Answer: B Explanation: The Japanese emphasis on hierarchical relationships seems to hamper internal communications; subordinates don't pass along bad news, for example. This reticence seems to have been a major problem during the Toyota product quality issues, when the secretive corporate culture in Japan clashed with the U.S. requirements that automakers disclose safety threats. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 50) According to foreign negotiators, which negotiation tactic is the most useful when dealing with Americans? A) offering cutbacks on deals B) including higher-level executives in talks C) providing lots of self-disclosures D) high first-offers, followed immediately with deeply discounted second-offers E) taking time with the negotiations Answer: E Explanation: "Just make them wait." Everyone else in the world knows that no negotiation tactic is more useful with Americans, because no one places more value on time, no one has less patience when things slow down, and no one looks at their wristwatches more than Americans do. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

51) Which approach is usually adopted by Westerners when faced with a complex negotiation task? A) dividing the large task into a series of smaller tasks B) analyzing the task in a holistic manner with foreign and domestic experts C) discussing all issues at once, in no apparent order D) making larger than normal concessions in a bid to push the deal through E) buying time by tackling peripheral issues first, and then tackling the main task Answer: A Explanation: When faced with a complex negotiation task, most Westerners divide the large task up into a series of smaller tasks. Issues such as prices, delivery, warranty, and service contracts may be settled one issue at a time, with the final agreement being the sum or the sequence of smaller agreements. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 52) What is true regarding the decision-making processes in international business negotiations? A) Asian negotiators prefer to break up a complex, large task into a series of smaller tasks. B) The American approach to a complex negotiation task is to discuss all issues at once, in no apparent order. C) American negotiators tend to make larger concessions after agreements are announced. D) Americans tackle issues such as prices, delivery, and warranty one at a time, with the final agreement being the sum of smaller agreements. E) The Western sequential approach and the Eastern holistic approach to decision-making are found to complement each other. Answer: D Explanation: When faced with a complex negotiation task, most Westerners divide the large task up into a series of smaller tasks. Issues such as prices, delivery, warranty, and service contracts may be settled one issue at a time, with the final agreement being the sum or the sequence of smaller agreements. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

54) Which statement reflects the decision-making style of the Americans in business negotiations? A) A business negotiation is an opportunity to develop a business relationship with the goal of long-term mutual benefit. B) The economic issues are the context, not the content, of the business negotiation talks. C) A business negotiation is a problem-solving activity, the best deal for both parties being the solution. D) Business issues are discussed at once, in no apparent order, and concessions are made on all issues at the end of the discussion. E) Interpersonal and interorganizational bonds take precedence over the bottom line in business negotiations. Answer: C Explanation: To Americans, a business negotiation is a problem-solving activity, the best deal for both parties being the solution. To a Japanese businessperson, a business negotiation is a time to develop a business relationship with the goal of long-term mutual benefit. The economic issues are the context, not the content, of the talks. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 55) What do Americans consider to be a signal of progress in a business negotiations with foreigners? A) absence of questions on specific areas of a deal B) a hardening of attitudes and positions on some issues C) a lesser frequency of talk among themselves in their own language D) higher-level foreigners being included in the discussions E) decreased bargaining and use of the higher-level and formal channels of communication Answer: D Explanation: Important signals of progress in business negotiations can be (1) higher-level foreigners being included in the discussions; (2) questions beginning to focus on specific areas of a deal; (3) a softening of attitudes and positions on some of the issues; (4) at the negotiation table, increased talk among themselves in their own language, which may often mean they are trying to decide something; and (5) increased bargaining and use of the lower-level, informal, and other channels of communication. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 23 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

56) Fred, a purchasing manager at a department store in the United States, is engaged in negotiations with a Brazilian supplier. What behavior would indicate that Fred has been making progress in the negotiations with the Brazilians? A) decreased bargaining by the Brazilians B) the involvement of Brazilian executives of lower ranks to continue the discussions C) a noticeable decrease in instances of private conversations among the Brazilians D) questions by Brazilians that focus primarily on the more general areas of the deal E) a softening of attitudes and positions by the Brazilians on some of the issues Answer: E Explanation: A softening of attitudes and positions of the Brazilians on some of the issues would indicate that Fred has been making progress in the negotiations. Important signals of progress in business negotiations can be (1) higher-level foreigners being included in the discussions; (2) questions beginning to focus on specific areas of the deal; (3) a softening of attitudes and positions on some of the issues; (4) increased talk among themselves in their own language, which may often mean they are trying to decide something; and (5) increased bargaining and use of the lower-level, informal, and other channels of communication. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation 57) What is the first step toward initiating efficient and effective international business negotiations? A) managing preliminaries such as training and location of talks B) preparing and manipulating negotiation settings C) selecting an appropriate negotiation team D) managing the process of negotiations E) following up on procedures and practices Answer: C Explanation: Four steps lead to more efficient and effective international business negotiations. They are: (1) selection of the appropriate negotiation team; (2) management of preliminaries, including training, preparations, and manipulation of negotiation settings; (3) management of the process of negotiations, that is, what happens at the negotiation table; and (4) appropriate followup procedures and practices. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

58) Global business success is the result of many factors, including A) standardization rather than customization of negotiation procedures across all cultures. B) the emergence of the English language as the chief medium of negotiations. C) increased homogenization of cultures across the world. D) the availability of large numbers of skillful international negotiators. E) avoidance of the use of technology in all areas related to business negotiations. Answer: D Explanation: One reason for global business successes is the large numbers of skillful international negotiators. These are the managers who have lived in foreign countries and speak foreign languages. In many cases, they are immigrants to the United States or those who have been immersed in foreign cultures in other capacities. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 59) Which trait is important for marketing executives involved in international negotiations and technical experts who accompany them? A) optimism B) altruism C) resistance D) culturally apathy E) aggressiveness Answer: A Explanation: Traits such as maturity, emotional stability, breadth of knowledge, optimism, flexibility, empathy, and stamina are all important, not only for marketing executives involved in international negotiations but also for the technical experts who often accompany and support them. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

60) In studies conducted at Ford Motor Company and AT&T, three traits were found to be important predictors of negotiator success with international clients and partners, including A) ability to function without team assistance. B) influence at headquarters. C) appreciation of external factors in negotiations. D) ability to command attention from an audience. E) willingness to take on additional responsibilities. Answer: B Explanation: In studies conducted at Ford Motor Company and AT&T, three additional traits were found to be important predictors of negotiator success with international clients and partners: willingness to use team assistance, listening skills, and influence at headquarters. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 61) Americans often make the mistake of going it alone against a greater number of foreigners in business negotiations. This is likely related to what American trait? A) collectivism B) chivalry C) information-orientation D) pragmatism E) independence Answer: E Explanation: Willingness to use team assistance is particularly important for American negotiators. Because of a cultural heritage of independence and individualism, Americans often make the mistake of going it alone against greater numbers of foreigners. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

62) What factor can get in the way of American team negotiations? A) cultural heritage of interdependence and collectivism B) emphasis on careful note taking and training via observation C) compensation schemes that overly emphasize individual performance D) preference for split commissions for negotiation teams E) hierarchical structures of American organizations Answer: C Explanation: Compensation schemes that overly emphasize individual performance can get in the way of team negotiating—a negotiation team requires a split commission, which many Americans naturally eschew. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 63) In relationship-oriented cultures, ________ speaks quite loudly in both persuasion and the demonstration of interest in a business relationship. A) the bottom line B) profit C) team strength D) secrecy E) rank Answer: E Explanation: Negotiators may have to request the accompaniment of senior executives to better match up with client's and partner's negotiation teams. Particularly in relationship-oriented cultures, rank speaks quite loudly in both persuasion and the demonstration of interest in a business relationship. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

64) The single most important activity of international business negotiations is A) organization. B) listening. C) presentation. D) etiquette. E) self-disclosure. Answer: B Explanation: The single most important activity of negotiations is listening. The negotiator's primary job is collecting information with the goal of enhancing creativity. The importance of listening skills in international business negotiations cannot be overstated. This goal may mean assigning one team member the sole responsibility of taking careful notes and not worrying about speaking during the meetings. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Communication Accessibility: Keyboard Navigation 65) An international business negotiator's primary job is collecting information with the goal of enhancing creativity. Which step may be taken during a meeting to ensure that the negotiator is able to do his job well? A) appointing different members of the team to provide self-disclosures and appropriate replies to queries B) bringing along junior executives for the purpose of training through observation and participation C) providing additional information to the other party when all the members fall silent during the meeting D) assigning one team member the sole responsibility of taking careful notes and not worrying about speaking E) including higher-rank executives and using informal channels of communication Answer: D Explanation: The single most important activity of negotiations is listening. The negotiator's primary job is collecting information with the goal of enhancing creativity. This goal may mean assigning one team member the sole responsibility of taking careful notes and not worrying about speaking during the meetings. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

66) Why is it important to bring along a senior executive to an international business negotiation? A) Influence at headquarters is crucial to success. B) The flexible position of the organization is indicated. C) The specific technical details of the deal can be discussed. D) Information can be collected through note taking with the goal of enhancing creativity. E) A larger number of nodding heads can reduce influence. Answer: A Explanation: Bringing along a senior executive is important because influence at headquarters is crucial to success. Indeed, many experienced international negotiators argue that half the negotiation is with headquarters. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 67) ________ should not be used as a selection criterion for international negotiation teams. A) Stamina B) Maturity C) Ethnicity D) Breadth of knowledge E) Gender Answer: E Explanation: Gender should not be used as a selection criterion for international negotiation teams, despite the great differences in the roles of women across cultures. Even in countries where women do not participate in management, American female negotiators are treated as foreigners first. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

68) In the context of international business negotiations, even in countries where women do not participate in management, American female negotiators are first treated as A) distractions. B) ignorant people. C) inappropriate. D) foreigners. E) inexperienced people. Answer: D Explanation: Gender should not be used as a selection criterion for international negotiation teams, despite the great differences in the roles of women across cultures. Even in countries where women do not participate in management, American female negotiators are treated as foreigners first. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 69) With respect to the roles of men and women in international business negotiations, A) in general, women are more comfortable speaking up in a meeting than men to maintain intimacy with their foreign counterparts. B) men are more comfortable talking one-on-one than women, owing to the social stigma associated with such practices. C) the negotiation style of American women is a lot closer to that of the Japanese than that of American men. D) in countries where women do not participate in management, American female negotiators are first considered incompetent. E) it is not particularly important for female executives to establish personal rapport at restaurants and other informal settings. Answer: C Explanation: In general, women are more comfortable talking one-on-one. The situation of speaking up in a meeting is a lot closer to boys' experience of using language to establish their position in a large group than it is to girls' experience of using language to maintain intimacy. In many ways American women's style is a lot closer to the Japanese style than to American men's. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

70) In the context of international negotiations, what is found to be lacking in the curricula of most schools of diplomacy? A) language skills B) diplomatic history and international relations C) foreign policies D) social and diplomatic skills E) cultural differences in communication styles Answer: E Explanation: In most schools of diplomacy the curricula cover language skills, social and diplomatic skills, and knowledge specific to the diplomatic profession, including diplomatic history and international relations, law, economics, politics, international organizations, and foreign policies. Cultural differences in negotiation and communication styles are seldom considered. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 71) Ford's program for managers working with Japanese, "Managing Negotiations: Japan," includes A) classes in the Japanese language. B) training in overcoming Japanese cultural traits. C) tapes of past negotiation mistakes. D) face-to-face practice with Japanese negotiators. E) rehearsals of upcoming negotiations. Answer: E Explanation: The MNJ program includes negotiation simulations with videotaped feedback, lectures with cultural differences demonstrated via videotape of Japanese–American interactions, and rehearsals of upcoming negotiations. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

72) What action must be taken by a negotiator before international negotiations begin? A) asking questions on specific areas of the deal B) planning concession strategies C) making concessions before reaching an agreement D) rushing the foreign negotiator to come to a decision E) relying only on information obtained from external sources Answer: B Explanation: A checklist has been recommended to ensure proper preparation and planning for international negotiations: Assessment of the situation and the people Facts to confirm during the negotiation Agenda Best alternative to a negotiated agreement (BATNA) Concession strategies Team assignments Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 73) Mike had been negotiating with a Japanese company for distribution rights for five days. He was afraid he was going to lose the contract, so at the last minute he decided to lower the price. They accepted the next day. What mistake did Mike make? A) He should have come in with a low price at the outset. B) He should have had a written concession plan before he began the negotiation. C) He should have given the Japanese negotiators a menu of options including the lower price. D) He should have avoided all concessions. E) He should have deferred to his superiors. Answer: B Explanation: It is important to plan out and write down concession strategies. Concessions can often snowball, and writing them down ahead of time helps negotiators keep them under control. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Apply AACSB: Knowledge Application Accessibility: Keyboard Navigation

74) What skills typically top the list of international negotiator traits? A) preparation and planning B) observational and oratory C) linguistic and social D) persuasion and intellectual E) informational and interpretation Answer: A Explanation: Preparation and planning skills are at the top of almost everyone's list of negotiator traits, yet it seems many Americans are still planning strategies during over-ocean flights when they should be trying to rest. Information about the other side's goals and preferences should be sought ahead of time. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 75) In Getting to Yes, the notion of ________ relates to how power in negotiations is best measured. A) what you negotiate is what you get B) a face-to-face communication C) the best alternative to a negotiated agreement D) the failure to listen during negotiations E) a standard for business negotiations Answer: C Explanation: The most important idea in Getting to Yes is the notion of the best alternative to a negotiated agreement (BATNA). This notion is how power in negotiations is best measured. Even the smallest companies can possess great power in negotiations if they have many good alternatives and their large-company counterparts do not. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

76) Even small companies can possess great power in negotiations if they have A) little influence at headquarters. B) a larger negotiating team. C) more to lose and less to gain from a deal. D) more good alternatives than their large-company counterparts. E) the advantage of negotiating in a foreign land. Answer: D Explanation: Even the smallest companies can possess great power in negotiations if they have many good alternatives and their large-company counterparts do not. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 77) Which aspect of the negotiation setting is an important consideration as it may eventually determine legal jurisdiction if disputes arise? A) preliminary research B) communications channels C) number of participants D) number of translators E) location Answer: E Explanation: Location is an important consideration because it may determine legal jurisdiction if disputes arise. Location also speaks loudly about power relations. Traveling to a negotiating counterpart's home turf is a big disadvantage, and not just because of the costs of travel in money and fatigue. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

78) Which statement regarding the physical arrangements of an international negotiation setting is true? A) Russians prefer to talk to everyone separately, and once everyone agrees, to schedule inclusive meetings. B) Japanese tend toward a cumulative approach, meeting with one party and reaching an agreement, then both parties calling on a third party. C) In high-context cultures, the physical arrangements of rooms are taken casually. D) Americans tend to want to get everyone together to quickly reach an agreement even if opinions and positions are divergent. E) Americans adopt a formal approach to seating and room arrangement. Answer: D Explanation: Physical arrangements can affect cooperativeness in subtle ways. Americans tend to want to get everyone together to "hammer out an agreement" even if opinions and positions are divergent. Japanese prefer to talk to everyone separately, then, once everyone agrees, to schedule inclusive meetings. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 79) Which method is the most efficient way to communicate with clients and partners in places like Mexico, Malaysia, and China? A) conversation over a long dinner B) negotiation through video-conferencing C) conversation over a phone call D) negotiation through e-mail E) negotiation with lower- and mid-ranking executives Answer: A Explanation: Americans should recognize that their counterparts in many other countries do not necessarily share their attraction to the Internet and teleconferencing. Recent research has shown that when using e-mail, trust is harder to build. A conversation over a long dinner may actually be the most efficient way to communicate with clients and partners in places like Mexico, Malaysia, and China. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

80) Which aspect of international business negotiations is considered to be the most difficult? A) agreeing on the number of participants in the negotiation B) finding the best alternative to a negotiated agreement C) actual conduct of the face-to-face meeting D) deciding on the location and physical arrangements E) selection of the appropriate negotiation team Answer: C Explanation: The most difficult aspect of international business negotiations is the actual conduct of the face-to-face meeting. Assuming that the best representatives have been chosen, and assuming those representatives are well prepared and that situational factors have been manipulated in one's favor, things can still go sour at the negotiation table. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation 81) ________ includes all those activities that might be described as establishing rapport, but it does not include information related to the "business" of a meeting. A) Persuasion B) Concessions and agreement C) Negotiation setting D) Task-related exchange of information E) Nontask sounding Answer: E Explanation: Everywhere around the world it has been found that business negotiations proceed through four stages: (1) Nontask sounding; (2) Task-related exchange of information; (3) Persuasion; and (4) Concessions and agreement. The first stage, nontask sounding, includes all those activities that might be described as establishing rapport or getting to know one another, but it does not include information related to the "business" of the meeting. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation

82) An American buyer is negotiating with a British supplier for the purchase of raw materials for production of heavy machinery in the United States. Before exchanging any information pertaining to the business of the meeting, he spends a few minutes talking to the British negotiator on topics such as World Cup soccer, the recently concluded general elections, and the English weather. The American buyer is engaging in the first stage of a business negotiation known as A) chit chat. B) nontask sounding. C) setting an agenda. D) assessment of business terms. E) appraisal of current affairs. Answer: B Explanation: Americans always discuss topics other than business at the negotiation table (e.g., the weather, family, sports, politics, and business conditions in general) but not for long. Usually the discussion is moved to the specific business at hand after 5 to 10 minutes. Such preliminary talk is known as nontask sounding. Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 83) What is one of the objectives of engaging in nontask sounding? A) determining if a client's attention is focused on business B) obtaining negative feedback on information supplied C) draining information from one's negotiation counterparts D) handling objections E) preventing loss of face Answer: A Explanation: Nontask sounding is much more than just friendly or polite; it helps negotiators learn how the other side feels that particular day. During nontask sounding, one can determine if a client's attention is focused on business or distracted by other matters, personal or professional. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

84) What aspect of nontask sounding most likely differs between the Americans and the Chinese? A) topic of discussion B) determining the trustworthiness of a client C) learning about the culture of a client D) duration of the nontask sounding process E) goals and objectives Answer: D Explanation: It usually takes 5 to 10 minutes in the information-oriented United States to complete the process of nontask sounding. Such is not the case in relationship-oriented countries like Japan or China; the goals of the nontask sounding are identical, but the time spent is much, much longer. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 85) Which method can be used to minimize the inevitable errors that crop up while exchanging information across language barriers? A) using silent periods more frequently B) prolonging the duration of nontask sounding C) using more promises and recommendations instead of threats and warnings D) agreeing to use a common language for communication E) using multiple communication channels during presentations Answer: E Explanation: The percentage of one's speech being misheard or misunderstood goes up dramatically when someone is speaking a second language, no matter the fluency levels or length of acquaintance. And when the second language capability is limited, entire conversations may be totally misunderstood. Using multiple communication channels during presentations— writing, exhibits, speaking, repetition—works to minimize the inevitable errors. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

86) ________ negotiators are often reluctant to voice objections during negotiations lest they damage the all-important personal relationships. A) Mexican B) American C) German D) British E) Israeli Answer: A Explanation: In many cultures, negative feedback is very difficult to obtain. In high-context cultures such as Mexico and Japan, speakers are reluctant to voice objections lest they damage the all-important personal relationships. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation 87) ________ negotiators are more likely to provide brutally frank negative feedback to foreign presenters. A) American B) Japanese C) Chinese D) German E) Mexican Answer: D Explanation: Low-context German executives often complain that American presentations include too much "fluff"—they are interested in copious information only, not the hyperbole and hedges so common in American speech. Negative feedback from Germans can seem brutally frank to higher-context Americans. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

88) In business negotiations, the most powerful persuasive tactic is to A) provide more promises and recommendations. B) enforce more punishments and use more commands. C) use more self-disclosures. D) ask more questions. E) offer more rewards and normative appeals. Answer: D Explanation: The most powerful persuasive tactic is actually asking more questions. Chester Karrass, in his still useful book The Negotiation Game, suggests that it is "smart to be a little dumb" in business negotiations. Repeat questions; and if clients or potential business partners have good answers, then perhaps a compromise on the issue is best. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation 89) What is one of the two obstacles to inventive negotiation techniques for Japanese negotiators? A) individualism B) civility C) frankness D) hierarchy E) relative integration Answer: D Explanation: There appears to be a deeply fundamental explanation for why the Japanese have been able to build such a successful society, despite their lack of natural resources and relative isolation. Japanese society has its own obstacles to invention—hierarchy and collectivism are two. They have developed a negotiation style that in many ways obviates such disadvantages. Difficulty: 1 Easy Topic: Cultural Differences in Negotiating Learning Objective: 19-10 The basics of inventive international negotiations. Bloom's: Remember AACSB: Diversity Accessibility: Keyboard Navigation

90) What step should be taken once negotiators have "gotten to yes" in order to generate new ideas and improve the business relationship? A) change the provisions of the signed contract. B) conduct a formal signing ceremony. C) schedule a review of the agreement. D) maintain a flow of communication through letters. E) push for signing of the next business deal. Answer: C Explanation: After negotiators have "gotten to yes," a scheduled review of the agreement may actually get one's business relationship past "yes" to truly inventive outcomes. The point is that time must be set aside for an inventive discussion of how to improve on the business relationship. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-10 The basics of inventive international negotiations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 91) Explain the meaning of this sentence: Negotiations are not conducted between national stereotypes. Answer: This is referring to the fact that negotiations are conducted between people who can vary in style and substance. Cultural factors can also make a huge difference, as can gender differences. Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-01 The problems associated with cultural stereotypes. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

92) What are the four kinds of problems caused by cultural differences in international business negotiations? Give examples of how misunderstandings could occur for each one. Answer: Cultural differences cause four kinds of problems in international business negotiations, at the levels of language, nonverbal behaviors, values, and thinking and decisionmaking processes. The order is important; the problems lower on the list are more serious because they are more subtle. For example, two negotiators would notice immediately if one were speaking Japanese and the other German. The solution to the problem may be as simple as hiring an interpreter or talking in a common third language, or it may be as difficult as learning a language. Cultural differences in nonverbal behaviors, in contrast, are almost always hidden below our awareness. That is to say, in a face-to-face negotiation, participants nonverbally—and more subtly—give off and take in a great deal of information. When the nonverbal signals from foreign partners are different, negotiators are most likely to misinterpret them without even being conscious of the mistake. Interpersonal friction often colors business relationships, goes undetected, and, consequently, goes uncorrected. Differences in values and thinking and decision-making processes are hidden even deeper and therefore are even harder to cure. Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-03 Common kinds of problems that crop up during international business negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 93) Give a brief description of the styles of negotiation of the Japanese, the Koreans, and the French. Answer: Japan – Their style of interaction is among the least aggressive (or most polite). Threats, commands, and warnings appear to be deemphasized in favor of more positive promises, recommendations, and commitments. Particularly indicative of their polite conversational style is their infrequent use of no and you and facial gazing, as well as more frequent silent periods. Korea – Korean negotiators use considerably more punishments and commands than do the Japanese. Koreans use the word no and interrupt more than three times as frequently as the Japanese. Moreover, no silent periods occur between Korean negotiators. France – The style of the French negotiators is perhaps the most aggressive. In particular, they use the highest percentage of threats and warnings. They also use interruptions, facial gazing, and no and you very frequently. Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-04 The similarities and differences in communication behaviors in several countries. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

94) Compare and contrast approaches to complex negotiation tasks between Westerners and Asians. Answer: When faced with a complex negotiation task, most Westerners divide the large task up into a series of smaller tasks. Issues such as prices, delivery, warranty, and service contracts may be settled one issue at a time, with the final agreement being the sum or the sequence of smaller agreements. In Asia, however, a different approach is more often taken wherein all the issues are discussed at once, in no apparent order, and concessions are made on all issues at the end of the discussion. The Western sequential approach and the Eastern holistic approach do not mix well. American managers often report great difficulties in measuring progress in Japan. In America, you are half done when half the issues are settled. However in Japan, issues follow no timetable and seem to get settled arbitrarily, catching the other parties unawares. Often Americans make unnecessary concessions right before agreements are announced by the Japanese. Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 95) How should American businesspeople approach the decision-making process in negotiations with their Asian counterparts? What are the important signals of progress in a business negotiation? Answer: American bargainers should anticipate a holistic approach to decision-making from their Asian counterparts and be prepared to discuss all issues simultaneously and in an apparently haphazard order. Progress in the talks should not be measured by how many issues have been settled. Rather, Americans must try to gauge the quality of the business relationship. Important signals of progress can be the following: Higher-level foreigners being included in the discussions. Questions beginning to focus on specific areas of the deal. A softening of attitudes and positions on some of the issues—"Let us take some time to study this issue." At the negotiation table, increased talk among themselves in their own language, which may often mean they're trying to decide something. Increased bargaining and use of the lower-level, informal, and other channels of communication. Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-05 How differences in values and thinking processes affect international negotiations. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation 43 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

96) Name three traits that are important when selecting international business negotiators, and explain why how these traits may increase the chances for success. Answer: Traits such as maturity, emotional stability, breadth of knowledge, optimism, flexibility, empathy, and stamina are all important, not only for marketing executives involved in international negotiations but also for the technical experts who often accompany and support them. In studies conducted at Ford Motor Company and AT&T, three additional traits were found to be important predictors of negotiator success with international clients and partners: willingness to use team assistance, listening skills, and influence at headquarters. Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 97) Name three reasons why team work is particularly important for American negotiators. Answer: Willingness to use team assistance is particularly important for American negotiators. Because of a cultural heritage of independence and individualism, Americans often make the mistake of going it alone against greater numbers of foreigners. One American sitting across the negotiation table from three or four Chinese negotiators is unfortunately an all too common sight. The number of brains in the room does make a difference. Business negotiations are social processes, and the social reality is that a larger number of nodding heads can exercise greater influence than even the best arguments. It is much easier to gather detailed information when teams are negotiating rather than individuals. Compensation schemes that overly emphasize individual performance can also get in the way of team negotiating—a negotiation team requires a split commission, which many Americans naturally eschew. Negotiators may have to request the accompaniment of senior executives to better match up with client's and partner's negotiation teams. Particularly in relationship-oriented cultures, rank speaks quite loudly in both persuasion and the demonstration of interest in the business relationship. Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-06 Important factors in selecting a negotiation team. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

98) List the seven aspects of the negotiation setting that must be manipulated ahead of time, if possible. Answer: The seven aspects of the negotiation setting that should be manipulated ahead of time are: Location Physical arrangements Number of parties Number of participants Audiences (news media, competitors, fellow vendors, etc.) Communications channels Time limits Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-07 How to prepare for international negotiations. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation

99) Compare the American and Japanese approaches during the four stages of business negotiations. Answer: A comparison of the American and Japanese approaches during the four stages of business negotiations is given below: Stages of business negotiations

Americans

Japanese

1. Nontask sounding

Very short periods are typical.

Considerable time and expense devoted to such efforts.

2. Task-related exchange of information

The most important step: Information is given briefly High first offers with long and directly. "Fair" first offers explanations and in-depth are more typical. clarifications.

3. Persuasion

The most important step: Minds are changed at the negotiation table, and aggressive persuasive tactics are often used.

4. Concessions and agreements

Concessions are made only toward Concessions and commitments the end of negotiations—a holistic are made throughout—a approach to decision making. sequential approach to Progress is difficult to measure for decision making. Americans.

Persuasion is accomplished primarily behind the scenes. Vertical status relations dictate bargaining outcomes.

Difficulty: 3 Hard Topic: Cultural Differences in Negotiating Learning Objective: 19-08 Managing all aspects of the negotiation process. Bloom's: Understand AACSB: Diversity Accessibility: Keyboard Navigation

100) What is the importance of follow-up communications and procedures in international business negotiations, and what are some ways to manage this? Answer: Follow-up communications are an important part of business negotiations with partners and clients from most foreign countries. Particularly in high-context cultures, where personal relationships are crucial, high-level executives must stay in touch with their counterparts. Letters, pictures, and mutual visits remain important long after contracts are signed. Indeed, warm relationships at the top often prove to be the best medicine for any problems that may arise in the future. Difficulty: 2 Medium Topic: Cultural Differences in Negotiating Learning Objective: 19-09 The importance of follow-up communications and procedures. Bloom's: Understand AACSB: Communication Accessibility: Keyboard Navigation

This Page is Intentionally Left Blank