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Chapter 1:
Scope, Concepts, and Drivers of International Marketing
TRUE/FALSE
1. The U.S. consumes more than 25% of worldwide products and services.
ANS: F
The United States constitutes one of the most important world markets, providing and consuming a
high percentage of worldwide products and services. Over time, it has become evident, however, that
this percentage is getting smaller: less than 25 percent. This is found in “The Importance of
International Marketing” section (1-1).
PTS: 1
DIF: Hard
2. International companies such as General Motors, Mitsubishi, Microsoft, and Exxon earn profits greater
than the Gross Domestic Product of many developing countries.
ANS: T
International companies such as GM do earn profits greater than the GDP of some developing
countries. This is found in the "The Importance of International Marketing" section (1-1).
PTS: 1
DIF: Medium
3. Companies from small countries have difficulty in succeeding internationally, as their income cannot
be supported by a large market at home.
ANS: F
Companies have, in fact, achieved worldwide dominance in spite of the smaller size and limited
market of their home country. It should be noted, however, that an international presence was essential
for their success. Example of such successful companies are Philips Electronics, Royal Ahold (a large
retailer, and ING, a global player in financial services. They come from the Netherlands, a smaller
country in Western Europe. This is found in the "The Importance of International Marketing" section
(1-1).
PTS: 1
DIF: Medium
4. In the future, postal services might constitute the new competitive territory of international companies.
ANS: T
As countries move to deregulate postal service, opportunities will arise for private companies (e.g.,
FedEx, UPS, etc.) to expand internationally. In the future, postal services might constitute the new
competitive territory of international companies. This is found in "The Importance of International
Marketing" section (1-1).
PTS: 1
DIF: Hard
5. A company engaging in domestic marketing has the least commitment to international marketing.
ANS: T
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Domestic marketing is the least committed to international marketing. The commitment increases
through other phases of marketing, such as export marketing, international marketing, etc. This is
found in the "Levels of International Marketing Involvement" section (1-2).
PTS: 1
DIF: Easy
6. A company engaging in export marketing has the least commitment to international marketing.
ANS: F
Domestic marketing is the least committed to international marketing. The commitment to
international marketing is much higher for export marketing, as companies actively seek international
clients. This is found in the "Levels of International Marketing Involvement" section (1-2).
PTS: 1
DIF: Easy
7. Export marketing requires a substantial focus on consumers in the international target market.
ANS: F
International marketing requires a substantial focus on international consumers in a particular country
or countries. This is found in the "Levels of International Marketing Involvement" section (1-2).
PTS: 1
DIF: Medium
8. International marketing is defined as the processes involved in the creation, production, distribution,
promotion and pricing products, services, ideas and experiences for international markets.
ANS: T
International marketing activities require a substantial focus on international consumers in a particular
country or countries. International marketing is thus defined as the processes involved in the creation,
production, distribution, promotion and pricing products, services, ideas and experiences for
international markets. This is found in the "Levels of International Marketing Involvement" section
(1-2).
PTS: 1
DIF: Easy
9. Global marketing activities are not coordinated across different countries, nor across different regions.
ANS: F
Global marketing activities are coordinated across different countries. International marketing
activities are not coordinated across different countries. This is found in the "Levels of International
Marketing Involvement" section (1-2).
PTS: 1
DIF: Medium
10. Firms with an ethnocentric orientation are guided by a domestic market extension concept.
ANS: T
Firms with an ethnocentric orientation are guided by a domestic market extension concept: In general,
top management of firms with an ethnocentric orientation consider that domestic strategies, techniques,
and personnel are superior to foreign ones. This is found in “Ethnocentric Orientation” section (1-3a).
PTS: 1
DIF: Medium
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11. Firms with an ethnocentric orientation consider that the purpose of their international operations is to
identify markets that could absorb surplus domestic production.
ANS: T
Firms with an ethnocentric orientation may simply view international markets are markets where they
could unload excess production. This is found in “Ethnocentric Orientation” section (1-3a).
PTS: 1
DIF: Medium
12. Disney has an ethnocentric philosophy that is manifest in its international operations.
ANS: T
Disney has traditionally had an ethnocentric philosophy, selling U.S. culture worldwide. This is found
in “Ethnocentric Orientation” section (1-3a).
PTS: 1
DIF: Medium
13. Polycentric firms are likely to be highly centralized.
ANS: F
Ethnocentric firms are likely to be highly centralized. Polycentric firms are likely to establish
individual businesses, typically wholly-owned subsidiaries in each of the countries where they operate.
This is found in the "Ethnocentric Orientation" section (1-3a).
PTS: 1
DIF: Medium
14. Firms with a regiocentric orientation are guided by a multidomestic market concept.
ANS: F
Polycentric firms are guided by the multidomestic market concept. Firms with a regiocentric
orientation are guided by the global marketing concept.
This is found in the "Regiocentric Orientation" section (1-3c).
PTS: 1
DIF: Medium
15. Firms with a polycentric orientation are guided by a multidomestic market concept.
ANS: T
Polycentric firms are guided by the multidomestic market concept. Managers of polycentric firms are
very much aware of the importance of individual international markets to the success of their business
and are likely to establish individual businesses in the countries where they operate. This is found in
the "Polycentric Orientation" section (1-3b).
PTS: 1
DIF: Medium
16. Each subsidiary in an ethnocentric organization has its own marketing plans and objectives and
operates autonomously as an independent profit center on an individual country basis.
ANS: F
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Each subsidiary in a polycentric organization has its own marketing plans and objectives and operates
autonomously as an independent profit center on an individual country basis. Found in the
"Polycentric Orientation" section (1-3b).
PTS: 1
DIF: Hard
17. Firms with a regiocentric or a geocentric orientation are guided by a global marketing concept.
ANS: T
Both regiocentric and geocentric firms are guided by the global marketing concept. Companies
adopting a regiocentric orientation view world regions as distinct markets that share economic,
political and/or cultural traits such that they would be viable candidates for a region-wide marketing
approach. This is found in the "Regiocentric Orientation" section (1-3c).
PTS: 1
DIF: Medium
18. Firms with a regiocentric or a polycentric orientation are guided by a global marketing concept.
ANS: F
Both regiocentric and geocentric firms are guided by the global marketing concept. Polycentric firms
are guided by the multidomestic marketing concept. This is found in the "Regiocentric Orientation"
section (1-3c) and "Geocentric Orientation" sections (1-3c, and 1-3d)).
PTS: 1
DIF: Medium
19. The objective of a geocentric company is most often to achieve a position as a low-cost manufacturer
and marketer of its product line.
ANS: T
Because geocentric firms concentrate on a uniform consumer segment, they are able to attain low costs
through standardization. This is found in the "Geocentric Orientation" section (1-3d).
PTS: 1
DIF: Medium
20. McDonald's has been successful because of its ethnocentric philosophy.
ANS: F
McDonald's has been successful as a result of its geocentric philosophy. This is found in the
"Geocentric Orientation" section (1-3d).
PTS: 1
DIF: Hard
21. IBM has always had a geocentric orientation.
ANS: F
IBM has changed its orientation from polycentric to geocentric recently, when it went through a
massive reorganization. Under the old system, a corporate customer with operations in several
countries had to contract with small IBM offices in each country, and each IBM office had its own
regulations; the reorganization placed IBM’s employees into 14 customer-focused groups, such as
financial services, entertainment, and oil and gas, to be able to work with a central sales office. This is
found in the "Geocentric Orientation" section (1-3d).
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PTS: 1
DIF: Hard
22. Organizing the firm on the basis of function, rather than on the basis of country of operations,
demonstrates a geocentric internationalization philosophy.
ANS: T
Organizing the firm on the basis of function, rather than on the basis of country of operations,
demonstrates a geocentric internationalization philosophy. McDonald's and IBM have geocentric
internationalization philosophies and are organized based on function, rather than based country of
operations. This is found in the "Geocentric Orientation" section (1-3d).
PTS: 1
DIF: Hard
23. Local firms targeting their products to local consumers are dependent on equipment, parts, and/or raw
materials originating abroad.
ANS: T
Few companies operate in an isolated, country-specific environment.Even local firms receive
international equipment, parts and raw materials from that originate in foreign countries/companies.
This is found in the "Drivers of International Expansion" section (1-4).
PTS: 1
DIF: Hard
24. Competition, regional economic integration, and technology are examples of Business Environment
Drivers.
ANS: T
Business Environment Drivers include: Competition, regional economic and political integration,
technology, improvements in the transportation and telecommunication infrastructure, economic
growth, transition to a market economy, and converging consumer needs. Found in the “Drivers in the
Business Environment” section (1-4a).
PTS: 1
DIF: Easy
25. Competitive pressure is frequently a driver of internationalization.
ANS: T
Domestic competition may encourage local companies to seek international markets. In this way
competitive pressure is frequently a driver of internationalization. This is found in the "Drivers in the
Business Environment" section (1-4a).
PTS: 1
DIF: Easy
26. Economic integration does not benefit companies from non-member states.
ANS: F
Economic integration benefits companies from non-member states. It allows subsidiaries incorporated
in the respective markets to benefit from free trade within the region, and allows firms outside the
integrated regions to conduct business within the common market without the impediments typically
posed by crossing national borders. This is found in the "Drivers in the Business Environment" section
(1-4a).
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PTS: 1
DIF: Medium
27. A subsidiary of a company from the United States incorporated in any country of the European Union
is a corporate citizen of the European Union.
ANS: T
Subsidiaries in the EU enjoy EU corporate citizenship. This minimizes the effects of tariffs and
exchange rates. This is found in the "Drivers in the Business Environment" section (1-4a).
PTS: 1
DIF: Medium
28. Much of the outsourcing of customer service to developing countries is largely attributed to
improvements in telecommunication.
ANS: T
Much of the outsourcing of customer service to developing countries, such as India and China, is
largely attributed to improvements in telecommunication. This is found in the “Drivers in the Business
Environment” section (1-4a).
PTS: 1
DIF: Easy
29. Economic growth is not an important driver of internationalization.
ANS: F
Economic growth is an important driver. The emergence of a strong middle class in large markets,
such as Brazil, hane created markets of high potential for international brands. This is found in the
"Drivers in the Business Environment" section (1-4a).
PTS: 1
DIF: Easy
30. Emerging economies in general are less open to foreign trade and severely limit international firms
operating in these markets.
ANS: F
Emerging economies in general are more open to foreign trade and no longer severely limit
international firms operating in these markets. This is found in the "Drivers in the Business
Environment" section (1-4a).
PTS: 1
DIF: Medium
31. An important outcome of the transition of the former Eastern Bloc countries to a market economy has
been the deregulation and privatization of former government monopolies.
ANS: T
An important outcome of the transition of the former Eastern Bloc countries to a market economy has
been the deregulation and privatization of former government monopolies. This allows companies like
Unilever to purchase or partner with local companies. This is found in the "Drivers in the Business
Environment" section (1-4a).
PTS: 1
DIF: Easy
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32. Companies investing in large transition economies, such as China, reap the greatest return on their
investment.
ANS: T
Most rewards are reaped by those companies investing in large transition economies, such as China’s.
Yum! Brands has reaped immense returns from its operations in China. This is found in the "Drivers in
the Business Environment" section (1-4a).
PTS: 1
DIF: Easy
33. Uniform consumer segments worldwide are every marketer’s hope. However, it is impossible to have
uniform segments as long as consumer preferences are so diverse.
ANS: F
Exposure to global brands in one’s home country and, while traveling abroad, to media advertising
these brands has created demand for many global products. Uniform consumer segments are emerging
worldwide. This is found in the "Drivers in the Business Environment" section (1-4a).
PTS: 1
DIF: Hard
34. Although the product life cycle is an important marketing consideration in domestic marketing, it has
little affect on the international expansion of a firm.
ANS: F
Products that are in maturity or decline can be invigorated by entering markets where the market is in a
younger stage of the PLC. This is found in the "Firm-Specific Drivers" section (1-4b).
PTS: 1
DIF: Medium
35. A main driver of international expansion is a firm’s attempt to prolong the life cycle of its products.
ANS: T
A main driver of international expansion is a firm’s attempt to prolong the life cycle of its products.
This is found in the "Firm-Specific Drivers" section (1-4b).
PTS: 1
DIF: Easy
36. New Product Development costs are not at all related to the product life cycle.
ANS: F
The concept of high new product development costs is related to the product life cycle. Companies
often spend long periods of time and significant amounts of money to develop new products. This is
found in the "Firm-Specific Drivers" section (1-4b).
PTS: 1
DIF: Easy
37. During the introduction stage of the product lifecycle, the core product is likely to achieve a standard
in a particular industry.
ANS: F
The core product usually achieves standardization in the maturity stage. This is found in the
"Firm-Specific Drivers" section (1-4b).
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PTS: 1
DIF: Medium
38. The U.S. market is very large. As a result, companies are likely to quickly recover their product
development costs and make a profit as well, if its sales are limited to the U.S.
ANS: F
Despite the size and purchase power of the U.S. market, it is unlikely that companies would fully
recover their product development costs and make a profit as well if they limited their sales to the U.S.
This is found in the "Firm-Specific Drivers" section (1-4b).
PTS: 1
DIF: Medium
39. Firms in the introductory stage of the product life cycle are most likely to move manufacturing
operations and facilities abroad, to developing countries, in an attempt to take advantage of
significantly lower labor costs.
ANS: F
Firms are more likely to move their facilities abroad in the maturity stage of the product life cycle.
This is found in the "Firm-Specific Drivers" section (1-4b).
PTS: 1
DIF: Medium
40. Colgate-Palmolive developed its successful Axion paste for washing dishes by hand after observing
the dish washing behavior of Latin American women.
ANS: T
International firms benefit from lessons they learn in different parts of the world. For example,
Colgate-Palmolive developed its successful Axion paste for washing dishes by hand after observing
the dish washing behavior of Latin American women. This is found in the "Firm-Specific Drivers"
section (1-4b).
PTS: 1
DIF: Medium
41. Experience transfers are limited to product manufacturers.
ANS: F
Experience transfers are also beneficial to service providers. This is found in the "Firm-Specific
Drivers" section (1-4b).
PTS: 1
DIF: Medium
42. It is important for the firm to adapt to the local business environment in order to serve the needs of
local consumers.
ANS: T
If the firm ignores the self-reference criterion and fails to adapt, then failure is likely to occur. Thus, it
is important for the firm to adapt to the local business environment in order to serve the needs of local
consumers. This is found in the "Self-Reference Criterion" section (1-5a).
PTS: 1
DIF: Easy
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43. Companies attempting to establish and maintain an international presence are likely to encounter
obstacles to internationalization both from within the company and from outside.
ANS: T
Companies attempting to establish and maintain an international presence are likely to encounter
obstacles to internationalization both from within the company and from outside. Such obstacles are
generally either financial or psychological in nature. This is found in the “Obstacles to
Internationalization” section (1-5).
PTS: 1
DIF: Medium
44. The self-reference criterion helps the firm to adapt as it expands operations to international markets.
ANS: F
The self-reference criterion is a hindrance to adaptation. It occurs when the individual makes a
conscious or unconscious reference to her own culture instead of considering the culture of the host
country. This is found in the "Self-Reference Criterion" section (1-5a).
PTS: 1
DIF: Medium
45. In Japan, similarly to the U.S., looking one's counterpart in the eyes conveys directness and honesty.
ANS: F
In Japan, this behavior is viewed as abrasive and challenging. This is found in the "Self-Reference
Criterion" section (1-5a).
PTS: 1
DIF: Medium
46. The first step in minimizing the impact of the self-reference criterion is selecting appropriate personnel
for international assignments.
ANS: T
The first step in minimizing the impact of the self-reference criterion is selecting appropriate personnel
for international assignments. Such employees are sensitive to others and have experience working in
different environments. This is found in the "Self-Reference Criterion" section (1-5a).
PTS: 1
DIF: Medium
47. Local content requirements are sometimes used by national governments to restrict or impede the
entrance of international firms.
ANS: T
Local content requirements are sometimes used by national governments to restrict or impede the
entrance of international firms. Other governmental barriers include: tariffs, import quotas, import
license awards, and foreign exchange restrictions. This is found in the "Government Barriers" section
(1-5b).
PTS: 1
DIF: Medium
48. Members of regional economic integration agreements such as NAFTA frequently use tariffs as a
means of restricting international expansion of companies in the countries' territories.
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ANS: F
Economic integration agreements are designed to remove tariffs and other barriers to trade. This is
found in the "Government Barriers" section (1-5b).
PTS: 1
DIF: Hard
49. Competition can be both a driver of internationalization and a barrier to new entrants in a market.
ANS: T
Competition (as in the Coca-Cola/McCann case) can encourage international expansion but it can also
hinder competition through raising entry barriers (e.g., cutting prices, controlling channels, etc.). This
is found in the "Competition" section (1-5c).
PTS: 1
DIF: Medium
50. Marlboro’s primary defensive marketing strategy in foreign countries is to decrease prices by as much
as one-third.
ANS: T
With heavy competition from new and lesser-known brands in Asia, Central and Eastern Europe, and
North Africa and the Middle East, Marlboro created a strong defensive strategy for its cigarettes: It
slashed prices by as much as a third and advertised heavily anywhere it was legal to do so, especially
on billboards in the center of different capital cities and towns in the provinces. This is found in the
“International Competition” section (1-5c).
PTS: 1
DIF: Hard
MULTIPLE CHOICE
1. The United States provides about ____ of the worldwide products and services
a. 5%
c. 25%
b. 15%
d. 35%
ANS: C
The U.S. constitutes one of the most important world markets. The U.S. provides about 25% of
worldwide products and services. This is found in "The Importance of International Marketing" section
(1-1).
PTS: 1
DIF: Hard
2. Recently, privatization in countries where government monopolies have dominated for decades has
made it possible for multinationals to compete in each of the following industries EXCEPT:
a. airlines
c. railway
b. postal services
d. telecommunications
ANS: B
Postal services may be a future competitive territory. It is not a current competitive territory. This is
found in "The Importance of International Marketing" section (1-1).
PTS: 1
DIF: Hard
3. In which type of marketing does a firm have the least commitment to international marketing?
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a. Domestic marketing
b. Export marketing
c. International marketing
d. Global marketing
ANS: A
Domestic marketing focuses solely on domestic consumers and on the home-country environment.
This is found in the "Levels of International Marketing Involvement" section (1-2).
PTS: 1
DIF: Easy
4. The firm is most likely to have an ethnocentric orientation when it engages in ____.
a. Export marketing
c. Multinational marketing
b. International marketing
d. Global marketing
ANS: A
International and multinational marketing activities require a substantial focus on international
consumers. Global marketing seeks markets where a global consumer segment exists. In export
marketing, however, the firm views the international market as an extension of the domestic market.
This is found in the "Levels of International Marketing Involvement" section (1-2).
PTS: 1
DIF: Easy
5. Which type of marketing best describes a company’s approach to international marketing if the
company is present in different countries with sales offices, subsidiaries, or is an active partner in
strategic alliances with local companies and that does not coordinate activities across the different
countries or regions.
a. Domestic marketing
c. International marketing
b. Export marketing
d. Global marketing
ANS: C
In both domestic and export marketing, the firm's offices remain in the home country. Global
marketing coordinates activities across countries and regions. This is found in the "Levels of
International Marketing Involvement" section (1-2).
PTS: 1
DIF: Medium
6. Which of the following approaches to international marketing involvement best describes a company
that coordinates activities across different countries or regions?
a. Domestic marketing
c. International marketing
b. Export marketing
d. Global marketing
ANS: D
Global marketing coordinates activities across countries and regions. This is found in the "Levels of
International Marketing Involvement" section (1-2).
PTS: 1
DIF: Medium
7. Which type of marketing involves marketing activities across different countries without focusing
primarily on national or regional segmentation?
a. Domestic marketing
c. Multinational marketing
b. Export marketing
d. Global marketing
ANS: D
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In domestic or export marketing, product may flow to other countries, but no marketing activity occurs.
In international or multinational marketing, markets are segmented. Only global marketing seeks a
universal segment of consumers across markets. This is found in the "Levels of International
Marketing Involvement" section (1-2).
PTS: 1
DIF: Medium
8. The EPRG Framework of international orientation stands for:
a. economics, psychographics, regulations, & geographics
b. enter, produce, react, & group
c. ethnicity, polychronic, regulations, & global expansion
d. ethnocentric, polycentric, regiocentric, & geocentric
ANS: D
Companies' philosophies on international involvement can be described, based on the EPRG
Framework as ethnocentric, polycentric, regiocentric, and geocentric. This is found in "The EPRG
Framework and International Marketing Concepts" section (1-3)
PTS: 1
DIF: Medium
9. Eli Lilly is a(n):
a. ethnocentric firm
b. polycentric firm
c. polychronic firm
d. regiocentric firm
ANS: A
Eli Lilly, a pharmaceutical firm, focuses solely on its domestic market. Top management at Eli Lilly
places most of the emphasis on product research and development, in an effort to bring to the
marketplace high-performance pharmaceutical products. This is found in the "Ethnocentric
Orientation" section (1-3a).
PTS: 1
DIF: Hard
10. When a company believes that domestic strategies, techniques, and personnel are superior to foreign
ones it is using a(n):
a. ethnocentric orientation
c. regiocentric orientation
b. polycentric orientation
d. geocentric orientation
ANS: A
An ethnocentric firm focuses solely on the domestic market. Thus, an ethnocentric firm believes that
domestic strategies, techniques, and personnel are superior to foreign ones. This is found in the
"Ethnocentric Orientation" section (1-3a).
PTS: 1
DIF: Medium
11. Firms that view international markets solely as markets where they could unload excess production
have a(n):
a. ethnocentric orientation
c. regiocentric orientation
b. polycentric orientation
d. geocentric orientation
ANS: A
Firms with an ethnocentric orientation may simply view international markets are markets where they
could unload excess production. This is found in “Ethnocentric Orientation” section (1-3a).
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PTS: 1
DIF: Medium
12. Firms with a polycentric orientation are guided by a:
a. domestic market extension concept
c. global marketing concept
b. multidomestic market concept
d. none of the above
ANS: B
Polycentric firms use a multidomestic concept. They treat each country as a separate market. This is
found in the "Polycentric Orientation" section (1-3b).
PTS: 1
DIF: Medium
13. Firms with a regiocentric orientation are guided by a:
a. domestic market extension concept
c. global marketing concept
b. multidomestic market concept
d. none of the above
ANS: C
Regiocentric (and geocentric) firms use a global marketing concept. They target a uniform segment
across markets. This is found in the "Regiocentric Orientation" section (1-3c).
PTS: 1
DIF: Medium
14. Companies view world regions as distinct markets that share economic, political, and/or cultural traits
such that they would be viable candidates for a regionwide marketing approach.
a. ethnocentric orientation
c. regiocentric orientation
b. polycentric orientation
d. geocentric orientation
ANS: C
Companies adopting a regiocentric orientation view world regions as distinct markets that share
economic, political, and/or cultural traits such that they would be viable candidates for a regionwide
marketing approach. A regiocentric orientation is now possible due to the success of regional
economic and political integration that allows for implementing a uniform marketing strategy in the
entire region. This is found in the “Regiocentric Orientation” section (1-3c).
PTS: 1
DIF: Medium
15. Firms where top management adopts a geocentric orientation perceive the world:
a. to be similar to the home country
b. to have regional segmentation possibilities
c. to lack national and regional distinctions
d. to have heterogeneous preferences
ANS: C
Firms with a geocentric orientation target a "universal segment" across regions. The universal segment
lacks national and regional distinctions. This is found in the "Geocentric Orientation" section (1-3d).
PTS: 1
DIF: Medium
16. Firms with a geocentric orientation:
a. pursue a differentiation strategy
b. position themselves as a low-cost manufacturer
c. frequently need to engage in "guerilla" marketing
d. none of the above
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ANS: B
Firms using a regiocentric orientation are likely to pursue a differentiation strategy. Firms with a
geocentric orientation deploy a standard product across regions. A standard product allows for
economies of scale and economies of scale lead to low-cost manufacturing. This is found in the
"Geocentric Orientation" section (1-3d).
PTS: 1
DIF: Medium
17. When Ford stopped making the Escort look different in every market and moved to an identical look
for all markets, it moved from a polycentric strategy to this kind of strategy.
a. ethnocentric orientation
c. regiocentric orientation
b. polycentric orientation
d. geocentric orientation
ANS: D
For decades, Ford used a polycentric strategy in meeting the needs of budget-conscious consumers by
developing a Ford Escort automobile for the United Kingdom that looked different from the one sold
in the United States or Southeast Asia. Currently, the automobile addressing the needs of the
budget-conscious consumer, the Ford Focus, looks identical in each market: Ford has adopted a
geocentric approach to product development. This is found in the “Polycentric Orientation” section
(1-3b).
PTS: 1
DIF: Medium
18. Which of the following is NOT a driver of international expansion?
a. Competition
c. Import quotas
b. Regional economic integration
d. Technology
ANS: C
Import quotas are government imposed trade barriers. This is found in the "Drivers of International
Expansion" section (1-4) and "Government Barriers" section (1-5b).
PTS: 1
DIF: Medium
19. When a company from the United States exporting products to multiple countries in the European
Union only has to go through customs once, this is an example of:
a. Competition
b. Regional economic & political integration
c. Import quotas
d. Technology
ANS: B
A subsidiary of a company from the United States incorporated in any country of the European Union
is a corporate citizen of the European Union. Consequently, the subsidiary does not have to pay duties
when it crosses borders of European Union member states, nor foreign exchange costs, because all
transactions are conducted in Euros. This is found in the “Drivers in the Business Environment”
section (1-4a).
PTS: 1
DIF: Medium
20. A subsidiary of a company from the United States incorporated in any country of the European Union
is:
a. subject to foreign exchange restrictions
b. forced to pay multiple tariffs
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c. exempt from U.S. taxation
d. a corporate citizen of the European Union
ANS: D
A reason to form an EU subsidiary is to avoid exchange restrictions and multiple tariffs. Although
subsidiaries may deduct taxes paid abroad, they are not exempt for U.S. taxation. The text states that,
"a subsidiary of a company from the United States incorporated in any country of the European Union
is a corporate citizen of the European Union." This is found in the “Drivers in the Business
Environment” section (1-4a).
PTS: 1
DIF: Medium
21. The improved telecommunications in Burundi is an example of:
a. infrastructure improvements
c. experience transfers
b. economic growth
d. an entry barrier
ANS: A
Today, a telephone connection to Burundi would be done via satellite, at a significantly lower cost
than previously, when it was handled via cable. This is an example of an infrastructure improvement.
This is found in the “Drivers in the Business Environment” section (1-4a).
PTS: 1
DIF: Medium
22. An important outcome of the transition of the former Eastern Bloc countries to a market economy is:
a. increasing forced domestication policies
b. increased product development costs
c. decreased foreign direct investment
d. deregulation and privatization of former government monopolies
ANS: D
While risk still exists, the trend is toward foreign direct investment and away from forced
domestication in many of the countries from the former Eastern Bloc. The "increased product
development costs" is unrelated to the question. The text explicitly states that an outcome is
deregulation and privatization. This is found in the “Drivers in the Business Environment” section
(1-4a).
PTS: 1
DIF: Medium
23. Uniform consumer segments:
a. are emerging worldwide
b. do not exist
c. are pursued by firms with a regiocentric orientation
d. are too small to be profitable
ANS: C
Uniform consumer segments are emerging worldwide and are pursued by firms with a geocentric
orientation. Targeting a uniform segment allows for lower costs and increased profits. This is found in
the “Drivers in the Business Environment” section (1-4a).
PTS: 1
DIF: Medium
24. Which of the following are advantages of uniform consumer segments worldwide?
a. lower costs
c. lower tariffs
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b. increased profits
d. a and b only
ANS: D
Targeting a uniform segment allows for lower costs and increased profits. This is found in the “Drivers
in the Business Environment” section (1-4a).
PTS: 1
DIF: Medium
25. Generation X consumers in the United States and in Southeast Asia:
a. are loyal to the same soft-drink brands
b. are very different even though they are in the same age demographic
c. wear the same brands of clothing but have different musical preferences
d. are targeted by firms with an ethnocentric orientation
ANS: A
Generation X consumers are an example of a uniform consumer segment. Thus, they "are loyal to the
same soft drink brands, wear the same brands of clothing, listen to the same music, have the same idols,
see the same television shows and watch MTV for entertainment." This is found in the “Drivers in the
Business Environment” section (1-4a).
PTS: 1
DIF: Hard
26. When consumers traveling abroad demand brands that may not be available in the home-country
market and retailers convey this information up the distribution chain to wholesalers, they
demonstrate:
a. push demand
b. pull demand
c. the benefits of diversification
d. improved communication within the supply chain due to advances in technology
ANS: B
Consumers traveling abroad bring with them product experiences and demand brands that may not be
available in the home-country market. This would generate pull demand, whereby consumers request
the product from the retailers, who subsequently convey the information up the distribution chain to
wholesalers. The wholesalers would then order the product. This is found in the “Drivers in the
Business Environment” section (1-4a).
PTS: 1
DIF: Medium
27. The product life cycle:
a. does not affect ethnocentric firms
b. is a driver of international expansion
c. is used by governments to erect entry barriers
d. is important in domestic marketing but is not relevant to global marketing
ANS: B
The product life cycle encourages firms to consider international expansion. A product may be in the
mature stage in a domestic market but be in an introduction or growth phase in a foreign market. This
is found in the "Firm-Specific Drivers" section (1-4b).
PTS: 1
DIF: Easy
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28. Nike, on the average, spends close to a year to develop, test, and manufacture new product designs that
then last on the shelves in the United States for about:
a. 3 months
c. 1 year
b. 6 months
d. over a year
ANS: B
Even though it takes Nike a year to develop many of its products, its products only last about 6 months
in the US market. For this reason Nike also sells internationally in hopes the extended sales will help
to offset the high product development costs. This is found in the "Firm-Specific Drivers" section
(1-4b).
PTS: 1
DIF: Hard
29. At which stage of the product life cycle is a firm most likely to move manufacturing operations and
facilities abroad?
a. Introduction
c. Maturity
b. Growth
d. It is equally likely among the stages.
ANS: C
Firms move abroad to take advantage of cost savings associated with lower labor costs. Costs become
more important in the mature stage of the life cycle. Competitive pressure is also more likely to
encourage international or global marketing in the mature stage. This is found in the "Firm-Specific
Drivers" section (1-4b).
PTS: 1
DIF: Medium
30. Colgate's development of Axion paste for washing dishes for its Latin American market and its later
deployment in some European countries is an example of:
a. standardization advantages
c. experience transfers
b. economies of scale
d. self reference criterion
ANS: C
Colgate developed Axion after noting that women washed dishes by hand, dunking their hands in a
small tub with a few slivers of soap. The same product was then offered to consumers in Central and
Eastern Europe after noting that they washed dishes using a similar method. Although some economies
of scale and standardization can be taken advantage of, a true standardization strategy (resulting in
large economies of scale) would not have altered the already existing detergents for the Latin
American market. This is found in the "Firm-Specific Drivers" section (1-4b).
PTS: 1
DIF: Hard
31. High domestic product development costs:
a. serve as market entry barriers in international expansion
b. encourage international expansion
c. rarely affect consumer product manufacturers
d. rarely affect industrial producers
ANS: B
Because product development costs are high and because of shrinking product life cycles, many
companies choose to extend the life cycle of the product by selling it in other markets. This is found in
the "Firm-Specific Drivers" section (1-4b).
PTS: 1
DIF: Hard
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32. The cigarette industry is either in the late maturity stage, or in the decline stage in industrialized
countries. By entering emerging markets where cigarettes are in the growth stage, the industry is
a. setting up new market barriers
b. prolonging its product life cycle
c. targeting consumer product manufacturers
d. focusing on the introduction stage of the product life cycle
ANS: B
The cigarette industry is in either the late maturity stage or in the decline stage in many industrialized
countries. By entering emerging markets where cigarettes are in the growth stage and consumers have
increasing purchase power, such as China, India, and Central and Eastern Europe, the cigarette
industry is in fact prolonging its products’ life cycle. This is found in the "Firm-Specific Drivers"
section (1-4b).
PTS: 1
DIF: Easy
33. Example(s) of obstacles to internationalization can be:
a. financial and psychological
c. physical and psychological
b. physical and financial
d. technological
ANS: A
Companies attempting to establish and maintain an international presence are likely to encounter
obstacles to internationalization. Such obstacles can be financial in nature: The company might not
have the finances to expand beyond national frontiers. Others are psychological: Fear of an unknown
international environment or of local business practices may keep the company from international
engagement. This is found in the “Obstacles to Internationalization” section (1-5).
PTS: 1
DIF: Medium
34. An example of psychological obstacle to internationalization is
a. fear of the unknown international environment
b. limited financing available
c. limited technology available
d. all of the above
ANS: A
Fear of an unknown international environment or of local business practices may keep the company
from international engagement. This is found in the “Obstacles to Internationalization” section (1-5).
PTS: 1
DIF: Medium
35. "Individuals' conscious or unconscious reference to their own national culture, to home-country norms,
values, as well as to their knowledge and experience, in the process of making decisions in the host
country" is the definition of:
a. the domestic market extension concept
b. a regiocentric orientation
c. a universal consumer segment
d. the self reference criterion
ANS: D
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An impediment to adaptation is the self-reference criterion, defined as individuals' conscious or
unconscious reference to their own national culture, to home-country norms, values, as well as to their
knowledge and experience, in the process of making decisions in the host country. This is found in the
"Self Reference Criterion" section (1-5a).
PTS: 1
DIF: Medium
36. Which of the following is NOT a formal method used by national governments to restrict or impede
entrance of international firms in the local market?
a. Import quotas
c. Foreign exchange restrictions
b. Import license awards
d. Consumer boycotts
ANS: D
By definition, consumers are not a governmental entity. The other methods are government barriers to
entry. This is found in the "Government Barriers" section (1-5b).
PTS: 1
DIF: Easy
37. When doing business in Latin America, a good marketing manager knows that:
a. it is crucial to show up early to a business meeting.
b. you don't have to "read between the lines" in the Latin American culture.
c. it is important to avoid alcohol and pork consumption.
d. it is important to interact with your client in a social setting before "getting to business."
ANS: D
Of the choices, only option D is discussed in chapter 1. Latin America is a polychronic and high
context culture. This causes meetings to have irregular starting times so it is rare to start a meeting on
time and in social settings it is even considered rude to show up "on time". The high context forces
individuals to understand the context behind what is being said. Finally, the pork & alcohol restriction
occurs in Muslim countries. It is not common in Latin American countries. This is found in the "Self
Reference Criterion" section (1-5a).
PTS: 1
DIF: Medium
38. The FIRST step to minimizing the impact of the self-reference criterion is:
a. training the employee to be sensitive to the local culture
b. selecting appropriate personnel for international assignments
c. developing a repatriation plan
d. limit the expatriate's exposure to own-country nationals.
ANS: B
Training the employee should occur after selecting the appropriate person for the job. Repatriation is
not directly related to the self-reference criterion. Limiting the expatriate's exposure to his or her
own-country nationals is not advised. This is found in the "Self-Reference Criterion" section (1-5a).
PTS: 1
DIF: Easy
39. Which of the following is a technique used by members of the World Trade Organization to restrict
trade to bypass traditional barriers to trade not permitted by the WTO?
a. Tariffs
b. Delays in granting licenses
c. Preferential treatment for local contractors
d. Cumbersome procedures for import paper-work processing
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ANS: A
One of the WTO's purposes (along with GATT) is to reduce tariffs. For this reason members use
non-tariff barriers. Thus, tariffs are not a common restriction among WTO members. This is found in
the "Government Barriers" section (1-5b).
PTS: 1
DIF: Medium
40. Competitors erect entry barriers by:
a. blocking channels of distribution
b. binding retailers into exclusive agreements
c. slashing prices temporarily
d. all of the above
ANS: D
While competition can be a driver of internationalization, competitors can also erect barriers to new
entrants in a market. They often do so by employing strategies such as blocking channels of
distribution, binding retailers into exclusive agreements, slashing prices temporarily to prevent product
adoption, or engaging in an advertising blitz that could hurt a company's initial sales in a market. This
is found in the "Competition" section (1-5c).
PTS: 1
DIF: Easy
COMPLETION
1. A company engaging in ______________________________ has the least commitment to
international marketing.
ANS: domestic marketing
PTS: 1
DIF: Medium
NOT: This is found in the "Levels of International Marketing Involvement" section (1-2).
2. A firm engaged in ____________________ marketing could be involved in exporting indirectly,
through orders from international clients, or directly.
ANS: export
PTS: 1
DIF: Medium
NOT: This is found in the "Levels of International Marketing Involvement" section (1-2).
3. ____________________ marketing activities require a substantial focus on international consumers in
a particular country or countries.
ANS:
International
Multinational
PTS: 1
DIF: Medium
NOT: This is found in the "Levels of International Marketing Involvement" section (1-2).
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4. ____________________ marketing involves marketing activities across different countries without
focusing primarily on national or regional segmentation.
ANS: Global
PTS: 1
DIF: Medium
NOT: This is found in the "Levels of International Marketing Involvement" section (1-2).
5. Firms with an ____________________ orientation are guided by a domestic market extension
concept.
ANS: ethnocentric
PTS: 1
DIF: Easy
NOT: This is found in the "Ethnocentric Orientation" section (1-3a).
6. Disney has adopted a(n) ____________________ philosophy in its international operations.
ANS: ethnocentric
PTS: 1
DIF: Easy
NOT: This is found in the "Ethnocentric Orientation" section (1-3a).
7. Firms with a ____________________ orientation are guided by a multidomestic market concept.
ANS: polycentric
PTS: 1
DIF: Easy
NOT: This is found in the "Polycentric Orientation" section (1-3b).
8. Firms with a regiocentric or geocentric orientation are guided by a
______________________________ concept.
ANS:
global
global marketing
PTS: 1
DIF: Easy
NOT: This is found in the "Regiocentric Orientation" section (1-3c).
9. The objective of a(n) ____________________ company is most often to achieve a position as a
low-cost manufacturer and marketer of its product line.
ANS: geocentric
PTS: 1
DIF: Hard
NOT: This is found in the "Geocentric Orientation" section (1-3d).
10. McDonald’s has a(n) ____________________ philosophy when it comes to internationalization.
ANS: geocentric
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PTS: 1
DIF: Hard
NOT: This is found in the "Geocentric Orientation" section (1-3d).
11. A subsidiary of a company from the United States incorporated in any country of the European Union
is a ______________________________ of the European Union.
ANS:
corporate citizen
citizen
PTS: 1
DIF: Medium
NOT: This is found in the "Drivers in the Business Environment" section (1-4a).
12. Economic growth constitutes a very important driver of _________________________.
ANS:
internationalization
globalization
PTS: 1
DIF: Easy
NOT: This is found in the "Drivers in the Business Environment" section (1-4a).
13. The transition of the former _________________________ countries to a market economy has led to
rapid economic development in many countries in the region and has created important new markets
for international brands.
ANS:
Eastern Bloc
communist
PTS: 1
DIF: Medium
NOT: This is found in the "Drivers in the Business Environment" section (1-4a).
14. Generation X consumers in the United States and in Southeast Asia are loyal to the same soft-drink
brands, wear the same brands of clothing, listen to the same music and have the same idols. This is an
example of a(n) ____________________ consumer.
ANS:
uniform
universal
PTS: 1
DIF: Medium
NOT: This is found in the "Drivers in the Business Environment" section (1-4a).
15. Consumers who have traveled abroad bring with them product experiences and demand brands that
may not be available in the home-country market. This would generate ____________________
demand.
ANS: pull
PTS: 1
DIF: Hard
NOT: This is found in the "Drivers in the Business Environment" section (1-4a).
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16. Products that are in _________________________ stage can change their position on the global
product lifecycle stage by going into markets where the product is in high demand.
ANS:
maturity
late maturity
decline
PTS: 1
DIF: Medium
NOT: This is found in the "Firm-Specific Drivers" section (1-4b).
17. Cigarettes are in the late maturity stage of the product life cycle in the United States, but they are in the
____________________ stage in emerging markets worldwide.
ANS: growth
PTS: 1
DIF: Medium
NOT: This is found in the "Firm-Specific Drivers" section (1-4b).
18. Firms in the _________________________ stage of the product life cycle are likely to move
manufacturing operations and facilities abroad, to developing countries, in an attempt to take
advantage of significantly lower labor costs.
ANS:
maturity
late maturity
PTS: 1
DIF: Medium
NOT: This is found in the "Firm-Specific Drivers" section (1-4b).
19. _________________________ played pop music on the rather loud side in its restaurants in new
markets as a result of knowledge gained in Central and Eastern Europe
ANS: Pizza Hut
PTS: 1
DIF: Hard
NOT: This is found in the "Firm-Specific Drivers" section (1-4b).
20. The Tesco Extra hypermarket concept was first introduced in ____________________ before it was
introduced in the U.K.
ANS: Hungary
PTS: 1
DIF: Hard
NOT: This is found in the "Firm-Specific Drivers" section (1-4b).
21. The ___________________________________ is defined as "individuals' conscious and unconscious
reference to their own national culture, to home-country norms, values, as well as to their knowledge
and experience, in the process of making decisions in the host country."
ANS:
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self-reference criterion
self reference criterion
PTS: 1
DIF: Medium
NOT: This is found in the "Self-Reference Criterion" section (1-5a).
22. Signatories of the General Agreement on Tariffs and Trade are using _________________________
barriers, such as cumbersome procedures for import paper-work to restrict international expansion of
companies in their countries' territories.
ANS:
non-tariff
non tariff
PTS: 1
DIF: Medium
NOT: This is found in the "Government Barriers" section (1-5b).
23. While competition can be a driver of internationalization, competitors can also erect
_________________________ to new entrants in a market.
ANS:
barriers
entry barriers
PTS: 1
DIF: Medium
NOT: This is found in the "Competition" section (1-5c).
24. ____________________ is both a driver of internationalization, and it can erect barriers to new
entrants in a market.
ANS: competition
PTS: 1
DIF: Medium
NOT: This is found in the "Competition" section (1-5c).
25. ____________________ barriers include blocking channels of distribution, binding retailers into
exclusive agreements, slashing prices temporarily to prevent product adoption, or engaging in an
advertising blitz that could hurt a company’s initial sales in a market and cause it to retrench.
ANS: Competitive
PTS: 1
DIF: Medium
NOT: This is found in the "Competition" section (1-5c).
ESSAY
1. Explain the EPRG Framework.
ANS:
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EPRG stands for ethnocentric, polycentric, regiocentric, and geocentric. It is useful for understanding
the way a firm views international marketing. The ethnocentric firm (e.g., Eli Lilly) is guided by a
domestic market extension concept. International operations and customers are considered secondary
to domestic operations and customers. The polycentric firm is guided by a multidomestic market
concept. This firm assumes that each market is unique and needs to be addressed individually. The
company is decentralized. The regiocentric firm is guided by the global marketing concept. It vies
regions as distinct markets and use region-wide marketing. A geocentric firm is also guided by the
global marketing concept. The geocentric company looks for a uniform consumer segment, which
allows the company to offer a standard product and a standard marketing campaign. This promotes
cost savings for the firm. This is found in "The EPRG Framework and International Marketing
Concepts" section (1-3).
PTS: 1
DIF: Medium
2. Discuss the reasons why a U.S. company would want to form a subsidiary within the European Union.
ANS:
A subsidiary of a company from the U.S. incorporated in any country of the European Union is a
corporate citizen of the EU. Consequently, the subsidiary does not have to pay duties when it crosses
borders of EU member states, nor foreign exchange costs, since all transactions are conducted in Euros.
This is found in the "Drivers in the Business Environment”section (1-4a).
PTS: 1
DIF: Medium
3. How does converging consumer needs affect international expansion?
ANS:
Converging consumer needs gives rise to a uniform consumer segment. A company with a geocentric
orientation is able to sell a standard product with a standard message to a uniform consumer segment.
This allows for lower costs, which may create a sustainable competitive advantage. This is found in
the "Drivers in the Business Environment" section (1-4a).
PTS: 1
DIF: Easy
4. What is the Self-Reference Criterion and how may it be overcome?
ANS:
The self-reference criterion is defined as "individuals' conscious and unconscious reference to their
own national culture, to home-country norms, values, as well as to their knowledge and experience, in
the process of making decisions in the host country." A first step to minimizing the impact of the
self-reference criterion is selecting appropriate personnel for international assignments. Second, it is
also important to train expatriates to focus on and be sensitive to the local culture. This is found in the
"Self-Reference Criterion" section (1-5a).
PTS: 1
DIF: Medium
5. How does competition affect international expansion?
ANS:
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Competition promotes and hinders expansion. In the "Drivers in the Business Environment" section,
competitive pressure drives internationalization. For example, McCann Erickson follows Coca Cola
into every country in an attempt to prevent competitors from stealing away the account. In the
"Obstacles to Internationalization" the competition is shown to erect barriers to new entrants in a
market. This can be done through blocking channels of distribution, binding retailers into exclusive
agreements, slashing prices, etc. This is found in the "Drivers in the Business Environment" section
(1-4a).
PTS: 1
DIF: Hard
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