CHAPTER 1 NATURE OF INTERNATIONAL MARKETING:

CHALLENGES AND OPPORTUNITIES MULTIPLE CHOICE 1. According to the textbook, international marketing is "the multinational process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives." The definition fails to recognize a) nonprofit marketing b) business-to-business marketing (X) c) consumer marketing d) integration of the 4 Ps 2. According to the textbook, international marketing is "the multinational process of planning and executing the conception, pricing, promotion, and distribution of ideas, good, and services to create exchanges that satisfy individual and organizational objectives." The definition fails to recognize a) product b) place c) promotion d) pricing e) all of the 4 Ps are recognized (X) 3. The marketing mix (the 4 Ps of marketing) does not include a) product b) place c) practicality (X) d) promotion 4. The study of international marketing should focus primarily on a) product b) place c) promotion d) pricing e) all of the above (X) 5. To U.S. students, French marketing is a) domestic marketing b) foreign marketing (X) c) comparative marketing d) international marketing 6. This kind of international marketing study contrasts two or more marketing systems to identify similarities and differences. a) domestic marketing b) foreign marketing c) comparative marketing (X) d) extensive marketing 7. For practical purposes, the difference between the concept of international marketing and the concept of multinational marketing is a) significant b) insignificant (X) c) meaningful d) adequate 8. Marketing is not needed in 1

a) socialist countries b) communist countries c) less developed countries d) developed countries e) marketing is needed in all countries (X) 9. MNCs are often associated with a) exploitation b) ruthlessness c) power d) bigness e) all of the above (X) 10. Midsize German companies' contribution to Germany's export success is a) significant (X) b) minor c) uneven d) unpredictable 11. This definition of MNC focuses on the number of countries in which the firm does business and the citizenship of corporate owners and top management. a) structure (X) b) performance c) behavior 12. This definition of MNC depends on the contribution of foreign operations in terms of earnings, sales, and assets. a) structure b) performance (X) c) behavior 13. A strong orientation toward the home country is an indication of a) ethnocentricity (X) b) polycentricity c) geocentricity 14. This is the feeling within a culture that its values are superior to those of foreign cultures. a) ethnocentricity (X) b) polycentricity c) geocentricity 15. When a firm uses the same marketing strategies abroad as that used at home, it probably is a) ethnocentric (X) b) polycentric c) geocentric d) unicentric 16. When a U.S. firm leaves local managers of its foreign subsidiary alone by assuming that the foreign market is difficult for outsiders to understand, this is a reflection of a) ethnocentricity b) polycentricity (X) c) geocentricity 17. Decentralization is likely in the case of a) ethnocentricity b) polycentricity (X) c) geocentricity 2

18. This kind of orientation often results in duplication of effort among overseas subsidiaries. a) ethnocentricity b) polycentricity (X) c) geocentricity 19. When companies believe that, even though countries may differ, the differences can be understood and managed, such firms are a) ethnocentric b) polycentric c) U.S.-centric d) geocentric (X) 20. These firms allocate corporate resources without regard to national frontiers and do not hesitate making direct investment abroad. a) ethnocentric firms b) polycentric firms c) geocentric firms (X) 21. Beatrice Foods may want to give up its U.S. citizenship because of tax advantages abroad. This kind of thinking is a) ethnocentric b) polycentric c) geocentric (X) 22. This kind of company does not identify itself with a particular country and may even prefer to lose its national identity. a) ethnocentric b) polycentric c) geocentric (X) 23. Firms that combine aspects of centralization and decentralization are a) ethnocentric b) polycentric c) geocentric (X) 24. Because of trade (and imports), inflation a) increases b) decreases c) moderates (X) d) disappears 25. As a result of international trade and global interdependence, countries' inflation rates tend to a) increase b) moderate (X) c) be unpredictable d) be unstable TRUE OR FALSE 1. Marketing is the process that encourages and facilitates an exchange between two parties. (T) 3

2. Because international marketing requires that a product is exported (moved), place (distribution) is thus more important than the other 3 Ps of the marketing mix. (F) 3. Because of the distance between markets, place (distribution) was and is still the primary focus of the study of international marketing. (F) 4. For practical purposes, any subtle difference between the concept of international marketing and the concept of multinational marketing is insignificant. (T) 5. From business firms’ perspective, multinational marketing and international marketing are essentially the same thing. (T) 6. The distinction between international marketing and multinational marketing is insignificant in practice. (T) 7. Domestic marketing and international marketing are similar in nature but not in scope. (F) 8. Domestic marketing and international marketing, while differing in scope, are similar in nature. (F) 9. International marketing is domestic marketing on a larger scale. (F) 10. The degree of overlap of the countries' sets of uncontrollable variables will dictate the extent to which the 4 Ps must change. (T) 11. Marketing is a universal activity. (T) 12. Marketing principles are applicable in certain countries only. (F) 13. Since marketing is a universal activity, consumers in all parts of the world can be satisfied in exactly the same way. (F) 14. Universal marketing principles imply the applicability of a uniform marketing mix for all markets. (F) 15. Marketing principles are likely to be more universal than marketing strategies (i.e., marketing mix). (T) 16. Marketing principles theories are probably universal, but marketing strategies (marketing mix) are not. (T) 17. Although marketing principles are generally universal, the marketing strategies derived from such principles are not necessarily so. (T) 18. When a certain marketing principle is universal, the marketing mix derived from it that is employed successfully in the United States will also be universally effective when this marketing mix is applied to the non-U.S. markets. (F) 19. China and Russia do not need marketing. (F) 20. Marketing is not needed in less developed countries. (F) 21. MNCs are often associated with exploitation and ruthlessness. (T) 4

22. Evidence shows that globalization encourages location of polluting industries in countries with low environmental regulations. (F) 23. MNCs create social benefits by facilitating economic balance. (T) 24. MNCs facilitate economic balance by serving as an efficient instrument of effective production and distribution of goods and services. (T) 25. MNCs act as an instrument to efficiently utilize the world's resources. (T) 26. In order to be an MNC, a company must be big (i.e., MNC is a function of size). (F) 27. The relationship between a firm's degree of multinationality and its market performance is linear and positive. (F) 28. The relationship between a firm's degree of multinationality and its market performance is curvilinear. (T) 29. For a firm to operate internationally and successfully, its corporate size matters--but only up to a certain extent. (T) 30. Compared to large German corporations, midsize German companies do not contribute significantly to Germany's export success. (F) 31. Japanese multinationals have been reluctant to commit their corporate resources to overseas assets. (F) 32. Ethnocentricity and centralization tend to be related. (T) 33. A strong orientation to the host country is known as geocentricity. (F) 34. Polycentricity usually results in uniform marketing. (F) 35. A geocentric firm does not identify itself with a particular country. (T) 36. A company is polycentric when it thinks internationally. (F) 37. Geocentric firms combine aspects of centralization and decentralization. (T) 38. There is evidence that geocentricity and companies' international practices (e.g., international trade propensity) are related. (T) 39. Being international (multinational) is a matter of degree. (T) 40. Being international is an absolute rather than a matter of degree. (F) 41. MNC is a one-dimensional concept. (F) 42. Internationalization is a one-dimensional concept. (F) 5

43. It is reasonably reliable to employ a single-variable measure to characterize the internationalization concept. (F) 44. There is no empirical evidence to support a hypothesis that some firms are “born global” in the sense that their mission from the outset is to become multinationals. (T) 45. Foreign markets allow a firm to diversify its risk posed by cyclical/seasonal factors. (T) 46. International trade minimizes the problem of inflation. (T) 47. International trade tends to create inflationary pressures. (F) 48. Import quotas depress price competition and ignite inflation. (T) 49. International marketing is a subset or special case of domestic marketing. (F) 50. The value of international marketing is not so much that it helps us to understand people abroad but rather that it helps us to understand ourselves more. (T)

CHAPTER 2 TRADE THEORIES AND ECONOMIC DEVELOPMENT

MULTIPLE CHOICE 1. Trade is a a) zero sum game b) positive sum game (X) c) negative sum game d) all of the above 2. A country should export a product that it can produce at a lower cost than other nations can. This is the principle of a) absolute advantage (X) b) comparative advantage c) relative advantage d) factor endowment 3. According to the principle of absolute advantage, a country should ..... a commodity that can be produced at a lower cost than can other nations. a) export (X) b) import c) both export and import d) neither export nor import 4. According to the principle of absolute advantage, a country should import a commodity that can be only produced at a ..... cost than can other nations. a) higher (X) b) lower c) same d) cost is irrelevant 5. The principle of relative advantage states that a country should produce a product with the ..... comparative advantage. a) least b) greatest (X) c) equal d) somewhat higher 6. According to the principle of relative advantage, a country should export a product for which it has the least a) absolute advantage b) absolute disadvantage c) comparative advantage d) comparative disadvantage (X) 7. According to the principle of comparative advantage, a country with the absolute disadvantages in all products should specialize in the product that it has a) absolute advantage b) more comparative advantage c) less comparative advantage d) least comparative disadvantage (X) e) greatest comparative disadvantage 8. On any certain day, the United States can produce 20 items of product A and 30 items of product B, while Australia produces 10 of A and 20 of B. Which product should Australia specialize in? a) A b) B (X) 1

c) none of the above d) A and B equally 9. A country should export a product that it can produce at a lower cost than other nations can. This is the principle of a) absolute advantage (X) b) comparative advantage c) relative advantage d) factor endowment 10. Comparative advantage is a) static b) semi-static c) dynamic (X) d) semi-dynamic 11. The theory of factor endowment considers this factor of production. a) labor b) land c) capital d) all of them are considered (X) 12. This production factor is not China's comparative advantage. a) labor b) land c) capital (X) d) technology 13. The evidence that the United States exports labor-intensive goods and imports capital-intensive goods is known as a) principle of absolute advantage b) principle of relative advantage c) Leontief Paradox (X) d) factor endowment 14. Trade theories assume that trade is a) unilateral b) bilateral (X) c) multilateral 15. Classical trade theories assume a) consumer homogeneity across national markets (X) b) product heterogeneity c) existence of trade restrictions d) importance of marketing activities 16. Since worldwide free trade is impossible, it is desirable to have economic cooperation on a smaller scale. This is known as a) theory of the best policy b) factor endowment theory c) theory of the second best (X) d) theory of relative advantage 17. This kind of economic cooperation requires countries to remove duties among themselves but allows member countries to maintain their own tariffs against outsiders. a) customs union b) free trade area (X) c) common market d) political union 2

18. NAFTA represents this type of economic cooperation. a) free trade area (X) b) customs union c) common market d) monetary union 19. This kind of economic cooperation requires countries to have identical tariffs against outsiders. a) customs union (X) b) free trade area c) common market d) political union 20. This kind of economic cooperation makes it necessary for a foreign firm to enter a member country with the least nontariff restrictions. a) free trade area b) customs union c) common market (X) d) political union 21. When countries agree to remove restrictions on the movement of factors of production, their economic cooperation is known as a) customs union b) free trade area c) common market (X) d) political union 22. This is not a characteristic of monetary union. a) total and irreversible convertibility of currencies b) complete freedom of capital movements c) revocably fixed exchange rates (X) 23. This type of economic cooperation requires convertible currencies, freedom of capital movements, and irrevocably fixed exchange rates. a) free trade area b) customs union c) common market d) monetary union (X) 24. Monetary union requires convertibility of currencies to be a) total but reversible b) total and irreversible (X) c) partial and reversible d) partial and irreversible 25. An economic union requires a) uniform tariff rates among member countries b) uniform tariffs against outsiders c) removal of restrictions on movement of factors of production d) harmonization of the national economic policies (X) 26. If a single currency is not possible, a monetary union must adopt these currency conditions, except a) complete freedom of capital movements b) total and irreversible convertibility of currencies c) irrevocably fixed exchange rtes with some fluctuation (X) 3

27. This is not a characteristic of a monetary union. a) partial freedom of capital movements (X) b) total and irreversible convertibility of currencies c) irrevocably fixed exchange rates with no fluctuation 28. “One money, one market” is the description of this type of economic cooperation. a) free trade area b) common market c) economic union (X) d) political union 29. The European Union members want to adopt a single currency in order to form this kind of regional cooperation. a) free trade area b) customs union c) common market d) economic union (X) 30. Malaya and Singapore formed a new nation called Malaysia in the 1960s. This type of cooperation is a) common market b) monetary union c) economic union d) political union (X) e) customs union TRUE OR FALSE 1. Trade is a zero sum game. (F) 2. The principle of absolute advantage states that a country should import a commodity that can be produced at a lower cost than can other nations. (F) 3. If one nation has absolute advantage for all products, trade will not take place. (F) 4. As long as the domestic exchange ratio of the United States and that of Canada are identical, the United States should trade with Canada even though the United States may have absolute advantage in all products. (F) 5. If the domestic exchange ratio of the United States and that of Canada are identical, the United States should not trade with Canada even though the United States may have absolute advantage in all products. (T) 6. According to the principle of relative advantage, absolute production costs are irrelevant. (T) 7. Relative production costs can determine whether trade should take place, but they do not determine what items to export or import. (F) 8. The principle of relative advantage suggests that a country should produce a product with the least comparative disadvantage. (T) 9. Because of trade, the two different domestic exchange ratios will be replaced by a new ratio called the world market exchange ratio or terms of trade. (T) 4

10. International trade is a function of the unequal domestic exchange ratios. (T) 11. A country that has absolute advantage in all products has nothing to gain from trading with other nations. (F) 12. Comparative advantage is a dynamic concept. (T) 13. One basic assumption of the principles of absolute and relative advantage is that the advantage is solely determined by labor. (T) 14. German and Japanese firms are successful in international trade because of their low labor costs. (F) 15. Countries can remain competitive in spite of their higher wages. (T) 16. A country's labor cost may be absolutely high and yet relatively low. (T) 17. Comparative advantage can be determined by abundance of factor endowments. (T) 18. According to the theory of factor endowment, the various regions of the world are equally well endowed with regard to production factors. (F) 19. According to the factor endowment theory, a country’s comparative advantage is in the production factor that it lacks. (F) 20. The theory of factor endowment holds that the inequality of relative prices is a function of regional factor endowments. (T) 21. Countries have different costs and prices because they differ in the supply of the factors of production. (T) 22. According to Michael Porter's theory of the Competitive Advantage of Nations, there are four major determinants of international competitiveness, and each determinant has no effect on the other determinants. (F) 23. According to Michael Porter's "diamond," a nation's competitive industries should be clustered. (T) 24. Michael Porter's "diamond" advocates that a nation should not cluster the industries. (F) 25. The evidence that the United States exports labor-intensive goods and imports capital-intensive goods is known as Leontief Paradox. (T) 26. Based on the factor endowment theory, developing countries should trade more with developed countries rather than among themselves. (T) 27. Developed countries tend to trade among themselves rather than with developing countries. (T) 28. Classical trade theories assume that factors of production are immobile. (T) 29. Production factors are now considered more mobile than previously assumed. (T) 5

30. Capital, as a factor of production, is mobile. (T) 31. Classical trade theories ignore the marketing aspect of trade. (T) 32. Countries forming a free trade area must have joint boundaries. (F) 33. Monetary union means adoption of multiple currencies. (F) 34. Economic union eliminates foreign exchange transaction costs and risks. (T) 35. An economic and monetary union (EMU) envisages total fiscal and monetary integration. (T) 36. For an economic and monetary union (EMU) to function effectively, member countries should have different economic conditions. (F) 37. "Social dumping" is a movement of business and jobs away from areas with high wages to areas with less organized labor forces and weak social-welfare policies. (T) 38. It is very unlikely that a political union on a global scale can ever become reality. (T) 39. Economic cooperation results in trade creation as well as trade diversion. (T) 40. Economic integration encourages trade liberalization internally, while it promotes trade protection externally. (T) 6

CHAPTER 3 TRADE DISTORTIONS AND MARKETING BARRIERS

MULTIPLE CHOICE 1. Perhaps, the most credible argument for protectionist measures is a) keeping money at home b) reducing unemployment c) enhancing national security d) equalizing cost and price e) protecting infant industry (X) 2. A penalty duty to offset a subsidy is a) protective tariff b) revenue tariff c) tariff surcharge d) countervailing duty (X) e) variable duties 3. Compared to a protective tariff, a revenue tariff is a) lower (X) b) higher c) about the same 4. Compared to tariff surcharge, countervailing duties are a) temporary b) permanent (X) c) equal in terms of duration 5. A duty of $1/gallon is a) specific duties (X) b) ad valorem duties c) compound duty d) combined rates 6. The duties stated as a fixed percentage of the invoice value are a) specific duties b) ad valorem duties (X) c) compound duty d) combined rates 7. The United States uses a) single-stage sales tax (X) b) value added tax c) cascade tax d) excise tax 8. This kind of tax is collected at each point in the distribution chain and levied on the total value of a product. a) single-stage sales tax b) value added tax c) cascade tax (X) d) excise tax 9. This is not a nontariff barrier. a) documentation b) quota c) product inspection d) countervailing duties (X) 1

e) license 10. This is not a form of subsidy. a) cash b) interest rate c) tax d) freight and infrastructure e) all of them are subsidies (X) 11. GATT's Subsidies Code prohibits the use of export subsidies on a) nonprimary products (X) b) primary products c) both primary and nonprimary products d) neither nonprimary nor primary products 12. This kind of quota is the most restrictive. a) absolute quota (X) b) tariff quota c) voluntary quota d) VER 13. When a country permits an import of limited quantities at low rates of duty but subjects an excess amount to a much higher rate, this kind of quota is used. a) absolute quota b) voluntary quota c) relative quota d) tariff quota (X) 14. In the mid-1980s, Japan signed an orderly marketing agreement (OMA) restricting its auto exports to the United States to 1.68 million units per year. This OMA is a(n) a) absolute quota b) tariff quota c) voluntary quota (X) 15. This type of trade barriers is easiest to deal with. a) tariffs (X) b) nontariff barriers c) private barriers d) international barriers 16. These barriers are least transparent. a) tariffs b) nontariff barriers c) government barriers d) private barriers (X) 17. South Korea's chaebol and Japan's keiretsu are examples of a) tariffs b) nontariff barriers c) private barriers (X) d) government barriers 18 . This world organization monitors trade and resolves disputes. a) WTO (X) b) GSP 2

c) UNCTAD d) World Bank e) IMF 19. This world organization wants to achieve a broad, multilateral, and free worldwide system of trading. a) WTO (X) b) GSP c) UNCTAD d) MFN 20. This organization does not allow a nation to veto a panel’s decision a) GATT b) WTO (T) c) UN d) NAFTA 21. This organization is a permanent organ of the United Nations General Assembly, and its goal is to encourage development in Third World countries and enhance their export positions. a) GATT b) GSP c) UNCTAD (X) d) IMF 22. The system which gives LDCs' exports a preferential treatment is called a) GATT b) GSP (X) c) UNCTAD d) MFN 23. The United States promotes economic development in some 140 poor countries by making it easier for them to export to the United States under a) IMF b) GATT c) GSP (X) d) MFN TRUE OR FALSE 1. Protectionism is ineffective in reducing unemployment. (T) 2. Without trade, cost/price equalization is very unlikely. (T) 3. A nation can never be completely self-sufficient. (T) 4. Protectionist policies rarely achieve their objectives. (T) 5. The mere existence of a government can distort international trade even without tariffs or other trade restrictions. (T) 6. A cartel is legal in the United States. (F) 7. It is debatable whether the United States is the most liberal nation in promoting free trade. (T) 8. Countervailing duties are imposed on imported products that are subsidized by foreign governments. (T) 3

9. Duties "according to value" of the imported goods are specific duties. (F) 10. A value-added tax is a multi-stage, noncumulative tax on consumption. (T) 11. A value-added tax cannot be rebated on exports. (F) 12. The use of VAT affects only about a quarter of the world's population. (F) 13. Only a small number of countries use VAT. (F) 14. Tariffs are more nontransparent than nontariff barriers. (F) 15. A trade barrier should be made transparent. (T) 16. The "national treatment" provision of the Government Procurement Code allows the signatory nations to give preferential treatment to their own citizens/suppliers. (F) 17. GATT's Subsidies Code prohibits the use of export subsidies on primary products (e.g., farm products) but not on nonprimary products (i.e., manufactures). (F) 18. Manufactured products are not allowed by GATT to be subsidized. (T) 19. Affluent countries have been heavily subsidizing their agricultural businesses. (T) 20. Unlike developing countries, affluent countries do not significantly subsidize their agricultural businesses. (F) 21. Because all parties and suppliers must adhere to the same product specifications, detailed product specifications are necessary to treat all bidders fairly. (F) 22. From a policy standpoint, a quota is more desirable than a tariff. (F) 23. VER and OMA are used to circumvent GATT's market safeguard of the most-favored-nation principle. (T) 24. When a foreign subsidiary is not allowed to freely remit the profit to its parent, the parent firm should bill its subsidiary for royalties, management fees, and engineering fees. (T) 25. Compared to nontariff barriers, private barriers are pretty much transparent. (F) 26. GATT's MFN (most favored nation) principle moves countries away from multilateral bargaining to bilateral bargaining. (F) 27. The most-favored-nation principle allows a country to give preferential treatment to the other member nations of the same free trade area or customs union. (F) 28. The most-favored-nation principle allows a country to give preferential treatment to domestic companies while discriminating against foreign companies. (F) 29. The MFN (Most Favored Nation) principle and the NTR (Normal Trade Relations) status are the same thing. (T) 4

30. Based on GATT's recent rounds of negotiation, the most favored nation principle is weakened because countries are allowed to retaliate against a certain country on an individual basis. (T) 31. The Uruguay Round of multilateral trade negotiations was concluded successfully as originally scheduled due to countries' recognition of the importance of free trade. (F) 32. The quantitative effects of the Uruguay Round should benefit almost all countries in the long run. (T) 33. GATT has been replaced by the World Trade Organization. (T) 34. Unlike GATT, the WTO is more permanent and legally secure. (T) 35. Unlike its predecessor (GATT), the WTO has less authority to settle trade disputes. (F) 36. The World Trade Organization allows a nation to veto a decision of the WTO's panel. (F) 37. GSP is the U.S. system which gives less developed countries' exports a preferential treatment. (T) 38. GSP is the tariff preference system employed by less developed countries to give preferential treatment to other less developed countries. (F) 39. The CBI (Caribbean Basin Initiative) reduces the benefits of GSP to designated countries in the Caribbean Basin region. (F) 40. There is no evidence that outward orientation is superior to inward orientation in terms of economic growth. (F) 41. There is no evidence that outward-oriented trade policy produces greater economic success than inward-oriented policy. (F) 42. U.S. trade policy is guided by the crowbar theory which states that foreign markets do not open except under threat. (T) 43. There is strong evidence that the United States is less unfair in trade than other countries. (F) 44. The Multi-Fiber Arrangement (MFA) removes trade barriers against LDC exporters. (F) 45. According to the “positive externalities” assumption, government intervention is appropriate because the development of a certain industry has a positive impact on a broader segment of the economy. (T) 46. Positive externalities are usually presumed than documented. (T) 47. Countries that protect domestic economies against international competition have experienced major economic losses. (T) 48. Countries tend to be protectionist because they are able to shift the costs of protection to the others (i.e., selling nations). (F)

CHAPTER 4 POLITICAL ENVIRONMENT

MULTIPLE CHOICE 1. This theory states that advanced countries extract surplus value from their less-developed counterparts, thus leaving them undeveloped. a) multiplicity of politics b) absolutist system c) capitalism d) dependency (X) 2. The U.S. government is a) parliamentary (X) b) absolutist c) closed d) constitutional 3. Germany and Israel have this system of government. a) single-party b) dominated one party c) two-party d) multiparty (X) 4. The former Soviet Union used to have this system of government. a) single-party b) dominated one party (X) c) two-party d) multiparty 5. North Korea employs this system of government. a) single-party b) dominated one party (X)

c) two-party d) multiparty 6. This electoral system has lower spending on social security and welfare. a) majoritarianism (X) b) proportionality c) single-party system d) dominated one-party system 7. Government interference or participation in business activities is at the maximum for this economic system. a) capitalism b) socialism c) communism (X) d) modified communism 8. This is not a characteristic of "centrally planned economies." a) a communist philosophy b) an active government role in economic planning c) bureaucratic political/economic systems d) market-oriented economy (X) 9. Sweden has adopted this economic system. 1

a) capitalism b) socialism (X) c) communism d) modified communism 10. The market-oriented system is called a) capitalism (X) b) socialism c) communism d) modified communism 11. Countries all over the world have been moving in the direction of this economic system. a) capitalism (X) b) socialism c) communism d) modified communism 12. The kind of capitalism that took place in the United States is known as a) cooperative capitalism b) personal capitalism c) managerial capitalism (X) d) active capitalism 13. The United Kingdom practices a) cooperative capitalism b) personal capitalism (X) c) managerial capitalism d) modified capitalism 14. This type of capitalism requires companies to have a social purpose and consider interests of all stakeholders. a) frontier b) personal c) cooperative (X) d) managerial 15. Germany is an example of this type of capitalism. a) frontier b) personal c) communitarian/cooperative d) managerial 16. Personal capitalism is most common in a) the United States b) Germany c) the United Kingdom (X) d) Japan 17. This country is an example of frontier capitalism. a) China b) Russia c) Cambodia d) all of the above (X) 18. This country is an example of frontier capitalism. a) China (X) b) Japan c) Canada d) Mexico 19. This form of capitalism is practiced when communist or socialist countries experiment with capitalism or when their government agencies engage in production for profit. 2

a) managerial b) personal c) cooperative d) frontier (X) 20. This economy bears a great resemblance to laissez faire which is the purest form of capitalism. a) Hong Kong (X) b) Japan c) the United States d) Germany 21. A government's taking ownership of a property with some compensation is a) confiscation b) expropriation (X) c) nationalization d) domestication 22. When a government forces foreign-held companies to partially or totally sell ownership to local citizens, it uses a) confiscation b) nationalization c) expropriation d) domestication (X) 23. The U.S. Congress approved the normalization of economic relations with China only after a satisfactory claims settlement. The claims stemmed from the Chinese government's seizure of American property after the communists took over in 1949. The Chinese government's seizure is known as a) confiscation (X) b) expropriation c) domestication d) creeping expropriation 24. Expropriation is an example of a) general instability risk b) ownership/control risk (X) c) operation risk d) transfer risk 25. This kind of risk applies to a host government's future acts that might restrict a subsidiary's payment to the parent firm. a) general instability risk b) ownership/control risk c) operation risk d) transfer risk (X) 26. A set of actions whose cumulative effect is to deprive investors of their fundamental rights in the investment is a) predomestication b) country risk c) creeping expropriation (X) d) nationalization 27. When the government changes investment laws and the changes adversely affect foreign investors' investment rights (e.g., ownership, profit), the action is known as a) predomestication b) country risk c) creeping expropriation (X) d) nationalization 28. This concept emphasizes cooperation. 3

a) monostasy b) systasy (X) c) democracy d) pluralism 29. The urge to stand alone is a) monostasy (X) b) systasy c) monopoly d) oligopoly 30. OPIC does not insure U.S. investments against this type of political risk. a) currency inconvertibility b) expropriation c) war, revolution, and civil strife d) all of the above can be insured (X) 31. This agency helps its more than 100 member states by promoting private investment in developing countries through insuring investment against political risk. a) AID b) IMF c) WTO d) MIGA (X) 32. The mission of this organization is to promote private investment in developing countries through insuring investment against political risk. a) WTO b) MIGA (X) c) IMF d) GATT TRUE OF FALSE 1. Dependency theory explains why LDCs (e.g., Latin American countries) are not willing to embrace MNCs. (T) 2. Because the former Soviet Union had elections and mandatory voting, it was considered to have the parliamentary form of government. (F) 3. Constitutional hereditary monarchy is a form of a parliamentary government. (T) 4. Research shows that spending on social security and welfare is lower under majoritarian systems (i.e., when compared to a system of proportionality). 5. Political stability is a function of economic development. (F) 6. Political stability is not necessarily a function of economic development. (T) 7. Democracy is not necessarily a prerequisite for political stability. (T) 8. There is a direct relationship between democracy and economic progress. (T) 9. Political stability is not possible without democracy. (F) 4

10. Centrally planned economies tend to have a nonmarket and weak economy. (T) 11. Capitalism is a market-oriented system. (T) 12. Capitalism is the ideal system for all countries. (F) 13. Capitalism should be used to lessen the existence of social class conflicts. (F) 14. Capitalism is the best economic system to serve the nation’s best interests in terms of social need. (F) 15. It is very unlikely for a country to adopt a system of either 100-percent capitalism or 100-percent communism. (T) 16. Sweden's socialism offers employees generous benefits and is responsible for the country's rapid economic growth. (F) 17. Domestication means preventing a foreign company from entering a country for the purpose of marketing its goods. (F) 18. The risk of nationalization will likely be more in the future. (F) 19. Expropriation/confiscation is unlikely to resurface in the near future. (T) 20. The political threats to MNCs’ foreign investments are more likely to be “creeping expropriation” than conventional expropriation. (T) 21. The world has been witnessing a trend toward private ownership and away from government ownership. (T) 22. MNCs should expect a trend toward government ownership in the near future. (F) 23. Privatization is more a political process than an economic process. (T) 24. There is no working model that supports a “functioning market economy with a massive state enterprise sector.” (T) 25. The breakup of the Soviet Union can be attributed to the shift toward monostasy to encourage modernization and competition. (T) 26. Monostasy encourages competition at the expense of cooperation. (T) 27. The premium over the LIBOR rate indicates the extent of the political risk involved. (T) 28. Euromoney’s and Institutional Investor’s country risk ratings are highly correlated and strongly agree on the creditworthiness of the assessed countries. (T) 29. Euromoney’s and Institutional Investor’s country risk ratings can be replicated with a few economic variables. (T) 30. One way for a U.S. company to reduce political risk is to "Americanize" its customers abroad. (F) 31. Political risk cannot be insured. (F) 5

32. OPIC assists economic development through investment insurance. (T) 33. MIGA insures investment against both commercial and noncommercial (i.e., political) risk in developing countries. (F)

CHAPTER 5 LEGAL ENVIRONMENT

MULTIPLE CHOICE 1. This law system spells out the law on all legal questions and does not rely on previous court decisions. a) common law b) code law (X) c) Muslim law d) civil law 2. This legal system relies on precedent and conventions. a) statute law b) code law c) civil law d) common law (X) 3. The United States uses this legal system. a) statute law b) code law c) civil law d) common law (X) 4. A European PLC is similar to a U.S. a) branch b) sole proprietorship c) partnership d) corporation (X) 5. This legal form of organization offers a limited liability advantage. a) branch b) subsidiary (X) c) partnership d) sole proprietorship 6. The Foreign Corrupt Practices Act prohibits payments to officials who perform a) ministerial functions b) clerical functions c) discretionary functions (X) d) routine government functions 7. According to the Foreign Corrupt Practices Act, this type of payment is illegal. a) expediting payment b) payment to those who perform clerical functions c) payment to those who have discretionary authority (X) 8. A symbol or name used to identify a product made or marketed by a particular firm is a) patent b) trademark (X) c) copyright d) registration 9. A ..... protects an invention of a scientific or technical nature. a) patent (X) b) trademark c) copyright d) registration 1

10. Intellectual property does not include a) patent b) trademark c) copyright d) trade secret e) all of the above are intellectual property (X) 11. This type of intellectual property refers to know-how. a) patent b) trademark c) copyright d) trade secret (X) 12. An owner of a unique cooking recipe should treat it as a a) patent b) trademark c) copyright d) trade secret (X) 13. A firm is likely to treat its list of customers as a a) patent b) trademark c) copyright d) trade secret 14. According to this rule of the Paris Union, the revocation of a patent in the country of original filing has no impact on its validity in other countries. a) priority right b) national treatment c) independence of patents (X) d) centralized protection 15. A common law country determines patent ownership by a) priority in use (X) b) priority in registration c) priority in foreign markets d) none of the above 16. The "first to file" or priority in registration system is used in a) common law countries b) statute law countries (X) c) commonwealth law countries d) spoken law countries 17. This country has adopted the first-to-invent system. a) France b) Japan c) the United States (X) d) Germany 18. The life of a patent is a) 20 years from the filing date (X) b) 20 years after granting c) 20 years after invention TRUE OR FALSE 1. A common law system uses a strict and literal interpretation of the law. (F) 2

2. Common law is based on tradition, past practices and rulings, and legal precedent. (T) 3. The United States is a code law country. (F) 4. Countries are bound by the international law which prescribes acceptable and legal behavior of international business enterprises. (F) 5. The Calvo Doctrine encourages international arbitration. (F) 6. According to the extraterritorial-application-of-the-law concept, nations cannot apply their laws to companies' business activities outside their borders. (F) 7. The extraterritorial application of the law involves a nation applying its laws to activities outside its own territory. (T) 8. The 1964 Civil Rights Act barring employment bias protects U.S. citizens working abroad for American firms. (F) 9. If a company wants to limit its potential liability which may derive from its foreign operations, it should form a foreign subsidiary rather than a foreign branch. (T) 10. Unlike litigation, arbitration saves time, expenses, and relationships. (T) 11. Since bribery is an absolute, it is easy to determine whether something is a bribe. (F) 12. Bribery is a matter of degree rather than an absolute. (T) 13. The U.S. government takes the position that payments made to low- and middle-level officials for tasks routinely performed by them are not illegal. (T) 14. The 1988 trade act does not consider a payment for a routine governmental action to be an illegal bribe. (T) 15. The Foreign Corrupt Practices Act does not allow U.S. firms to make expediting payments for routine government action. (F) 16. OECD countries have adopted anti-bribery codes. (T) 17. Surprisingly, virtually all cultures condemn bribery as being unethical. (F) 18. Regardless of cultural values, a bribe is immoral. (F) 19. While the legality of bribery is country-specific, the morality of the act is not. (F) 20. Perceptions of ethical issues vary by country. (T) 21. Corruption opportunities increase when a government reduces its role in the economy. (F) 22. One effective method to deal with foreign bribery is to convert a private bribe into a public donation. (T) 3

23. There are internationally recognized standards of behavior (e.g., OECD codes) which multinational firms can refer to so as to determine whether a certain business activity is a bribe. (T) 24. U.S. courts are prohibited from applying the Foreign Corrupt Practices Act extraterritorially. (F) 25. The Foreign Corrupt Practices Act cannot be applied in an extraterritorial manner. (F) 26. The Foreign Corrupt Practices Act specifically prohibits U.S. firms from making expediting payments for routine government action. (F) 27. A patent offers protection against copying by others to an author or artist for his literary, musical, dramatic, and artistic works. (F) 28. Computer software cannot be copyrighted. (F) 29. Affixing a copyright notice is mandatory in order to obtain copyright protection. (F) 30. A copyright cannot exist without registration. (F) 31. Patents granted by one country for chemicals and pharmaceuticals are automatically recognized by other countries. (F) 32. Centralized protection of trademarks is easier to accomplish than centralized protection of patents. (T) 33. As in the case of the Madrid Arrangement, the Trademark Registration Treaty requires a prior home registration. (F) 34. A statute law country determines patent ownership based on the "first to file" rather than "the first to invent." (T) 35. Based on a GATT provision, the life a patent is 20 years from the filing date. (T) 36. Based on a GATT provision, the life a patent is 20 years after granting. (F) 37. Manufacturers of low unit-value products do not have to contend with counterfeiting problems. (F) 38. Unlike consumer products, industrial products do not have counterfeiting problems. (F) 39. Counterfeiting is a low-risk, high-profit venture. (T) 40. Counterfeiting may actually benefit a trademark/patent owner in terms of product diffusion. (T) 41. Counterfeiting benefits a patent owner by speeding up product diffusion and adoption. (T)

CHAPTER 6 CULTURE

MULTIPLE CHOICE 1. This is not a characteristic of culture. a) prescriptive b) socially shared c) learned d) objective (X) 2. This is not a characteristic of culture. a) being enduring b) being cumulative c) being static (X) d) communication facilitation 3. The tendency of an individual to be bound by one's own assumptions is the effect of a) self perception b) cultural assumptions c) self reference criterion (X) d) cultural norms 4. In this type of society, messages are explicit and clear, with words conveying the main part of information in communication. a) high context b) medium context c) low context (X) d) all of the above 5. The U.S. culture is a) high context b) medium context c) low context (X) d) all of the above 6. For such high-context cultures as Japan, this advertising approach should be used.

a) lecture b) drama (X) c) natural 7. The cultures which handle information in a direct, linear fashion are a) monochronic (X) b) polychronic c) multichronic d) all of the above 8. Germany's culture is a) monochronic and low-context (X) b) monochronic and high-context c) polychronic and low-context d) polychronic and high-context 9. This is the easiest language to learn. a) English b) Spanish c) esperanto (X) d) Chinese 1

10. This kind of time perception implies that time spent in the past will make some contribution to the future. a) linear-separable time (X) b) circular-traditional time c) procedural-traditional time d) none of the above 11. This kind of time perception is based on the thinking that the future cannot be altered and that there is no need to plan since time is not valuable. a) linear-separable time b) circular-traditional time (X) c) procedural-traditional time d) none of the above 12. Advertising cultures with a nonlinear perception of time provide a) scattered information (X) b) reasoned arguments c) credible source d) explicit conclusion 13. These people prefer substantial conversational distance and no physical contact. a) Asians (X) b) Latin Americans c) Americans d) Europeans TRUE OR FALSE 1. Culture is inherited genetically. (F) 2. Self reference criterion should be eliminated. (T) 3. A marketer with a highly developed self reference criterion is able to adapt to a new culture quickly and easily. (F) 4. In high-context cultures, the nonverbal part of the message carries most of the information. (T) 5. Compared to a low-context culture, high-context cultures perceive nonverbal communications elements as being more informative. (T) 6. When people work on several fronts simultaneously instead of pursuing a single task, the culture is polychronic. (T) 7. Consumers' shared values mean shared behavior. (F) 8. Different languages can result in different methods of thinking. (T) 9. According to the "use it or lose it" hypothesis, people have an innate ability to learn a language in a natural way regardless of how old they are. (F) 10. Language acquisition may have a biological component. (T) 2

11. The Chinese language system requires the reader to go from left to right and from bottom to top. (F) 12. The U.S. population has very low foreign-language fluency. (T) 13. Being analytical helps in learning a foreign language. (F) 14. Esperanto is an international language. (T) 15. Esperanto is an easy language to learn. (T) 16. Cognitive processing of words varies based on whether such words are written in logographic or alphabetic scripts. (T) 17. Advertising copy should be interpreted rather than translated. (T) 18. The system of dating (i.e., day, month, and year) used in the United States in terms of sequence or ordering is different from the one used elsewhere. (T) 19. People routinely communicate with each other in a nonverbal manner. (T) 20. In the United States, there is a direct relationship between time and the importance of a matter. (T) 21. Due to cultural universals, the meanings of time, space, and friendship do not vary from country to country. (F) 22. The meanings of time, space, and friendship tend to be culture free. (F) 23. Perceptions of time are culture bound. (T) 24. In the case of procedural-traditional time, the activity is more relevant than the amount of time spent on it. (T) 25. Advertising cultures with a nonlinear perception of time appear to provide reasoned arguments with explicit conclusion. (F) 26. While making a conversation, a comfortable distance between parties is relatively constant in all parts of the world. (F) 27. The United States is a very legalistic society, and Americans are both specific and explicit in terms of agreement. (T) 28. North Americans' straightforward approach in indicating disagreement is inappropriate in most places of the world. (T) 29. Americans are unique in the sense that they develop friendship quickly and deeply. (F) 30. The American practice of using first names is admired in most parts of the world. (F) 31. Long silence and a lack of eye contact, to non-Americans, are neither unusual nor improper. (T) 3

32. Race (or ethnic origin) is the only valid way to classify subcultures. (F)

CHAPTER 7 CONSUMER BEHAVIOR IN THE INTERNATIONAL CONTEXT:

PSYCHOLOGICAL AND SOCIAL DIMENSIONS MULTIPLE CHOICE 1. A study of consumer behavior should emphasize this particular perspective. a) cultural b) psychological c) social d) all of the above (X) 2. The unit of analysis of this discipline is the group. a) psychology b) social psychology c) sociology (X) d) group 3. The unit of analysis of this discipline is the individual. a) psychology (X) b) sociology c) anthropology d) culture 4. The price motive is an example of a(n) a) rational motive (X) b) emotional motive c) subjective motive d) prestige motive 5. Which one of the following is not a psychological concept? a) motivation b) learning c) social class (X) d) personality 6. Which one of the following is a psychological concept? a) personality (X) b) social class c) family d) opinion leadership 7. This is not a characteristic of attitude. a) reaction being favorable/unfavorable b) transient (X) c) learned d) enduring 8. This country is low in power distance, masculinity, and uncertainty avoidance. a) Canada (X) b) Greece c) Mexico d) Taiwan 9. This country is low in individualism but high in power distance, masculinity, and uncertainty avoidance. a) the United Kingdom b) the United States c) Japan (X) d) Australia 1

10. In low power-distance countries, advertisements should emphasize a) social roles b) group affiliation c) symbolic benefits of products d) functional brand images (X) 11. Social needs should be stressed when advertising in a country with a ..... degree of power distance. a) high (X) b) moderate c) low d) ultra low 12. Country of origin is a ..... construct. a) one-dimensional b) multidimensional (X) c) single-cue d) varying-cue 13. The effect of country of origin is strongest when it is a) the only cue (X) b) used with a few cues c) used with many cues 14. Which of the following can weaken the effect of "country of origin" on perceived product quality? a) country of product design b) brand name c) retailer name d) all of the above (X) 15. Attitudes are a) neutral b) innate c) transient d) enduring (X) 16. These people put less emphasis on social hierarchy. a) Asians b) Latin Americans c) Americans (X) d) Europeans 17. These people are probably least group oriented. a) Japanese b) Hispanic c) African d) American (X) 18. This kind of family is common in the United States. a) nuclear (X) b) consanguine c) extended d) horizontal 19. These people are relatively weak in terms of family orientation. a) Japanese b) Hispanic c) Chinese d) American (X) 2

TRUE OR FALSE 1. Consumer behavior is a study of the explicit act of purchase. (F) 2. The best way to study consumer behavior is to use the cultural approach without focusing on the psychological and social processes. (F) 3. In the case of sociology, the unit of analysis is the group rather than the individual. (T) 4. Evidence has shown that rational motives are superior to nonrational motives in explaining consumer behavior. (F) 5. Motives must be learned. (T) 6. Because personality applies to a person rather than to a group, it is not possible to state that particular personality traits seem dominant in certain countries. (F) 7. Although personality applies to a person rather than to a group, particular personality traits appear dominant in certain countries. (T) 8. The concept of national character states that the people of each nation have distinctive personality characteristics. (T) 9. Britons and Americans have different personality characteristics. (T) 10. The Japanese and Canadians have been found to exhibit the same cognitive style. (F) 11. The concept of consumer ethnocentrism explains why some consumers feel that it is inappropriate to buy imported products. (T) 12. Highly and lowly ethnocentric consumers do not differ in terms of their preference for imported products. (F) 13. There is no relationship between cultural power distance and brand image strategies. (F) 14. There is empirical evidence that shows that countries can be clustered in terms of the various dimensions of national cultures. (T) 15. Japanese consumers are so homogeneous that psychographic studies have yielded no unique market segment. (F) 16. Perceptions are formed through a selective and objective process. (F) 17. There is no evidence of country-category effect in the sense that consumers use stereotyping in typing product classes and brands. (F) 18. The effects of country of origin on product perceptions can be moderated by consumer expertise and attribute information. (T) 19. Consumers have general images about certain countries as well as form specific attitudes about products made there. (T) 20. Consumers have stereotyped opinions about specific products from particular countries. (T) 3

21. There is a positive relationship between countries' economic development levels and product evaluations. (T) 22. Country of origin is a multidimensional construct. (T) 23. Country of design may mitigate the effect of country of assembly/manufacturing. (T) 24. Country of design and country of assembly effects are one and the same. (F) 25. Country of origin has the strongest effect on stereotyped image when it is the only cue. (T) 26. The effect of country of origin is strong when it is the only cue, and the effect becomes even stronger when other product cues are included. (F) 27. The effect of country of origin is strong when country of origin is the only cue, but the effect is weakened when multiple cues are used. (T) 28. Country of origin has a halo effect in the sense that a country’s positive or negative image affects all products made in that country. (F) 29. It is appropriate to treat country of origin as a halo effect. (F) 30. The effect of country of origin is a function of product-country match rather than a halo effect. (T) 31. A country's image, rather than being product-specific, has a halo effect. (F) 32. In spite of the inequality implied, social classes are necessary and, in virtually all countries, even desirable. (T) 33. The criteria used in the United States to assign people into social classes are consistent with those used in other countries. (F) 34. The strength of influence of a reference group is constant across product categories. (F) 35. In the United States, the word family has a narrow meaning, and Americans tend to be less family oriented than others. (T) 36. Emphasis on joint, husband-dominated, and wife-dominated decisions varies by stage of the decision process as well as by stage-culture interaction. (T) 37. Because cultural values are not related to innovation resistance, it is appropriate to use a global standardized campaign to introduce new products in foreign markets. (F)

CHAPTER 8 MARKETING RESEARCH AND INFORMATION SYSTEM

MULTIPLE CHOICE 1. The top country in terms of marketing research expenditures is a) the United Kingdom b) the United States (X) c) Germany d) Japan 2. This kind of information is collected firsthand to answer specific, current research questions. a) primary data (X) b) secondary data c) selective data d) relevant data 3. One problem of primary data is a) specificity b) relevance c) being up to date d) cost (X) 4. Information that has already been collected for other purposes is called a) primary data b) principal data c) secondary data (X) 5. This is not a characteristic of a good test market. a) representativeness b) self-contained media c) expanded trading area (X) d) market isolation 6. Winnipeg (Canada) is a good test market because of its a) representativeness b) self-contained media c) self-contained trading area d) all of the above (X) 7. When a measuring instrument is able to measure what it purports to, the instrument is a) reliable b) consistent

c) stable d) valid (X) 8. Dating (between the sexes) is an activity which most non-American people may not understand, the measurement of the concept is complicated by the lack of this kind of equivalence. a) conceptual (X) b) classificational/definitional c) instrument d) linguistic 9. A bicycle is a recreation device in some countries and a basic transportation device in others. This research problem is known as a) functional equivalence (X) b) definitional equivalence c) classification equivalence d) instrument equivalence 1

10. These are tests constructed to study a phenomenon within one culture only. a) emic (X) b) etic c) dependent d) independent 11. This translation technique uses several individuals to independently translate a question and compares their translated statements. a) back translation b) parallel blind (X) c) committee approach d) random probe 12. This translation technique views both the source version and the target version as open to modification. a) back translation b) decentering (X) c) committee approach d) random probe 13. The results of American consumers' responses may not apply to foreign consumers. This is a problem of a) internal validity b) specific validity c) external validity (X) d) predictive validity 14. This step of MIS development involves the investigation of all users' needs. a) system analysis (X) b) system design c) system implementation d) system investigation 15. The desirable characteristics of an international marketing information system do not include a) time dependence (X) b) location independence c) linguistic compatibility d) legal compatibility e) multicurrency TRUE OR FALSE 1. International marketing research is less difficult and less complex than domestic (U.S.) research. (F) 2. The American Marketing Association's definition of marketing research stresses the importance of preresearch analysis. (F) 3. The gathering of information can never be a substitute for managerial judgment. (T) 4. Secondary data are less costly than primary data. (T) 5. Secondary data on international marketing (and countries to be compared) are often not comparable. (T) 2

6. It is just as easy to use probability sampling methods abroad as in the United States. (F) 7. It is advisable to pay appropriate attention to sampling design issues without getting unduly obsessed with them. (T) 8. In cross-national studies, the same sampling method for all countries may not assure the comparability of national groups. (T) 9. The observation method tends to yield more objective information than the questioning method. (T) 10. In LDCs, one of the most frequently used means of communication in surveys is the telephone because of poor transportation and mail delivery. (F) 11. A measuring instrument proven to be reliable in one country should yield basically the same level of reliability elsewhere. (F) 12. Reliability is a prerequisite for the existence of validity. (T) 13. Reliability is a necessary condition but not a sufficient condition for validity. (T) 14. The attainment of measure equivalence in cross-national surveys is easier for attitudinal variables than for demographic variables. (F) 15. The same measurement scales may have different reliabilities in different cultures and may even exhibit different reliabilities when used by the same individual in evaluating products from different cultures. (T) 16. The same instrument can exhibit different reliabilities even when used by the same person in evaluating products from different cultures. (T) 17. Unlike other kinds of variables, demographic variables are easy to understand and thus have no problem with conceptual equivalence. (F) 18. Semantic differential and Likert scales are stable enough that they can be used without adaptation. (F) 19. Identical questions used in a cross-national study assure uniformity without guaranteeing content validity and comparable data from different countries. (T) 20. Response styles can affect scale scores. (T) 21. Questions with negatives should not be used in a consumer survey abroad. (T) 22. MIS must be automated or computerized. (F) 23. MIS should be expandable. (T) 3