mktg 485 exam 1 - test bank

Chapter 01 - The Scope and Challenge of International Marketing

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Chapter 01

The Scope and Challenge of International Marketing

True / False Questions

1. (p. 3) Global commerce thrives during peacetime. TRUE

Difficulty: Easy

Type: Knowledge

2. (p. 4) To date, the lesson for international commerce in the 21st century is "expect the unexpected." TRUE

Difficulty: Easy

Type: Knowledge

3. (p. 5) Today, every American business is international. TRUE

Difficulty: Moderate

Type: Comprehension

4. (p. 5) One event that will influence the shape of international business as the future unfolds is the rapid growth of the World Trade Organization, NAFTA, and the European Union. TRUE


Type: Comprehension


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5. (p. 5) One event that will influence the shape of international business as the future unfolds is the unprecedented acceptance of communism and socialism in Latin America. FALSE Difficulty: Moderate

Type: Comprehension

6. (p. 5) A trend that will impact international business in the future is a mandate to properly manage the resources and global environment. TRUE


Type: Comprehension

7. (p. 5) Today, most business activities are local or regional in scope. FALSE


Type: Knowledge

8. (p. 6, Crossing Borders 1.1) What do French farmers, Chinese fishermen, and Russian hackers have in common--they can all receive subsidy payments from the U.S. government. FALSE


Type: Knowledge

9. (p. 6) Foreign-made products remain a small portion of all consumer products sold in the United States. FALSE

Difficulty: Easy

Type: Knowledge


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10. (p. 8) U.S. companies compete with global competitors in foreign markets and have little competition in domestic markets from global competitors. FALSE Difficulty: Easy

Type: Knowledge

11. (p. 9, Exhibit 1.2) The leading U.S. multinational with foreign revenues of $345 billion plus annually is Wal-Mart. TRUE

Difficulty: Hard

Type: Knowledge

12. (p. 9) International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. TRUE


Type: Knowledge

13. (p. 9-10) A good illustration of an uncontrollable variable that might impact international business is a marketing decision with respect to research. FALSE

Difficulty: Hard

Type: Application

14. (p. 11, Exhibit 1.3) The foreign uncontrollable environment is the same as the domestic uncontrollable environment. FALSE

Difficulty: Hard

Type: Comprehension


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15. (p. 12) The level of technology is an uncontrollable element for international marketers. TRUE Difficulty: Moderate

Type: Knowledge

16. (p. 14) The political and legal environment is a controllable element for international marketers because of the ability to lobby and influence legislation. FALSE


Type: Knowledge

17. (p. 14) In a broad sense, the uncontrollable elements of the foreign business environment constitute the culture. TRUE

Difficulty: Hard

Type: Comprehension

18. (p. 15) John refuses to buy Japanese products because he sees them as a way of selling out to nation known for its aggressive behavior. John is using a self-reference criterion to make his decision. TRUE


Type: Application

19. (p. 15) A self-reference criterion is closely related to ethnocentrism. TRUE


Type: Comprehension


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20. (p. 15) Sam Watkins just recently ate and, therefore, feels justified in refusing food from his Middle Eastern host. In this instance, Sam's self-reference criterion has just saved him from making a cultural blunder. FALSE Difficulty: Hard

Type: Application

21. (p. 16) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that emphasizes the need for ethnocentrism. FALSE


Type: Comprehension

22. (p. 17) To be globally aware, you should be tolerant of cultural differences. TRUE

Difficulty: Easy

Type: Comprehension

23. (p. 17) To be globally aware, you should require that all of your international customers know about your cultural rules and adhere strictly to each one. FALSE


Type: Comprehension

24. (p. 18) If a company is in a stage designated as being one with "no direct foreign marketing," the company does not actively cultivate customers outside national boundaries. TRUE

Difficulty: Easy

Type: Knowledge


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25. (p. 20) Of all the stages in international business, a stage called "regular foreign marketing" produces the most profound change in the orientation of the company toward markets and associated planning activities. FALSE Difficulty: Moderate

Type: Knowledge

26. (p. 22) If a company uses a strategic orientation called domestic market extension, it views its international operations as secondary to and an extension of its domestic operations. TRUE


Type: Knowledge

27. (p. 22-23) The global marketing concept views the marketplace as consisting of one primary domestic market that is complimented by several smaller regional markets. FALSE

Difficulty: Hard

Type: Knowledge

Multiple Choice Questions

28. (p. 3) International __________ play an important role in promoting global peace and prosperity. A. foreign aid and treaties B. competition and consumer spending C. trade and marketing D. consumer and industrial services

Difficulty: Easy

Type: Knowledge


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29. (p. 4) According to the text, all of the following events have impacted international business EXCEPT: A. the Indian Ocean tsunami in 2004 B. the high-tech bust of 2001. C. the steroids in major league sports scandal D. 2003 SARS outbreak in Asia. E. September 11, 2001 disasters. Difficulty: Easy

Type: Comprehension

30. (p. 5) Of all the events and trends affecting global business today, four stand out as the most dynamic. Which of the following would be one of those events? A. The trend toward buying American cars in Europe. B. The trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe. C. The trend toward using English as the global language. D. The trend toward establishing a world currency. E. The trend toward worldwide instant communication.


Type: Comprehension

31. (p. 5) All of the following events and trends are among the four major trends described in the chapter as having a major impact or effect on global business EXCEPT: A. the trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe. B. the rapid growth of the World Trade Organization and regional free trade areas such as NAFTA and the European Union. C. the burgeoning impact of the Internet and other global media on the dissolution of national borders. D. the trend toward decreasing OPEC profits as oil reserves decline in the 21st century. E. the mandate to properly manage the resources and global environment for the generations to come.

Difficulty: Hard

Type: Comprehension


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32. (p. 5-6) Strategic plans that are competitive in global markets are _____. A. the challenge of international marketing B. expanded domestic marketing plans C. not necessary for small firms D. multilingual and multicultural in scope Difficulty: Easy

Type: Knowledge

33. (p. 5) Every American company is international, at least to the extent that: A. Federal law requires all corporations to outsource whenever it is cost-effective. B. the Internet generates orders for all American businesses from abroad. C. its business performance is affected by events that occur abroad. D. natural disasters create a greater global community. E. all of the above.

Difficulty: Hard

Type: Knowledge

34. (p. 5) Simi Khan wants to move his business into the international arena as quickly as possible; however, to be successful he must consider a variety of factors that have global dimensions. Which of the following factors would be most important to Simi Khan's computer technology business as he moves forward with his global expansion plans? A. Electricity usage around the world. B. The drive toward a more ergonomic workplace. C. Communication and technology networks in third-world countries. D. Restrictions on advertising in Russia. E. Increasing licensing fees in Spain and Portugal.


Type: Application


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35. (p. 7) Foreign investment in the United States is growing yearly. At present, foreign investment in the United States is in excess of $16.3 ______________. A. trillion B. million C. billion D. thousand E. cannot be determined. The government does not track foreign investment. Difficulty: Moderate

Type: Knowledge

36. (p. 7) Companies from ____________________ lead in foreign investment in the United States: A. Kingdom of Saudi Arabia B. Russia C. China D. United Kingdom E. Canada

Difficulty: Hard

Type: Knowledge

37. (p. 7) Foreign investment is a two-way street. An organization (through investment and acquisition) from which of the following countries now controls all United Kingdom rail freight business and runs the queen's private train via its English, Welsh, & Scottish Railway unit? A. Germany B. Switzerland C. United States D. Canada E. Netherlands

Difficulty: Hard

Type: Knowledge


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38. (p. 9, Exhibit 1.2) Many U.S. firms do exceedingly well in the global arena. Which of the following organizations is considered to be the U.S. leader with global revenues approximated at $345 billion annually? A. IBM B. ExxonMobil C. Ford Motor D. Wal-Mart E. Hewlett-Packard Difficulty: Moderate

Type: Knowledge

39. (p. 9) For firms venturing into international marketing for the first time, the first requirement is: A. employment of foreign nationals in target foreign markets. B. a thorough and complete commitment to foreign markets. C. obtain market data from consulate of the country being targeted. D. an assessment of the cost of doing business in the foreign market. E. performance reviews of all potential salespeople being considered for foreign assignment.


Type: Knowledge

40. (p. 9) ___________ is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. A. Global management B. Global business C. Marketing D. International marketing E. Global marketing concept


Type: Knowledge


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41. (p. 9) The performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit is called: A. global management. B. global business. C. marketing. D. the global marketing concept. E. international marketing. Difficulty: Moderate

Type: Knowledge

42. (p. 9) The only difference between the definitions of domestic marketing and international marketing is that marketing activities: A. focus on consumers in domestic markets and barterers in foreign markets. B. take place in more than one country. C. follow traditional communication paths in domestic markets. D. focus on distribution in the domestic market. E. are usually non-regulated in foreign markets.


Type: Comprehension

43. (p. 9) According to the text, the primary difference in the practice of marketing at the domestic versus the international level is: A. the environment within which the marketing plans must be implemented. B. the revenues necessary to be successful. C. the demand charts available to the marketer. D. the control over the budget. E. the accountability of board of directors.

Difficulty: Hard

Type: Comprehension


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44. (p. 9) With respect to the environment in which a business operates, such factors as competition, legal restrains, government controls, and the weather would all be examples of what are called: A. controllable elements. B. uncontrollable elements. C. predictable elements. D. demographic elements. E. cultural elements. Difficulty: Easy

Type: Knowledge

45. (p. 9-10) All of the following would be considered to be controllable elements of marketing decisions EXCEPT: A. product. B. price. C. promotion. D. research. E. government regulations.

Difficulty: Easy

Type: Knowledge

46. (p. 11, Exhibit 1.3) Considering the model of the international marketing task displayed in the text, which of the following reasons demonstrates the most important difference between the international marketer's task and that of the domestic marketer? A. The international marketer must deal with at least two levels of uncontrollable uncertainty instead of one. B. The international marketer must rely on at least two levels of controllable certainty instead of one. C. The international marketer is never certain about supply or demand. D. The international marketer is never certain about total market size. E. The international marketer must be aware of international monetary exchange rates.


Type: Comprehension


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47. (p. 11, Exhibit 1.3) Robert Jonas is in charge of a new marketing effort directed toward Peru. In order for his company to effectively market and distribute to all of Peru's major cities, Mr. Jonas must devise a logistics plan for crossing the Andes Mountains on a daily basis. Which of the following foreign environment uncontrollable variables would be a chief concern as Mr. Jonas devises his plan? A. Competitive forces B. Cultural forces C. Geography and infrastructure D. Economic forces E. Political/legal forces Difficulty: Moderate

Type: Application

48. (p. 11, Exhibit 1.3) Compared to the foreign environment uncontrollable variables, which of the following elements is excluded from the domestic marketer's list of uncontrollable variables? A. Political forces B. Competitive structure C. Economic climate D. Cultural forces E. Legal forces.

Difficulty: Hard

Type: Comprehension

49. (p. 11, Exhibit 1.3) All of the following would be among the domestic marketer's controllable environmental variables EXCEPT: A. research. B. price. C. product. D. channels of distribution. E. economic climate.


Type: Comprehension


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50. (p. 11, Exhibit 1.3) All of the following appear as a foreign environment uncontrollable variable in the model of the international marketing task shown in the text EXCEPT: A. economic forces. B. competitive forces. C. product demand forces. D. cultural forces. E. political/legal forces. Difficulty: Easy

Type: Knowledge

51. (p. 10) Amy Sims has been assigned the task of preparing a marketing plan for company for the next year's business activities. She knows that she should begin her plan by examining the variables that she has some control over. These controllable variables would include price, product, channels-of-distribution, and: A. demand. B. supply. C. competition. D. economic climate. E. promotion.

Difficulty: Easy

Type: Knowledge

52. (p. 10) A political decision involving _______________ would most likely have a direct effect on a firm's international marketing success. A. domestic foreign policy B. immigration reform C. oil exploration policy D. FCC satellite regulations E. FAA airline regulations


Type: Knowledge


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53. (p. 11) Which of the following would be a chief way that U.S. companies attempt to influence domestic foreign policy? A. A company could lobby with respect to its own interests. B. A company could attempt to bribe elected officials to influence policy decisions. C. A company could ask a foreign government to bring pressure on U.S. legislative bodies. D. A company could threaten to withdraw operations from foreign markets. E. A company could threaten to move its corporate headquarters to a foreign market. Difficulty: Hard

Type: Comprehension

54. (p. 12) Competition within the home country can have a profound effect on the international marketer's task. Which of the following BEST illustrates this statement? A. Boeing recently opened talks with its primary trade union to avoid a forecasted strike. B. Microsoft and Dell have jointly invested $700 million in a new venture to investigate high technology of the future. C. Fuji opened a $300 million plant in the U.S. and now commands a 12 percent share of the lucrative U.S. film market. D. Several name companies are still under investigation because of the Enron scandal. E. Declaration of independence by Baltic States after the collapse of the Soviet Union.


Type: Application

55. (p. 12) With respect to challenges faced by the international marketer, a significant source of uncertainty is the number of factors in the: A. foreign environment controllables. B. foreign environment uncontrollables. C. domestic environment controllables. D. parallel environment uncontrollables. E. parallel environment controllables.

Difficulty: Easy

Type: Comprehension


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56. (p. 12) Ralph Waite has just been assigned the task of reviewing his company's international investment opportunities. He knows that his view of the list of opportunities should be tempered by foreign environment uncontrollables that might be encountered. Which of the following would be the BEST illustration of a foreign environmental uncontrollable that Mr. Waite should investigate? A. A country's level of technology. B. Pricing policies in the foreign country. C. The ability to do research in the foreign country. D. Manufacturing capabilities in the foreign country. E. The ability to do advertising in the foreign country. Difficulty: Hard

Type: Application

57. (p. 12) The _____________ is an uncontrollable element that can often be misread because of the vast differences that may exist between developed and undeveloped countries. A. Structure of distribution B. competitive forces C. economic forces D. political/legal forces E. level of technology

Difficulty: Hard

Type: Knowledge

58. (p. 13) The _____________ and issues abroad are often amplified by the "alien status" of the company, which increases the difficulty of properly assessing and forecasting the dynamic international business climate. A. structure of distribution B. competitive forces C. economic forces D. political/legal forces E. level of technology


Type: Knowledge


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59. (p. 13) Which of the following would be the BEST illustration of the "alien status" found in the political and legal arena that sometimes cause problems for international marketers as they attempt to do business in foreign countries? A. A company in the U.K. recently purchased Ben & Jerry's ice cream operations. B. The Indian government told Coca-Cola that it must reveal its "secret formula" if it wished to continue do business in India. C. Richard Branson's Virgin Cola was not widely accepted in the United States. D. French Canadians prefer French to English when conducting business in Canada. E. British Airlines and Japan Airlines join American Airlines to form OneWorld Alliance. Difficulty: Moderate

Type: Application

60. (p. 14) Global businesses must be willing to adjust and adapt a marketing program to a foreign market. In a broad sense, the environmental uncontrollable elements constitute the: A. problem. B. opportunity. C. culture. D. marketplace. E. commerce landscape.

Difficulty: Hard

Type: Comprehension

61. (p. 14) The task of ____________ is the most challenging and important one confronting international marketers. A. care for the environment B. dealing with politics C. international standardization D. cultural adjustment E. international branding


Type: Comprehension


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62. (p. 14) Which of the following would be the BEST example to illustrate the fact that international marketers need to make cultural adjustments as they seek to do business abroad? A. In America, white is an accepted color for wedding gowns; in Asia it is the color of mourning. B. Many teens earn extra income by working. C. Women out number men in the United States. D. Most Middle Eastern women do not work outside the home. E. Many European nations require a period of national service for youth. Difficulty: Hard

Type: Application

63. (p. 15) ____________ is the conscious effort on the part of the international marketer to anticipate the influences of both the foreign and domestic uncontrollable factors on a marketing mix and then adjust the marketing mix to minimize the effects. A. Standardization B. Adaptation C. Segregation D. Segmentation E. Projection


Type: Knowledge

64. (p. 15) The primary obstacles to success in international marketing are a person's _________ and an associated ethnocentrism. A. regionalism B. holism C. self-reference criterion D. segregation E. integration

Difficulty: Easy

Type: Comprehension


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65. (p. 15) _____________ is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. A. Regionalism B. Holism C. Self-reference criterion D. Segregation E. Xenophobia Difficulty: Moderate

Type: Knowledge

66. (p. 15) In the United States, unrelated individuals keep a certain physical distance between themselves and others when talking or in groups. We do not consciously think about that distance; we just know what feels right without thinking. Someone from another culture would not necessarily understand this and would apply their own rules for contact when speaking. The preceding is an illustration of what is called applying a ___________ when reviewing the mentioned social custom of contact. A. self-space B. segregation C. integration D. space command theory E. self-reference criterion (SRC)


Type: Application

67. (p. 15) Your ____________ can prevent you from being aware that there are cultural differences or from recognizing the importance of those differences. A. self-space B. personality C. demographic character D. self-reference criterion (SRC) E. concept of integration

Difficulty: Easy

Type: Comprehension


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68. (p. 16) The most effective way to control the influence of ethnocentrism and __________ is to recognize their effects on our behavior. A. the self-reference criterion (SRC) B. regionalism C. tunnel vision D. standardization E. xenophobia Difficulty: Moderate

Type: Knowledge

69. (p. 17) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion influences. Which of the following would be the BEST first-step to take to avoid the aforementioned errors? A. Redefine the problem without the SRC influence. B. Solve the problem for the optimum business goal situation. C. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem. D. Define the business problem or goal in home-country cultural traits, habits, or norms. E. Define the business problem or goal in foreign-country cultural traits, habits, or norms through consultation with natives of the target country.

Difficulty: Hard

Type: Application

70. (p. 17) Which of the following steps in a cross-cultural analysis to isolate self-reference criterion influences would finalize the process and lead to a solution of the problem? A. Redefine the problem without the SRC influence and solve the problem for the optimal business goal situation. B. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem. C. Define the business problem or goal in home-country cultural traits, habits, or norms. D. Define the business problem or goal in foreign-country cultural traits, habits, or norms through consultation with natives of the target country. E. The last step is not indicated in the list of alternatives.

Difficulty: Easy

Type: Application


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71. (p. 17) To be globally aware, an international marketer must have all the following EXCEPT: A. a tolerance of cultural differences. B. a knowledge of cultures. C. a knowledge of history. D. a knowledge of microeconomics. E. a knowledge of world market potential. Difficulty: Easy

Type: Knowledge

72. (p. 17) Successful businesspeople in the twenty-first century have ___________ and a frame of reference that goes beyond a region or even a country and encompasses the world. A. a sense of fashion B. global awareness C. an intimate knowledge of ecological problems D. a consumer mind-set E. a pronounced skill in promotion


Type: Knowledge

73. (p. 18) There are a variety of stages in the process of becoming involved in international marketing. Which of the following best describes the stage of development where the company's products reach a foreign market through no conscious effort on the part of the marketer? A. Infrequent foreign marketing B. Regular foreign marketing C. No direct foreign marketing D. International marketing E. Global marketing

Difficulty: Easy

Type: Comprehension


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74. (p. 18) If a marketer is motivated to enter into an international marketing effort because of temporary surpluses in the domestic market, which of the following stages BEST characterizes the stage of international marketing involvement for this marketer? A. Infrequent foreign marketing B. Regular foreign marketing C. No direct foreign marketing D. International marketing E. Global marketing Difficulty: Moderate

Type: Comprehension

75. (p. 19) James Bright's company seek markets all over the world and attempts to sell products that are a result of planned production for markets in various countries. Which of the following stages BEST characterizes the stage of international marketing involvement for Mr. Bright's company? A. Infrequent foreign marketing B. Regular foreign marketing C. No direct foreign marketing D. International marketing E. Global marketing

Difficulty: Hard

Type: Application

76. (p. 20) Maria Peron's company treats the world, including the home market in Spain, as one market. Market segmentation decisions no longer focus on national borders. Instead, market segments are defined by income levels, usage patterns, and other factors that span countries and regions. Which of the following stages BEST characterizes the stage of international marketing involvement for Ms. Peron's company? A. Infrequent foreign marketing B. Regular foreign marketing C. No direct foreign marketing D. International marketing E. Global marketing


Type: Application


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77. (p. 22) If a company basically sees the process of international marketing as one where the domestic company seeks a sales extension of its domestic products into foreign markets, the company is using which of the following concepts to formulate its international policies and strategies? A. Domestic market extension concept B. Multidomestic market concept C. Global marketing concept D. Universal marketing concept E. Standardized marketing concept Difficulty: Easy

Type: Comprehension

78. (p. 22) The Ajax Corporation has decided to enter the international marketing arena by marketing its products on a country-by-country basis, with separate marketing strategies for each country. The company is using which of the following concepts to formulate its international policies and strategies? A. Domestic market extension concept B. Multidomestic market concept C. Global marketing concept D. Universal marketing concept E. Standardized marketing concept


Type: Comprehension

79. (p. 22-23) A company using the ________________ views an entire set of country markets as a unit, identifying groups of prospective buyers with similar needs as an opportunity market segment and develops a marketing plan that strives for standardization wherever it is cost and culturally effective. A. domestic market extension concept B. multidomestic market concept C. global marketing concept D. universal marketing concept E. standardized marketing concept

Difficulty: Hard

Type: Comprehension


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Fill in the Blank Questions

80. (p. 3) _____________ commerce thrives during peacetime. Global (or international)

Difficulty: Easy

Type: Knowledge

81. (p. 7) ___________ (country) leads in foreign investment in the United States. The United Kingdom

Difficulty: Hard

Type: Knowledge

82. (p. 9, Exhibit 1.2) Among the top ten players in the global game of commerce, __________ (company) leads the pack with $345 billion in revenues coming from global markets. Wal-Mart

Difficulty: Hard

Type: Knowledge

83. (p. 9) ___________ marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. International

Difficulty: Easy

Type: Knowledge

84. (p. 11, Exhibit 1.3) Domestic marketing elements as price, product, promotion, channels of distribution, and research are called ____________ elements. controllable


Type: Comprehension


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85. (p. 15) A person's self-reference criterion is often associated with an associated term called ________. ethnocentrism Difficulty: Moderate

Type: Knowledge

86. (p. 15) A person's ________________ is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. self-reference criterion (SRC)


Type: Knowledge

87. (p. 17) The successful businessperson in the twenty-first century has global _____________ and a frame of reference that goes beyond a region or even a country and encompasses the world. awareness


Type: Comprehension

88. (p. 20) At the __________ marketing level, companies treat the world, including their home market, as one market. global

Difficulty: Hard

Type: Knowledge

89. (p. 23) The global _____________ views an entire set of country markets as a unit, identifying groups of prospective buyers with similar needs as a global market segment. marketing concept


Type: Knowledge


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Essay Questions

90. (p. 3) Global commerce thrives in peacetime. Explain why this statement is true.

Economic booms often occur as the world finds itself at peace. Resources go toward research and technology rather than "war machines." Peace brings renewed efforts to negotiate and trade. Barriers generally come down between nations. Nations enter into partnerships and alliances that foster trade. Individual companies are willing to take greater investment risks when peacetime is blooming.

Difficulty: Easy

Type: Comprehension

91. (p. 4) Provide examples of events and issues that contribute to uncertainty in the international marketing environment.

Answers will vary but may include any of the issues discussed on page 4 including, terrorism, growth of the U.S. balance of payments deficit, conflicts between the U.S. and China, predictions of collapse in U.S. consumer spending and housing markets.


Type: Comprehension

92. (p. 5) List and briefly describe the four events or trends described in the text that have shaped international business beyond today's bumpy roads and into the future.

The events or trends are: (1) the rapid growth of the World Trade Organization and regional free trade areas such as NAFTA and the EU; (2) the trend toward the acceptance of the free market system among developing countries in Latin America, Asia, and Eastern Europe; (3) the burgeoning impact of the Internet and other global media on the dissolution of national borders; and, (4) the mandate to properly manage the resources and global environment for the generations to come.

Difficulty: Hard

Type: Comprehension


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93. (p. 6) Joan Wilson owns a small software company, SecureSoft, that specializes in home network security. The company has been in business for 5 years and its sales have grown rapidly. Last year the company began offering international versions (multilanguage) of its software. SecureSoft sells its products through a network of software distributors. However, recently Ms. Wilson has become concerned that Russian software hackers have produced pirated copies of the company's leading software. Explain how the Russian hackers disrupt SecureSoft's international marketing efforts.

SecureSoft international marketing efforts will now have to take into account the lost of sales/profits due to the pirated software. Virtually all components of marketing will likely be impacted. Marketing will have to consider product modifications to preclude prirating efforts, a change in distribution to direct sales, and other software protection schemes. In addition, special advertisement and promotion may be required to promote the security-enhanced products. These efforts to protect is software against piracy come at a cost which means that software retail prices will increase.


Type: Application

94. (p. 9) Define international marketing.

International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit.


Type: Knowledge

95. (p. 10-12, Exhibit 1.3) List and briefly discuss the domestic environment uncontrollable elements found in the model that describes the international marketing task.

The domestic environmental uncontrollable elements include political/legal forces, competitive structure, and the economic climate. For a brief discussion of each element see pages10-12.


Type: Comprehension


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96. (p. 11, Exhibit 1.3) List and briefly comment on the elements found in a company's domestic controllable environment.

The elements include price, product, promotion, channels of distribution, and research. For more information see page 10.

Difficulty: Easy

Type: Comprehension

97. (p. 10-14, Exhibit 1.3) Explain the differences between the domestic environment uncontrollable elements and the foreign environment uncontrollable elements.

According to information presented in the text and in Exhibit 1.3, the domestic environmental uncontrollable elements include the political/legal forces, competitive structure, and the economic climate. The foreign environment is more inclusive with the following elements political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. For additional information on differences see pages 10-14.

Difficulty: Hard

Type: Comprehension

98. (p. 14-15) To be an effective international marketer, why is it necessary to master cultural adjustment? Explain.

The marketers must adjust their marketing efforts to cultures to which they are not attuned. In dealing with unfamiliar markets, marketers must be aware of frames of reference they are using in making their decisions or evaluating the potential of a market. As an illustration, the story goes that two shoe salesmen report back to their companies after making a survey trip to an impoverished portion of Africa. One salesman says, "There is no market for shoes--no one has any money--poverty is everywhere." The other shoe salesman (representing world famous Bata Shoe Company) says, "Great news everybody needs shoes." Bata leads the world in selling shoes to third-world countries.


Type: Comprehension


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99. (p. 15) Explain the concept of the self-reference criterion (SRC).

SRC is an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions. The concept is closely associated with ethnocentrism.


Type: Knowledge

100. (p. 16) To avoid errors in business decisions, it is necessary to conduct a cross-cultural analysis that isolates the self-reference criterion influences. List the four steps that make up the framework for such an analysis.

The steps are: (1) define the business problem or goal in home-country cultural traits, habits, or norms; (2) define business problem or goal in foreign-country cultural traits, habits, or norms through consultation with natives of the target country--make no value judgments; (3) isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem; and, (4) redefine the problem without the SRC influence and solve for the optimum business goal situation.

Difficulty: Hard

Type: Comprehension

101. (p. 17) In order for a company to be globally aware, the company must do what two things (according to the text)?

The company must (1) have a tolerance for cultural differences and (2) have knowledge of cultures, history, world market potential, and global economic, social, and political trends.


Type: Comprehension


1-30

102. (p. 23) With respect to a strategic orientation to conducting international marketing, describe the global marketing concept.

The global marketing concept views an entire set of country markets (whether the home market and only 1 other country, or the home market and 100 other countries) as a unit, identifying groups of prospective buyers with similar needs as a global market segment and developing a marketing plan that strives for standardization wherever it is cost and culturally effective.


Type: Comprehension

103. (p. 5) Rick Russell owns a small company that specializes in waste cleanup on the high seas. He believes that his company can grow dramatically if he can find foreign partners and investors. According to the events and trends cited in the text as affecting global business today, which of these trends would have the most impact on Mr. Russell's business? Explain your rationale.

After reviewing the trends, the trend that is most likely to affect Russell's operation is the fourth trend--the mandate to properly manage the resources and global environment for the generation to come. Students should supply their own rationale. If another trend is chosen, it should be explained, characterized, and justified.


Type: Application


1-31

104. (p. 11, Exhibit 1.3) Scott Web Services has decided to go international with their new anti-spam software. Using the International Marketing Task model shown in the text, discuss which factors will impact Scott Web Services the most as it gears up to pursue international expansion.

To effectively answer this question, students must be familiar with Exhibit 1.3. Students can comment on the inner ring (domestic controllables), middle ring (domestic environment [uncontrollables]), and the outer ring (foreign environment [uncontrollables]). Students should focus on the technological aspects of the company, political/legal forces, competitive forces, and cultural forces that might impact the company. Students can be creative with this answer; therefore, you might wish to establish ground rules or guidelines.

Difficulty: Hard

Type: Application

105. (p. 15-17) You are about to eat at a friend's house for dinner. However, your friend is from a foreign country and you are sure that his family will have prepared an ethnic meal for you. Explain how your self-reference criterion (SRC) might cause you problems with your upcoming new experience. What should do about this?

This example is created to stimulate students into thinking about how that their own "cultural baggage" can sometimes make a new experience frightening. Eating strange food among "foreigners" is a common occurrence. Stimulate students think about what SRC is and how it can either hinder or help a relationship. For additional information on SRC, see pages 15-18.

Difficulty: Easy

Type: Application

Chapter 02

The Dynamic Environment of International Trade



1-32

1. (p. 27) The French government continues to exclude American beef from the French diet based on disputes about mad cow disease. FALSE

Difficulty: Easy

Type: Knowledge

2. (p. 27) Trade barriers are pesky hurdles to peace and prosperity. TRUE

Difficulty: Easy

Type: Knowledge

3. (p. 27) One of the most severe problems faced by international marketers today is the extremely high level of tariffs the world over. FALSE


Type: Knowledge

4. (p. 28, Exhibit 2.1) With respect to total trade, the United States trades more with Mexico than any other country. FALSE


Type: Knowledge


1-33

5. (p. 28) The creation of the World Trade Organization (WTO) is one of the biggest victories for free trade in decades. TRUE Difficulty: Easy

Type: Comprehension

6. (p. 28) At no time in modern economic history have countries been more economically interdependent. TRUE

Difficulty: Easy

Type: Comprehension

7. (p. 29) One of the contributing causes of the Great Depression was the Smoot-Hawley Act (1930), which raised average U.S. tariffs on more than 20,000 imported goods to levels in excess of 60 percent. TRUE

Difficulty: Hard

Type: Knowledge

8. (p. 31) For almost one hundred years (1888-1971) the U.S. had a trade deficit. Since then, the U.S. has had a trade surplus. FALSE

Difficulty: Hard

Type: Knowledge

9. (p. 31, Exhibit 2.2) Following the great economic boom of the late 1990s the number of American largest corporations remained approximately level through 2007 whereas during the same period Japanese largest corporations decreased from 22 to 8 corporations. TRUE

Difficulty: Easy

Type: Knowledge


1-34

10. (p. 31, Exhibit 2.2) Following the great economic boom of the late 1990s British corporations were no longer among the world's largest corporations. FALSE Difficulty: Easy

Type: Knowledge

11. (p. 33) A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time--usually one year. TRUE


Type: Knowledge

12. (p. 33) A balance-of-payments statement includes the following: the current account, the past account, and the overdue account. FALSE

Difficulty: Hard

Type: Knowledge

13. (p. 35) Nations utilize legal barriers, exchange barriers, and psychological barriers to restrain entry of unwanted goods. TRUE


Type: Knowledge

14. (p. 35) As the value of the dollar declines to lower levels, American products are more expensive for foreign customers and American exports decrease; moreover, foreign products are less expensive for American customers and foreign imports increase. FALSE

Difficulty: Easy

Type: Knowledge


1-35

15. (p. 35-36) One of the justifications of protectionism is protection of cartels. FALSE Difficulty: Moderate

Type: Comprehension

16. (p. 37) A tariff is a specific unit or dollar limit applied to a particular type of good. FALSE


Type: Knowledge

17. (p. 38) If there is a limit on the number of imported television sets from Mexico, this is called a quota. TRUE

Difficulty: Easy

Type: Application

18. (p. 38) If Germany agrees voluntarily to limit the number of automobiles exported to the United States, this would be an example of a quota. FALSE


Type: Application

19. (p. 39) A government boycott is an absolute restriction against the purchase and importation of certain goods from other countries. TRUE

Difficulty: Easy

Type: Knowledge


1-36

20. (p. 38) A government can effectively regulate its international trade position by various forms of boycotts and embargoes. FALSE Difficulty: Moderate

Type: Comprehension

21. (p. 40) If the United States requires that any imported medicine meant for humans pass FDA standards, the standard requirement would be considered to be a form of nontariff barrier to international trade. TRUE

Difficulty: Hard

Type: Application

22. (p. 40-41) If a foreign producer intentionally sells their products in the United States for less than the cost of production with the purpose of undermining competition and taking control of the market, the foreign producer would be guilty of what is called warrior pricing. FALSE


Type: Application

23. (p. 41) The overall purpose of the Omnibus Trade and Competitiveness Act of 1988 was to deal with trade deficits, protectionism, and overall fairness of our trading partners. TRUE

Difficulty: Hard

Type: Comprehension

24. (p. 44) The GATT (General Agreement on Tariffs and Trade) was set up as a successor to the WTO (World Trade Organization). FALSE


Type: Knowledge


1-37

25. (p. 42) GATT stands for Global and Territorial Trade. FALSE Difficulty: Easy

Type: Knowledge

26. (p. 43) Since GATT's inception there have been four "rounds" of intergovernmental tariff negotiations. FALSE


Type: Knowledge

27. (p. 44) The WTO (World Trade Organization) is an institution, not an agreement as was GATT. TRUE

Difficulty: Easy

Type: Knowledge

28. (p. 46) The International Monetary Fund (IMF) was created to serve as a watchdog over most international financial transactions between nations. FALSE


Type: Knowledge

29. (p. 46) An International Monetary Fund device, special drawing rights (SDR), is in effect "paper gold." TRUE


Type: Knowledge


1-38

30. (p. 47) Those that protest WTO meetings are generally thought to be antiglobalization in their orientation. TRUE Difficulty: Easy

Type: Comprehension


31. (p. 27) American beef continues to be excluded in this country's diet based on disputes about mad cow disease. A. Japan B. Mexico C. Canada D. United Kingdom E. China

Difficulty: Easy

Type: Knowledge

32. (p. 27) International work continues around the world to reduce these trade obstacles to peace and prosperity. A. Satellite and terrestial communication. B. Energy and food costs. C. Medical and drug prices. D. National debt and high exchange rates. E. Tariff and nontariff trade barriers.

Difficulty: Easy

Type: Knowledge


1-39

33. (p. 28, Exhibit 2.1) The United States has many successful trade relationships. Four of these relationships account for a tremendous volume of trade. All of the following countries are among the top four producers of trade for the U.S. EXCEPT: A. Canada B. Mexico C. Japan D. France E. China Difficulty: Moderate

Type: Knowledge

34. (p. 29) For every dollar the United States invested in the economic development and rebuilding of other countries after World War II, hundreds of dollars returned in the form of purchases of U.S. goods and services. The primary plan after World War II used to rebuild and reinvigorate war ravaged countries was the: A. Eisenhower Plan B. Marshall Plan C. Bradley Plan D. Roosevelt Plan E. Truman Plan

Difficulty: Hard

Type: Application

35. (p. 30) With respect to international trade, MNC stands for: A. Municipal, National, and County districts B. Multilateral and National Cartels C. Multinational Corporations D. Military and National Control districts E. Market Nongovernment Channels


Type: Knowledge


1-40

36. (p. 31, Exhibit 2.2) With respect to the nationality of the world's 100 largest industrial corporations, the United States is home to the largest number of the top 100 firms. Which of the following countries is home to the second largest number of these firms? A. Germany B. United Kingdom C. France D. Netherlands E. Japan Difficulty: Moderate

Type: Application

37. (p. 31) After 1888, the United States had unparalleled growth and a favorable balance of trade until _________. After this date, the United States has a negative balance of trade. A. 1950 B. 1963 C. 1968 D. 1971 E. 1985

Difficulty: Hard

Type: Comprehension

38. (p. 31, Exhibit 2.2) In 2007 this country ranked second behind the United States in number of world's largest corporations. A. Netherlands B. Japan C. France D. Germany E. South Korea

Difficulty: Easy

Type: Knowledge


1-41

39. (p. 31) Faced with increased competition for U.S. businesses in the '80s and early '90s, questions were raised as to how to maintain the competitive strength of American business, how to avoid the domination of U.S. markets by foreign multinationals, and how to __________. A. restructure heavy industries B. strengthen the dollar C. initiatite retalitory trade restrictions D. forestall the buying of America E. return to the gold standard Difficulty: Moderate

Type: Knowledge

40. (p. 33) The system of accounts that records a nation's international financial transactions is called its: A. trade balance. B. national accounts system. C. EX-IM (exports-imports) account. D. balance of payments. E. exchange rate.


Type: Knowledge

41. (p. 33) A nation's balance-of-payments statement records all financial transactions between: A. its member states and its primary trading partners. B. its residents and those of the rest of the world during a given period of time. C. its suppliers and receivers. D. profit and nonprofit organizations over a five-year period of time. E. its top 100 companies and the global top 100 companies.


Type: Comprehension


1-42

42. (p. 34) A balance-of-payments statement includes three accounts. Two of those accounts are the current account and the capital account. What is the third account found on the balance-of-payments statement? A. investment account B. receivables account C. services account D. credit account E. reserves account Difficulty: Hard

Type: Comprehension

43. (p. 34) Which of the following would be the balance-of-payments account that is a record of all merchandise exports, imports, and services plus unilateral transfers of funds? A. current account B. capital account C. credit account D. receivables account E. reserves account

Difficulty: Hard

Type: Comprehension

44. (p. 35) The marketing manager for Healthy Horse Products wants to export to Australia but learns the labeling requirements are quite difficult to comply with limiting imports. This is a type of: A. blockage. B. protectionism. C. trade refusal. D. stonewalling. E. boycotting.


Type: Comprehension


1-43

45. (p. 35) Which of the following has been effective in reducing tariffs but not in preventing protectionism? A. GATT B. the United Nations C. the International Monetary Fund D. the World Court E. None of the above Difficulty: Moderate

Type: Comprehension

46. (p. 35-36) All of the following would be considered to be reasons for adopting an attitude of protectionism with respect to world trade EXCEPT: A. to protect religious beliefs. B. protection of an infant industry. C. protection of a home market. D. the need to keep money at home. E. to encourage capital accumulation.

Difficulty: Hard

Type: Comprehension

47. (p. 35) Randall Smithe-Jones believes that protectionism is the only way to save the United Kingdom from outside competitors. He has seen small business after small business go bankrupt because cheaper foreign goods have been more popular. The UK has just started a cell-phone manufacturing industry and Smithe-Jones' company is one of the first to try their hand at cell-phone manufacturing. Which of the following would probably be the argument that Smithe-Jones would use to persuade his government representatives that protectionism is still needed in the U.K.? A. Protection of an infant industry B. The need to keep money at home C. Conservation of natural resources D. National defense E. The industrialization of a low-wage nation


Type: Application


1-44

48. (p. 36, Crossing Borders 2.1) Section 301 of the Omnibus Trade and Competitiveness Act authorizes the U.S. government to _____________ and ___________ against specific foreign trade barriers judged to be unfair. A. suppress, attack B. educate, substantiate C. investigate, retaliate D. market, dominate E. litigate, retaliate Difficulty: Hard

Type: Comprehension

49. (p. 37) A(n) ________ is simply a tax imposed by a government on goods entering at its borders. A. quota B. trade penalty C. tariff D. boycott E. embargo

Difficulty: Easy

Type: Knowledge

50. (p. 37) __________ generally do all of the following: increase inflationary pressures and special interests' privileges; decrease balance-of-payments positions; and, restrict competition. A. Tariffs B. Voluntary export restraints C. Orderly market agreements D. Monetary barriers E. Quotas


Type: Application


1-45

51. (p. 37) In general, __________ are arbitrary, discriminatory, and require constant administration and supervision. A. tariffs B. standards C. quotas D. boycotts E. embargoes Difficulty: Hard

Type: Comprehension

52. (p. 38) A specific unit or dollar limit applied to a particular type of good is called a(n): A. tariff. B. quota. C. standard. D. embargo. E. boycott.

Difficulty: Easy

Type: Knowledge

53. (p. 37, Exhibit 2.6) All of the following would be considered to be nontariff barriers that could be erected to restrict trade EXCEPT: A. quotas. B. taxes C. packaging requirements D. border taxes. E. embargoes.


Type: Comprehension


1-46

54. (p. 37, Exhibit 2.6) Which of the following types of nontariff barriers would be considered to be "specific limitations on trade" by international marketers? A. Fees B. Export subsidies C. Voluntary export restraints D. Embargoes E. Packaging, labeling, or marking standards Difficulty: Hard

Type: Comprehension

55. (p. 37, Exhibit 2.6) Cybil Chan has been asked by her company to review a series of published nontariff barriers that is used by the Hong Kong Port Authority to control customs and administrative entry procedures. Which of the following nontariff barriers should Ms. Chan look for under the category called customs and administrative entry procedures? A. Orderly marketing agreements B. Voluntary export restraints C. Countervailing duties D. Export subsidies E. Documentation requirements


Type: Application

56. (p. 38-39) Exporting countries sometimes agree to voluntary export restraints (VER) as an alternative to the threat of: A. expulsion. B. disorderly marketing agreements. C. stiffer quotas and tariffs. D. export subsidies E. standardization disparities


Type: Application


1-47

57. (p. 38-39) An agreement between the importing country and the exporting country for a restriction on the volume of exports is called a(n): A. tariff. B. standards option. C. voluntary export option (VER). D. fee. E. documentation requirement. Difficulty: Easy

Type: Knowledge

58. (p. 39) When the United States refuses to sell goods to Iran because of the perception that the country harbors radicals and terrorists, the refusal is called a(n): A. boycott. B. embargo. C. tariff. D. orderly market agreement. E. blocked currency.


Type: Application

59. (p. 39) ____________ is accomplished by refusing to allow importers to exchange its national currency for the seller's currency. A. Boycotted money B. Embargoed capital C. Blocked currency D. Anti-banking E. Cartel dissolution

Difficulty: Hard

Type: Knowledge


1-48

60. (p. 39) The practice of ______________ is a particularly ingenious method of controlling imports as it encourages the importation of goods the government deems desirable and discourages importation of goods the government does not want. A. a differential exchange rate B. blocked currency C. boycott D. embargo E. import price limit Difficulty: Moderate

Type: Comprehension

61. (p. 40) The function of an exchange permit is to: A. regulate the supply of money. B. cut-off all exchange. C. require that importers gain permission to exchange an amount of local currency for foreign currency. D. protect monopolies. E. limit pornographic or harmful merchandise from the domestic market.


Type: Comprehension

62. (p. 40) Tall Pine Plywood Company has just received notice that a shipment of plywood (2 metric tons) has been rejected by Japanese customs because the knotholes commonly found on a plywood sheet are too large. This would be an illustration of which of the following nontariff barriers to trade? A. quota B. predatory pricing C. embargo D. boycott E. standards

Difficulty: Easy

Type: Application


1-49

63. (p. 40-41) According to the information provided in the text, a new nontariff barrier that was designed to prevent foreign producers from using predatory pricing is called: A. quotas. B. fees. C. standards. D. antidumping laws. E. licenses. Difficulty: Moderate

Type: Comprehension

64. (p. 40) _____________ is the practice whereby a foreign producer intentionally sells their products in the United States for less than the cost of production to undermine the competition and take control of the market. A. Basing point pricing B. Offensive pricing C. Defensive pricing D. Counterpoint pricing E. Predatory pricing


Type: Knowledge

65. (p. 41) Which of the following trading partners has become the number one "trade problem" for the United States at the beginning of the 21st century? A. the United Kingdom B. Japan C. Germany D. Canada E. China

Difficulty: Hard

Type: Knowledge


1-50

66. (p. 41) Which of the following acts was designed to deal with trade deficits, protectionism, and the overall fairness of our trading partners? A. the World Trade Organization Act B. the Omnibus Trade an Competitiveness Act of 1988 C. the League of Nations Act of 1920 D. the Hawley-Smoot Tariff Act of 1930 E. the International Monetary Fund Act Difficulty: Moderate

Type: Comprehension

67. (p. 47) Protesters have often disagreed with the work of the WTO. Where did the first great protest against globalization and WTO policies and plans occur? A. Uruguay B. Chile C. Paris D. Seattle E. Berlin


Type: Comprehension

68. (p. 47) All of the following activities or organizations are designed to support the growth of international trade EXCEPT: A. the General Agreement on Tariffs and Trade (GATT). B. the World Trade Organization (WTO). C. the International Trade Administration (ITA). D. the World Bank Group E. the International Money Fund (IMF).


Type: Comprehension


1-51

69. (p. 42) Shortly after World War II, the United States and 22 other nations signed _________________ to pave the way for the first effective worldwide tariff agreement. A. the General Agreement on Tariffs and Trade (GATT) B. the Trade Related Investment Measures (TRIM) C. the World Trade Organization (WTO) agreement D. the International Monetary Fund (IMF) agreement E. the World Bank act Difficulty: Moderate

Type: Comprehension

70. (p. 42) One of the basic elements of the General Agreement on Tariffs and Trade (GATT) is that: A. no nation shall unfairly create tariffs against another. B. all tariffs shall be abolished among member nations by 2010. C. the World Court shall review all claims and make final judgments. D. trade shall be conducted on a nondiscriminatory basis. E. the United Nations Trade Agency (UNTA) shall serve as watchdog.


Type: Comprehension

71. (p. 43) The Uruguay Round of the WTO achieved many significant breakthroughs in trade. One of the most significant was of particular interest to those in the technology field. Which of the following was considered to be a significant breakthrough of the Uruguay Round? A. Trade-Related Aspects of Intellectual Property Rights (TRIPs) B. Trade-Related Investment Measures (TRIMs) C. Trade-Related Accounting Procedures (TRAPs) D. Trade-Related Operational Methods (TROMs) E. Trade-Related Information Technologies (TRITs)

Difficulty: Hard

Type: Comprehension


1-52

72. (p. 44) The World Trade Organization was created during which of the following GATT Rounds? A. Seattle B. Uruguay C. Paris D. Berlin E. Moscow Difficulty: Moderate

Type: Knowledge

73. (p. 44) Unlike GATT, the WTO issues ______________ decisions. A. illegal B. counseling C. no D. binding E. intelligent

Difficulty: Hard

Type: Knowledge

74. (p. 44) The ratification of the WTO by the United States was challenged in the U.S. Congress for all of the following reasons EXCEPT: A. possible loss of sovereignty over its trade laws to the WTO. B. the lack of veto power by the U.S. C. the ability of a WTO member to challenge trade laws of individual states. D. the amount of funds that must be supplied to the WTO to run its organization. E. a majority of WHO members could imposed decisions on the U.S.

Difficulty: Hard

Type: Comprehension


1-53

75. (p. 45) One of the most popular ways to circumvent WTO guidelines for free trade has been for a country to impose: A. antidumping duties. B. tariffs. C. quotas. D. fees. E. licenses. Difficulty: Moderate

Type: Comprehension

76. (p. 44) As Taki Muri readies his company to pursue lucrative markets in the United States. He is apprehensive about running afoul of U.S. antidumping laws. He has always thought that these laws were constructed just to keep competitors out. However, he also believes (as many other foreign competitors believe) that one way around the U.S. antidumping laws deals with a question of interpretation. Which of the following is the best description of the interpretation loophole that Mr. Muri that believes will work to his benefit? A. the definition of what a product is B. the definition of what a price is C. the interpretation of what "selling below cost" is D. the interpretation of what a foreign good is E. the exchange rate variations in the value of the dollar


Type: Application

77. (p. 44) According to the WTO, which of the following is the definition of dumping? A. Moving questionable goods into a market that does not want them. B. Flooding a market with so many goods that prices are depressed. C. Taking excess capacity of one nation and moving that capacity to another. D. Selling a good at a lower price in the foreign market than in other markets. E. Exporting goods to take advantage of favorable foreign exchange rates.

Difficulty: Easy

Type: Knowledge


1-54

78. (p. 45) Several nations are frustrated with the slow progress of the most recent round of WTO trade negotiations. To vent this frustration, several countries are: A. negotiating bilateral trade agreements. B. forming a rival organization. C. refusing to honor rules and regulations imposed by the WTO. D. using legal means to sue the WTO. E. doing all of the above to retaliate against the WTO. Difficulty: Moderate

Type: Comprehension

79. (p. 45) _____________ and the World Bank Group are two global institutions created to assist nations in becoming and remaining economically viable. A. The United Nations B. The World Court C. The International Monetary Fund D. The International Red Cross E. The League of Nations

Difficulty: Easy

Type: Knowledge

80. (p. 45) __________ has been the forum for successful trade negotiations; recent trade talks continue in Geneva in 2008. A. ICC (International Chamber of Commerce) B. EU (European Union) C. WHO (World Trade Organization) D. IMF (International Monetary Fund) E. NAFTA (North American Free Trade Agreement)


Type: Knowledge


1-55

81. (p. 46) Which of the following is one of the primary objectives of the International Monetary Fund (IMF)? A. The abolishment of unfavorable exchange rates for any nation. B. The abolishment of debt for impoverished nations. C. The stabilization of foreign exchange rates. D. The waiver of all debts from World War II. E. The establishment of global nondiscrimatory prices. Difficulty: Easy

Type: Comprehension

82. (p. 46) Another term for IMF special drawing rights (SDRs) is: A. black gold. B. wealth for capitalists. C. peace in our time. D. paper gold. E. virtual dollars.

Difficulty: Easy

Type: Knowledge

83. (p. 46) The World Bank provides all of the following to reduce poverty and improve standards of living EXCEPT: A. provides loans. B. provides technical assistance. C. provides policy guidance to developing-country members. D. starter governments for a period of five years. E. provides investors with investment guarantees.

Difficulty: Easy

Type: Comprehension


1-56

84. (p. 47) One of the major complaints from protestors during the Seattle Round of the WTO meetings centered on: A. the use of the automobile by the industrialized world. B. sweatshops that supplied industrial nations with goods. C. strike breaking within industrialized nations. D. the obesity of citizens of industrialized nations. E. the use of the Internet by industrialized nations. Difficulty: Moderate

Type: Comprehension


85. (p. 30) With respect to international trade, a ______________ is often called a MNC. multinational corporation

Difficulty: Easy

Type: Knowledge

86. (p. 30) In 1968, French author, J.J. Servan-Schreiber wrote the popular book _______________ that focused on the fears of Europeans that American industry would take over Europe and European markets. The American Challenge

Difficulty: Hard

Type: Knowledge

87. (p. 31, Exhibit 2.2) The country that is the home to the largest percentage of the top 100 largest industrial corporations is ______________. the United States of America

Difficulty: Easy

Type: Knowledge


1-57

88. (p. 31) From 1888 to 1971, the United States had a ____________ balance of trade where it sold more than is bought from other countries. favorable Difficulty: Easy

Type: Knowledge

89. (p. 33) A nation's ________________ statement records all financial transactions between its residents and those of the rest of the world during a given period of time--usually one year. balance-of-payments


Type: Knowledge

90. (p. 34) With respect to a nation's balance-of-payments statement, the official ___________ account is a record of exports and imports of gold, increases or decrease in foreign exchange, and increases or decreases in liabilities to foreign central banks. reserves

Difficulty: Hard

Type: Knowledge

91. (p. 37) Although the World Trade Organization (WTO) was effective in reducing tariffs, countries still resorted to measures of _____________. protectionism


Type: Comprehension

92. (p. 37) A _________ is a tax imposed by a government on goods entering at its borders. tariff

Difficulty: Easy

Type: Knowledge


1-58

93. (p. 38) A __________ is a specific unit or dollar limit applied to a particular type of good. quota Difficulty: Moderate

Type: Knowledge

94. (p. 39) An __________ is a refusal to sell to a specific country. embargo


Type: Knowledge

95. (p. 40-41) Antidumping laws were designed to prevent foreign producers from using their _______ pricing. predatory

Difficulty: Easy

Type: Comprehension

96. (p. 44) The ___________ is an institution, not an agreement as was GATT. WTO


Type: Knowledge

97. (p. 45) The ______________ and the ________________ are two global institutions created to assist nations in becoming and remaining economically viable. International Monetary Fund (IMF); World Bank Group

Difficulty: Hard

Type: Knowledge

Essay Questions


1-59

98. (p. 30) In his 1968 book called The American Challenge, French author J.J. Servan-Schreiber made certain predictions about the European market. Briefly characterize those predictions.

Servan-Schreiber predicted that the U.S. influence on Europe was becoming so overwhelming that in a few short years the U.S. and Russia would so completely dominate Europe that Europe would become American Industry Europe. For additional predictions see chapter material.


Type: Comprehension

99. (p. 31) Describe what happened to the United States with respect to its balance of trade after 1971.

After 1971 the United States began to have an unfavorable balance of trade. This meant that for the first time since 1888 the United States did not sell more than it bought from foreign markets. For additional details see chapter material.


Type: Application

100. (p. 33) What does a nation's balance-of-payments statement indicate?

A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time--usually one year.

Difficulty: Easy

Type: Knowledge


1-60

101. (p. 33-35) A nation's balance-of-payments statement includes three accounts. Describe each of those three accounts.

The accounts consist of: (1) the current account--a record of all merchandise exports, imports, and services plus unilateral transfers of funds; (2) the capital account--a record of direct investment, portfolio investment, and short-term capital movements to and from countries; and, (3) the official reserves account--a record of exports and imports of gold, increase or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks.

Difficulty: Hard

Type: Comprehension

102. (p. 35-36) Countless reasons are given to maintain government restrictions on trade. The text lists eleven (11) such reasons. Please list any five (5) of these reasons.

Students may choose any of the eleven reasons cited on Page: 35 or Page: 36 in the chapter.

Difficulty: Hard

Type: Knowledge

103. (p. 37) Tariffs have an impact on trade. Please provide a brief discussion that indicates what aspects of a country's economy are increased, weakened, or restricted with respect to world trade.

The text list several illustrations of increase, weaken, and restrict phenomenon or factors. Any of the three above can be used to adequately answer this question. Because of the length of the list, it is not repeated here. However, for a complete viewing see Page: 37 in the chapter. If more specific instructions are warranted, please insert them in the question.

Difficulty: Hard

Type: Analysis


1-61

104. (p. 39) What is the difference between an embargo and a boycott?

An embargo is a refusal to sell to a specific country. A pubic boycott can be either formal or informal and may be government sponsored or sponsored by an industry. Boycotting deals with buying goods rather than selling them.


Type: Comprehension

105. (p. 37) Using three examples, describe how nontariff barriers are used to restrict imports.

Students examples will vary. Exhibit 2.6 on Page: 37 lists numerous types of nontariff barriers.


Type: Comprehension

106. (p. 42-45) Briefly, describe the history and impact of the General Agreement on Tariffs and Trade (GATT).

GATT began shortly after World War II and, although not all countries participated, this agreement paved the way for the first effective worldwide tariff agreement. The original agreement provided a process to reduce tariffs and created an agency to serve as a watchdog over world trade. For additional information, see pages 42-45 in the chapter.

Difficulty: Hard

Type: Comprehension


1-62

107. (p. 44-45) Briefly, describe how the World Trade Organization (WTO) functions.

At the signing of the Uruguay Round trade agreement in 1994, U.S. representatives pushed for an enormous expansion of the definition of trade issues. The result was the creation of the World Trade Organization, which encompasses the GATT structure and extends it to new areas not adequately covered in the past. The WTO is an institution, not an agreement as was GATT. It sets many rules governing trade among its 148 members, provides a panel of experts to hear and rule on trade disputes between members, and, unlike GATT, issues binding decisions. For additional information, see pages 44-45.

Difficulty: Hard

Type: Comprehension

108. (p. 38-39) As a trade representative of the United States, you have become alarmed at the increasing number of nations that are using quotas as a means of controlling trade and protecting domestic interests. You believe that utilization of voluntary export restraints (VERs) or orderly market agreements (OMAs) is a far superior approach to quota systems. Explain how quotas, VERs, and OMAs work to justify your position.

A quota is a specific unit or dollar limit applied to particular type of good (such as limiting the number TV sets imported from Japan). Quotas tend to add as much as 50 percent to the final selling price of the good. This increases inflationary pressures. Common in textiles, clothing, steel, agriculture, and automobiles, VERs are agreements between the importing and exporting countries for a restriction on the volume of exports. Signing an OMA would bring order to a market by restricting product flow. OMAs also result in many foreign goods manufacturers bringing manufacturing facilities to the importing country (a plus for jobs in a sense) but negative results can still thwart market stability. For more information and examples see page 38-39.

Difficulty: Hard

Type: Analysis


1-63

109. (p. 44-45) As member of the automobile industry in the United States, you have long believed that Japan is guilty of predatory pricing in the U.S. automobile industry market. Explain predatory pricing and why that Japan might be guilty of such a practice.

Predatory pricing is a practice where a foreign producer would intentionally sell their products in the United States for less than the cost of production to undermine competition and take control of the market. For many years, Japanese carmakers Toyota and Honda were accused of such practices. Some felt that this policy was the only way that Japanese cars could crack the tough U.S. market where U.S. carmakers controlled not only pricing but distributorships. Students are free to give their own opinions on the issue (however, justifications or facts should accompany opinions). The instructor might advise research on the issue before assigning this question. For additional information on predatory pricing and further illustrations of the practice, see pages 44-45 in the chapter.


Type: Application

Chapter 04

Cultural Dynamics in Assessing Global Markets


1. (p. 93) There is a moderate level American-style risk-taking among Japanese investors. FALSE

Difficulty: Easy

Type: Knowledge

2. (p. 93) The liberalization of Japan's capital markets in recent years now gives Japanese more freedom of choice in their investments. However, only twelve percent of household financial assets are directly invested in stocks and a mere two percent in mutual funds. TRUE


Type: Knowledge


1-64

3. (p. 93) The Japanese transition into a more modern and stable securities market has been a smooth one. FALSE

Difficulty: Easy

Type: Knowledge

4. (p. 94) The manner and amount in which people consume are factors that dictate their style of living. TRUE

Difficulty: Easy

Type: Knowledge


1-65

5. (p. 94, footnote #1) Apparently obesity in the United States is causing Disneyland to deepen the channel on which its Small World boats float to keep the boats from bottoming out. TRUE Difficulty: Easy

Type: Knowledge

6. (p. 94) Culture deals with a group's design for living. TRUE

Difficulty: Easy

Type: Comprehension

7. (p. 94) According to the text, culture is specifically how well someone walks, talks, or writes. FALSE

Difficulty: Easy

Type: Knowledge

8. (p. 94) Marketers are often considered to be agents of change with respect to culture. TRUE


Type: Comprehension

9. (p. 94) Culture affects every part of our lives, every day, from birth to death and everything in between. TRUE

Difficulty: Easy

Type: Comprehension


1-66

10. (p. 98) According to Dutch professor Geert Hofstede, culture is a figment of our imagination. FALSE Difficulty: Moderate

Type: Knowledge

11. (p. 99, Exhibit 4.4) According to the text, culture can trace its origins to geography, history, technology and political economy, and social institutions. TRUE


Type: Knowledge

12. (p. 99, Exhibit 4.4) Good illustrations of elements of culture would be one's family, religion, schools, media, government, and even corporations. FALSE


Type: Knowledge

13. (p. 104) In most cultures the first social institution infants are exposed to outside of the home takes the form of a church or other religious institution. TRUE


Type: Comprehension

14. (p. 103) The two social institutions that most strongly influence values and culture are governments and nonprofit institutions. FALSE

Difficulty: Hard

Type: Comprehension


1-67

15. (p. 106) Underlying the cultural diversity that exists among countries are fundamental differences in cultural values. TRUE Difficulty: Moderate

Type: Knowledge

16. (p. 107) The Individualism/Collectivism Index measures the tolerance of social inequality. FALSE


Type: Knowledge

17. (p. 107) Aspects of additional data sets related to values related to leadership and organizations developed in the 1990s coincide with Hofstede's data collected 25 years earlier. TRUE

Difficulty: Easy

Type: Knowledge

18. (p. 107) Rebecca Nguyen is attempting to measure power inequality between superiors and subordinates within AT&T's social system. The best measure would be the Power Distance Index. TRUE


Type: Application

19. (p. 111) Anthropologist Edward T. Hall tells us that culture is communication. TRUE


Type: Comprehension


1-68

20. (p. 112) With respect to languages, Spanish, Italian, French, and Portuguese are all classified as Romance languages because most poetry is written in these languages. FALSE Difficulty: Moderate

Type: Application

21. (p. 112) A researcher for the Gallup polling organization is designing a questionnaire that will explore people's attitudes toward the arts, folklore, and music. The researcher's survey will, therefore, explore people's attitudes toward what is called aesthetics. TRUE


Type: Application

22. (p. 114) According to information about beliefs found in the text, a Chinese man or woman who believed in feng shui would not face their home in either a northwesterly or southwesterly direction. TRUE

Difficulty: Hard

Type: Application

23. (p. 115) The type of knowledge about a culture that is usually obvious and must be learned is designated as being interpretative knowledge. FALSE


Type: Knowledge


1-69

24. (p. 116) Jose and Mary Garcia, while both being Hispanic, are miles apart in their cultural upbringing. Jose, who grew up in Argentina, believes that time is unimportant in daily activities and that all things will eventually get done. Mary was raised in Los Angeles where everything is very time-oriented. These differences would be attributed to interpretative knowledge gained by the two Garcia's. TRUE Difficulty: Hard

Type: Application

25. (p. 116-117) If a person has cultural sensitivity then the person is attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated, and appreciated. TRUE

Difficulty: Easy

Type: Knowledge

26. (p. 117) Cultural borrowing is relevant only to those cultures formed in what was called the New World. FALSE


Type: Knowledge

27. (p. 117) A good illustration of cultural borrowing is the fact that salsa is now the number one condiment used by Americans with their meals. TRUE


Type: Application

28. (p. 117) If there is anything constant about culture is that it is constantly changing. TRUE

Difficulty: Easy

Type: Comprehension


1-70

29. (p. 118) If we were to describe a culture as being dynamic, we would recognize that this culture was resistant to change. FALSE Difficulty: Easy

Type: Comprehension

30. (p. 120) An illustration of cultural congruence would be the fact that Apple Computer prints all instructions for setting up their computer products in English and the native language of the country where the product is to be sold. TRUE


Type: Application

31. (p. 120) Nike would be following a program of unplanned change if it were to introduce a line of tennis shoes for women (Nike Goddess) in a Muslim country with no prior marketing or communication efforts. TRUE

Difficulty: Hard

Type: Application


32. (p. 94) __________ is pervasive in all marketing activities; the marketer's efforts actually become a part of the __________. A. Resistance; opposition to change B. Culture; fabric of culture C. Acceptance; new global context D. Public relations; culture E. Change; marketing strategy


Type: Comprehension


1-71

33. (p. 94) _____________ is the human-made part of human environment. A. Sociology B. Psychology C. Culture D. Reference groups E. Cohort groups Difficulty: Moderate

Type: Knowledge

34. (p. 94) The sum total of knowledge, beliefs, art, morals, law, customs, and any other capabilities and habits acquired by humans as members of society is called: A. Sociology B. Psychology C. Culture D. Reference groups E. Cohort groups


Type: Knowledge

35. (p. 94) When marketers first introduced the PDA to the American consumer they performed the role of being a(n) _____________ because the cultural impact of the product became widespread. A. gatekeeper B. role player C. supply creator D. agent of change E. promoter


Type: Application


1-72

36. (p. 96, Exhibit 4.2) With respect to a cultural fact, which of the following countries has the highest rate of consumption of chocolate? A. France B. Germany C. United States D. Italy E. United Kingdom Difficulty: Hard

Type: Application

37. (p. 98) According to Dutch management professor Geert Hofstede, culture is seen as: A. "software of the mind." B. "the difference between life and death." C. "the conflict of civilization versus the masses." D. "tool of the elite." E. "art's triumph over banality."

Difficulty: Hard

Type: Comprehension

38. (p. 98) According to Dutch management professor Geert Hofstede, culture is seen as a: A. weapon that is often used on the poor. B. problem-solving tool. C. bias that is used to justify racial inequality. D. a relationship enhancer. E. reflection of a nation's evolution.


Type: Knowledge


1-73

39. (p. 99, Exhibit 4.4) All of the following are considered to part of the origins of culture EXCEPT: A. geography. B. history. C. technology and political economy. D. mathematical models E. social institutions. Difficulty: Moderate

Type: Comprehension

40. (p. 99, Exhibit 4.4) Which of the following would be considered to among the elements of culture according to a model presented in the text? A. family B. religion C. media D. rituals E. school


Type: Comprehension

41. (p. 99) A traditional definition of ____________ centers around the notion that it is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation. A. social class B. psychology C. anthropology D. demography E. culture


Type: Knowledge


1-74

42. (p. 102) As Mike Jones has grown up he has learned a great about his culture from his schools, church, mass media, and family. This learning is called: A. acculturation. B. socialization. C. naturalization. D. emancipation. E. adaptation. Difficulty: Hard

Type: Application

43. (p. 98, Crossing Borders 4.1) The following traits have been identified as those shared by humans EXCEPT __________. A. conceive of success and failure B. overestimate objectivity of thought C. express emotions with face D. engage in sport activities E. imitate outside influences

Difficulty: Easy

Type: Knowledge

44. (p. 102) Mervin is excited about his new home in the Philippines. Even though he was born in Los Angeles, Mervin has been given the opportunity to learn about a new culture, form new friends, and capitalize on opportunities than were not available in his previous home or workplace. Mervin will go through what is called a ______________ as he adjusts to living in Manila. A. acculturation B. socialization C. naturalization D. emancipation E. standardization


Type: Application


1-75

45. (p. 103) The family, religion, schools, the media, government, and corporations are all illustrations of what are called: A. social institutions. B. cultural icons. C. internal variables. D. external variables. E. demographic variables. Difficulty: Moderate

Type: Knowledge

46. (p. 104) In most cultures the first social institution infants are exposed to outside the home takes the form of a: A. day care center. B. school. C. religious institution (church, mosque, shrine, or temple). D. shopping mall. E. government agency.

Difficulty: Hard

Type: Comprehension

47. (p. 104) According to the text, there is some good news about gender equality in recent years -- the __________ gap between the sexes is narrowing in many places around the world. A. intelligence B. employment C. identity D. education E. language

Difficulty: Easy

Type: Knowledge


1-76

48. (p. 105) __________ are seen as leading positive cultural changes and progress around the world. A. Schools B. Sports stadiums C. Labor unions D. Dogmatic religions E. Internet and television Difficulty: Easy

Type: Knowledge

49. (p. 105) The four social institutions that most strongly influence values and culture are schools, churches (religious institutions), families, and: A. shopping malls. B. day care centers. C. government agencies. D. the media. E. corporations.


Type: Comprehension

50. (p. 106) Compared with the early (during childhood) and direct influences of family, religion, school, and the media during childhood, governments: A. hold a very strong position. B. hold a moderate position. C. hold relatively little sway. D. control a great deal of our lives. E. basically ignore people.

Difficulty: Hard

Type: Application


1-77

51. (p. 106-107) The most useful information on how cultural values influence various types of business and market behavior comes from work done by: A. Sigmund Freud. B. George Gallup. C. Geert Hofstede. D. Ayn Rand. E. Milton Friedman. Difficulty: Hard

Type: Knowledge

52. (p. 107, Exhibit 4.5) Many languages are very different from other languages. Which of the following languages is the most distant from English? A. French. B. German. C. Spanish. D. Arabic. E. Taiwanese (Taiwan).

Difficulty: Hard

Type: Knowledge

53. (p. 108) The ________________ Index refers to the preference for behavior that promotes one's self-interest. A. Individualism/Collectivism B. Power Distance C. Uncertainty Avoidance D. Ritual E. Language


Type: Knowledge


1-78

54. (p. 107, Exhibit 4.5) Which of the following countries scores highest on the Individualism/Collectivism Index meaning that this country values and rewards individual initiative more that the others cited? A. Brazil B. Greece C. France D. Germany E. United States Difficulty: Easy

Type: Application

55. (p. 107, Exhibit 4.5) Which of the following countries would have the most affinity (score highest) for collectivism (cohesive groups are honored and encouraged)? A. Great Britain B. Australia C. Canada D. France E. Japan

Difficulty: Easy

Type: Application

56. (p. 108) The Uncertainty Avoidance Index measure the tolerance of ___________ and __________ among members of a society. A. social equality; inequality B. self-interest; collective interest C. uncertainty; ambiguity D. primary; secondary language tolerance E. ritual; dislocation


Type: Comprehension


1-79

57. (p. 107, Exhibit 4.5) Emma Smith has just been hired as a consultant for the Smith Barney stock brokerage firm. Her task is to determine whether Smith Barney should use face-to-face contacts to encourage sales or the more impersonal electronic communications that have become so popular today. Her data indicates (based on reviews of Individualism/Collectivism studies) that all but one of the following countries would probably favor electronic communication. Which country would most likely favor face-to-face contact with a Smith Barney broker? A. United States B. Australia C. Canada D. Japan E. Great Britain Difficulty: Moderate

Type: Application

58. (p. 109, Crossing Borders 4.2) Giving a gift in another country requires careful attention if it is to be done properly. According to the characteristics of gift giving that follows, which country most likely matches with this form of gift giving? Characteristics: never make an issue of a gift presentation--publicly or privately; gifts should be presented privately, with the exception of collective ceremonial gifts at banquets or after speeches. A. Arab World B. United States C. Japan D. Latin America E. China


Type: Application

59. (p. 110-111) Rituals let people know: A. what to expect. B. what something costs. C. how the government operates. D. the impact of language. E. the ancient rites of worship.


Type: Comprehension


1-80

60. (p. 111) Anthropologist Edward T. Hall tells us that culture is: A. all-encompassing. B. relatively minor in the scheme of life. C. communication. D. strongly linked to physiology. E. standard throughout the world. Difficulty: Moderate

Type: Knowledge

61. (p. 111) In many parts of the world language is itself thought of as a social institution (often with political importance). Which of the following countries best exemplifies the above statement? A. Australia B. United States C. France D. Mexico E. Switzerland


Type: Application

62. (p. 111) The relationship between language and international marketing is an important factor that cannot be overestimated. Recent studies indicate that a new concept, __________, is proving useful to marketing researchers in market segmentation and strategic entry decisions. A. linguistic traps B. linguistic distance C. language parallels D. language roots E. linguistic accents


Type: Comprehension


1-81

63. (p. 112) Which of the following general terms would most closely be associated with the arts, folklore, music, drama, and dance? A. controllable environmental variables B. uncontrollable environmental variables C. aesthetics D. cultural mandates E. cultural icons Difficulty: Moderate

Type: Knowledge

64. (p. 114) Much of what we learn to believe comes from: A. the media. B. the Internet. C. religious training. D. biological heredity. E. physiological need states.

Difficulty: Easy

Type: Comprehension

65. (p. 114) Gin and Oki Chen are about to purchase a new home in San Francisco. The first home shown to the couple is a lovely ranch-style house. As Gin looks at the home she comments to the real estate broker, "This will never do. I am sorry but the front entrance faces northwest. No one would ever visit us. May we please see another house from your list." Her husband concurs. Which of the following would explain why Gin Chen's statement was so strong and why she would rather look at another home? A. She is afraid of earthquakes in the San Francisco area. B. She dislikes the color of the house but is afraid to say so because it would be rude. C. She never has liked houses that face shaded areas. D. She is from southern China and, therefore, prefers an entrance that faces southwest. E. She respects traditional feng shui beliefs.


Type: Application


1-82

66. (p. 115) How people think and view the world is important to any cultural study of the international environment. According to a book written by Richard Nisbett, The Geography of

Thought, Asians tend to: A. prefer home cooking to fast food. B. see the whole picture and can report details about background and foreground. C. focus on small details in the foreground but cannot often see the "big picture." D. see the world (surprisingly) in a similar way to everyone else. E. see only what they want to see as they are very biased on their outlook on life. Difficulty: Hard

Type: Application

67. (p. 115) ____________ knowledge about a culture is usually obvious and must be learned. A. Factual B. Interpretative C. Virtual D. Historical E. Superstitious


Type: Knowledge

68. (p. 115) _____________ knowledge about a culture is an ability to understand and to appreciate fully the nuances of different cultural traits and patterns. A. Factual B. Interpretative C. Virtual D. Historical E. Superstitious


Type: Knowledge


1-83

69. (p. 115) Factual knowledge is very important to understanding a culture. Which of the following would be the best illustration of this importance? A. The Catholic religion is widespread throughout the world. B. The United States is located in the Northern Hemisphere of what was called the New World. C. 98 percent of Mexico is Roman Catholic. D. Great Britain is made up of England, Scotland, Ireland, and Wales. E. Traffic laws requiring autos to travel on the right or left side of the road. Difficulty: Hard

Type: Application

70. (p. 116) ______________ is being attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated, and appreciated. A. Cultural ombudsmanship B. Being a cultural icon C. Being a cultural maven D. Cultural sensitivity E. Cultural borrowing


Type: Knowledge

71. (p. 117) ________________ is a responsible effort to learn from other's cultural ways in the quest for better solutions to a society's particular problems. A. Cultural ombudsmanship B. Being a cultural icon C. Being a cultural maven D. Cultural sensitivity E. Cultural borrowing


Type: Knowledge


1-84

72. (p. 117) Modern medicine in the United States has been impacted by application of herbal remedies from South America and acupuncture from the Orient. This would be an example of which of the following? A. Cultural ombudsmanship B. Being a cultural icon C. Being a cultural maven D. Cultural sensitivity E. Cultural borrowing Difficulty: Moderate

Type: Application

73. (p. 117) Which of the following best illustrates the concept of cultural borrowing in the United States? A. Eating three meals a day. B. Working five days a week. C. Eating salsa on just about everything. D. The popularity of SUVs in suburban neighborhoods. E. The popularity of basketball among urban youth.

Difficulty: Easy

Type: Application

74. (p. 119) According to text, innovations vary across cultures. In the Hofstede and other studies it was shown that innovation was associated with all of the following EXCEPT: A. higher individualism B. lower power distance C. uncertainty avoidance D. production and acceptance of innovations E. customized disruptive innovations

Difficulty: Hard

Type: Application


1-85

75. (p. 119) Some studies have shown that one of the most important factors in determining what kind and how much of an innovation will be accepted is the: A. degree of interest in the particular subject. B. how much the item costs. C. what color the item is. D. how the item is packaged. E. knowledge of the brand name. Difficulty: Hard

Type: Comprehension

76. (p. 119) Often, cultural resistance to change disappears as: A. government mandates force consumers to change. B. religion and rituals spark acceptance of cultural change. C. change agents provide correct change. D. superstition overcomes science. E. ideas initially too complex for consumers become less so.

Difficulty: Hard

Type: Application

77. (p. 120) Marketers have two options when introducing an innovation to a culture. First, they can cause change. What is the other option? A. They can wait. B. They re-package the innovation to cause confusion. C. They mandate adoption by withdrawing all alternatives. D. They can plea for governmental assistance and support. E. They can promote the innovation as accepted in other cultures.


Type: Comprehension


1-86

78. (p. 120) One of the ways to introduce change into a market is to do it in slow gradual steps by making the new products as similar to the old ones as possible. This would be called a strategy of: A. unplanned change. B. cultural adiaphoria. C. cultural syncopation. D. cultural congruence. E. continuous change Difficulty: Moderate

Type: Comprehension

79. (p. 120-121) Morton Foods has decided to introduce a new line of turkey products to the American consumer. Turkey Steaks will resemble beefsteak in taste but will be made from turkey meat. The Turkey Steaks will be leaner and healthier for a variety of reasons. However, Morton Foods is concerned that the product will not be accepted. If Morton Foods follows a strategy of ______________, they are more likely to success with the introduction of the new product. A. unplanned change B. cultural adiaphoria C. cultural syncopation D. cultural congruence E. continuous change

Difficulty: Hard

Type: Application

80. (p. 119-120) Nexar Energy is advocating the use solar power to replace all petroleum-based energy sources. The company has demonstrations to show how solar power could be used in all major petroleum-based products--automobiles, power sources, and heating and cooling. Since Nexar Energy is advocating _____________, their information documents their deliberate attempt to change the way we do things with respect to energy sources. A. unplanned change B. planned change C. parallel change D. syncopated change E. synergistic change


Type: Application


1-87

81. (p. 120) The Westernized diet has caused many Japanese to become overweight. This would be an illustration of which of the following forms of change? A. unplanned change B. planned change C. parallel change D. syncopated change E. synergistic change Difficulty: Moderate

Type: Application

82. (p. 121) When ____________ (acceptance) occurs, a process of social change may also occur. A. product replacement B. product abandonment C. product innovation D. product diffusion E. product acceleration

Difficulty: Hard

Type: Comprehension

83. (p. 121-122) The marketer seeking _____________ and adoption may inadvertently bring about change that affects the very fabric of a social system. A. product replacement B. product abandonment C. product innovation D. product diffusion E. product acceleration

Difficulty: Hard

Type: Comprehension


1-88

84. (p. 121) If the consequences of diffusion on an innovation on a society are undesirable, then the innovation can be said to have had a(n) ____________ impact on the society. A. functional B. dysfunctional C. symmetrical D. parallel E. dynamic Difficulty: Moderate

Type: Knowledge


85. (p. 94) The human-made part of human environment is associated with the concept of _____________. Culture


Type: Knowledge

86. (p. 94) Marketers often seek to get consumers to adopt new ideas and products. When the marketers do this they are called ____________. agents of change

Difficulty: Easy

Type: Comprehension

87. (p. 96, Exhibit 4.2) The annual consumption per capital for tobacco products in __________ has declined approximately 29%. Germany

Difficulty: Easy

Type: Knowledge


1-89

88. (p. 98, Crossing Borders 4.1) Since we are all of the same species there are hundreds of __________ that we share. traits Difficulty: Easy

Type: Knowledge

89. (p. 98) Dutch management professor ______________ refers to culture as the "software of the mind." Geert Hofstede

Difficulty: Hard

Type: Knowledge

90. (p. 99, Exhibit 4.4) Elements of culture include values, rituals, symbols, beliefs, and ______________. thought processes


Type: Knowledge

91. (p. 103) ____________ includes such areas as family, religion, school, the media, government, and corporations. Social institutions


Type: Knowledge

92. (p. 103) The four social institutions that most strongly influence values and culture are ________, churches, family, and the media. schools


Type: Comprehension


1-90

93. (p. 106) Underlying the cultural diversity that exists among countries are fundamental differences in cultural __________. values Difficulty: Easy

Type: Knowledge

94. (p. 107, Exhibit 4.5) According to indices developed by Hofstede, the ____________ Index focuses on self-orientation. Individualism/Collectivism

Difficulty: Hard

Type: Knowledge

95. (p. 111) Linguistic ___________ is proving useful to marketing researchers in marketing segmentation and strategic entry decisions. distance


Type: Comprehension

96. (p. 115) ___________ knowledge is usually obvious and must be learned. Factual

Difficulty: Easy

Type: Knowledge

97. (p. 116) Being attuned to the nuances of culture is called cultural ___________. sensitivity

Difficulty: Easy

Type: Knowledge


1-91

98. (p. 117) Cultural __________ is what occurs when products or customs from one culture are used by another culture. borrowing Difficulty: Easy

Type: Knowledge

Essay Questions

99. (p. 94) Culture deals with a group's design for living. Comment and explain.

When designing a product, the style, uses, and other related marketing activities must be made culturally acceptable is they are to be operative and meaningful. Culture is pervasive in all marketing activities. For more information and suggestions, see page 94.

Difficulty: Easy

Type: Comprehension

100. (p. 94) Define culture.

Culture is the human-made part of human environment--the sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by humans as members of society.


Type: Knowledge

101. (p. 99, Exhibit 4.4) Describe the relationships among origins, elements, and consequences of culture according to the model presented in the text.

See Exhibit 4.4 on page 99 for a graphic display of the model and associated explanation.

Difficulty: Hard

Type: Comprehension


1-92

102. (p. 103-105) List and briefly discuss the role of the six social institutions that impact a nation's culture.

The six social institutions are family, religion, school, the media, government, and corporations. Discussion of the impact of the social institutions is found on pages 103-105.

Difficulty: Hard

Type: Comprehension

103. (p. 103-105) Four social institutions strongly influence values and culture. List and briefly describe these four social institutions as to their strong influence.

The four institutions are schools, churches, families, and the media. For a discussion of the impact, see page 103-105.


Type: Comprehension

104. (p. 107, Exhibit 4.5) Pick one of the indices used by Geert Hofstede to describe the fundamental differences between cultural values among nations and indicate its purpose and what a high and low score on that indices would indicate.

The Hofstede indices include Individualism/Collectivism (preference for behavior that promotes one's self-interest), Power Distance (tolerance of social inequality), and Uncertainty Avoidance (tolerance of uncertainty and ambiguity among members of a society). See text material to determine high and low value ramifications.

Difficulty: Hard

Type: Comprehension


1-93

105. (p. 110-111) What is a ritual? Give an example of a ritual that has cultural significance and explain the connection.

Life is filled with rituals, or patterns of behavior and interaction that are learned and repeated. The most obvious rituals are associated with major life events such as marriage or death (funerals).


Type: Comprehension

106. (p. 111-112) What is linguistic distance? What is its importance to marketers?

Linguistic distance is determined to be narrow or wider differences in language content and meaning. Linguistic distance increases transaction costs. For additional information see pages 110-111.


Type: Comprehension

107. (p. 117-118) Explain the concept of cultural borrowing and provide an example to illustrate your discussion.

Cultural borrowing is common to all cultures. Societies have found that answers to problems can be found by seeing how other cultures have solved their problems. Although each society has a few truly unique situations facing it, most problems confronting all societies are similar in nature. See the text (page 116) for illustrations of cultural borrowing.


Type: Comprehension

108. (p. 119-120) What is cultural congruence?

Cultural congruence involves marketing similar products to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance.

Difficulty: Easy

Type: Knowledge


1-94

109. (p. 99, Exhibit 4.4; 117) Using information gained from the model that demonstrates origins, elements, and consequences of culture, create an example of how one culture might adapt a product or service from another culture. Please be specific in your application and use of the model.

See model on page 99, Exhibit 4.4. Students should review material on cultural borrowing (see page 117). Students should construct an example that will apply to the model. This question could be given as a homework assignment or as take-home portion of an exam.

Difficulty: Hard

Type: Application

110. (p. 107, Exhibit 4.5) Considering that the United States scores high on the Individualism/Collectivism Index (91) and Japan scores low (46), describe what this means to a marketer of an automobile, computer, or life insurance policy (pick one for discussion).

The index refers to the preference for behavior that promotes one's self-interest. A high score indicates individualism as an approach. A low score indicates more group orientation and value. Students are free to create with the illustrations; however, an American would probably prefer a car that addresses individual needs and is different in styling, a computer that is highly adaptable to a personal need, and an insurance policy that could benefit one's self (investment). The Japanese consumer might want a car that fit with group expectations and did not standout. The computer would be chosen for its ability to interact with others. The insurance policy would to provide security for a larger family unit.

Difficulty: Hard

Type: Application

111. (p. 117-118) Culture is dynamic in nature; it is a living process. Comment.

Cultural change is constant. The dynamic character of culture is significant in assessing new markets even though changes face resistance. Students can follow with a discussion of how societies change and what culture has to do with this. Students can also introduce the concept of cultural borrowing at this point. For additional information see the text (pages 117-118.)


Type: Application

Chapter 05

Culture, Management Style, and Business Systems


1-95


1. (p. 134) Although there is some power seeking by business managers throughout the world, power seems to be a more important motivating force in South American countries. TRUE


Type: Comprehension

2. (p. 135, Exhibit 5.2) With respect to contextual background among countries, Japan would be a good illustration of a country that has a low context explicit background. FALSE

Difficulty: Hard

Type: Knowledge

3. (p. 123) The giant toy maker Mattel Inc. changed its strategy and began designing and marketing worldwide one standardized version of its doll, Barbie, instead of different variations for children in different countries only to have its sales plummet. TRUE

Difficulty: Easy

Type: Knowledge

4. (p. 124) Culture, profoundly affects management style. TRUE

Difficulty: Easy

Type: Comprehension


1-96

5. (p. 138) One of the real bonuses of using the Internet for business communication is that, because it is based in machine translation of language, it can manage all the nuances of language and syntax. FALSE Difficulty: Hard

Type: Knowledge

6. (p. 124) Management style includes business culture, management values, and business methods and behavior. TRUE


Type: Application

7. (p. 125) As a guide to adaptation, one of the "rules" that should be followed would be to be open tolerance. TRUE

Difficulty: Easy

Type: Knowledge

8. (p. 125) The key to adaptation is to try not to be American and to teach your international business colleagues about U.S. management methods. FALSE

Difficulty: Easy

Type: Comprehension

9. (p. 139) Since France is higher on the Hofstede Power Distance Index (PDI), business executives would find the American business managers' casual attitude toward business affairs to be crude and unsophisticated. TRUE

Difficulty: Hard

Type: Application


1-97

10. (p. 138) According to Hall, in countries that follow monochromic time (M-time) such as Americans, these cultures tend to concentrate on one thing at a time. TRUE Difficulty: Moderate

Type: Application

11. (p. 140) M-time (monochromic time) is more dominate in high-context cultures. FALSE

Difficulty: Hard

Type: Comprehension

12. (p. 129) In the Arabic world, a non-believer would not be allowed to enter a mosque. This would be an example of what is called an exclusive. TRUE


Type: Application

13. (p. 129) Cultural imperatives are those customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred. FALSE


Type: Knowledge

14. (p. 129-130) The "master of destiny" philosophy is fundamental to U.S. management thought. TRUE

Difficulty: Easy

Type: Comprehension


1-98

15. (p. 141) A standard rule in international business negotiations is "know thyself." TRUE Difficulty: Moderate

Type: Knowledge

16. (p. 130) In Japan a person's blood type can influence hiring decisions. TRUE

Difficulty: Easy

Type: Knowledge

17. (p. 131) A key value underlying the American business system is reflected in the notion of a never-ending quest for improvement. TRUE

Difficulty: Easy

Type: Knowledge

18. (p. 131) In the United States advancement is frequently tied to one's ability to make improvements; results are what count. TRUE

Difficulty: Easy

Type: Knowledge

19. (p. 132) No matter how thoroughly prepared a marketer may be when approaching a foreign market, a certain amount of culture shock occurs. TRUE

Difficulty: Easy

Type: Knowledge


1-99

20. (p. 132) In high-PDI (Power Distance Index) countries such as Mexico and Malaysia, understanding the rank and status of clients and business partners is very important. TRUE Difficulty: Moderate

Type: Comprehension

21. (p. 145) Giving valuable business gifts is accepted and expected in the United States but generally condemned in many countries. FALSE


Type: Comprehension

22. (p. 147) In the United States today, fraud has replaced bribery as the primary focal point for what is meant by the term corruption. TRUE


Type: Comprehension

23. (p. 134) In some Asian societies, personal life is company life. TRUE


Type: Knowledge

24. (p. 148, Exhibit 5.5) According to the Transparency International Corruption Perception Index, Finland ranks lowest in corruption perception and Haiti highest. TRUE

Difficulty: Hard

Type: Application


1-100

25. (p. 149, Exhibit 5.6) According to the Transparency International Bribe Payers Index, Australia would be the most likely country in the world to offer a bribe to someone. FALSE Difficulty: Hard

Type: Application

26. (p. 151) Even though bribery is seen as publicly contemptuous in the United States, internationally the U.S. receives a TI score (grade) of a 7.2, or a C, with respect to bribery issues. TRUE


Type: Knowledge

27. (p. 151) As a form of bribery, lubrication involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where offerings are not prohibited by law. TRUE


Type: Knowledge

28. (p. 151) The Foreign Corrupt Practices Act prohibits U.S. businesses from paying bribes openly or using middlemen as conduits for a bribe when the U.S. official knows that part of the middleman's payment will be used as a bribe. TRUE


Type: Comprehension

29. (p. 153) Three ethical principles provide a framework to help the marketer distinguish between right and wrong, determine what ought to be done, and properly justify his or her actions. One of those principles is called utilitarian ethics. TRUE

Difficulty: Easy

Type: Comprehension


1-101

30. (p. 156, Exhibit 5.7) The United States would be correctly labeled as relationship-oriented culture because it is high-context, respects collectivism, and follows polychronic time. FALSE Difficulty: Hard

Type: Application


31. (p. 126) Culture affects management style around the world. Which of the following statements would be an improper characterization of business behavior and practices around the world? A. North Americans are individualists. B. The Japanese are consensus oriented. C. The Italians are rank conscious. D. All Russians are communists. E. The Germans are elitists.


Type: Comprehension

32. (p. 126, photo caption) Nothing causes more problems for Americans negotiating in other countries than their __________. A. arrogance B. informality C. inabiltity to speak the language D. impatience E. superiority

Difficulty: Easy

Type: Knowledge


1-102

33. (p. 126) Knowledge of _______________ consists of understanding the business culture, management values, and business methods and behaviors. A. management style B. management trends C. management missions D. management personalities E. management theories Difficulty: Moderate

Type: Knowledge

34. (p. 126) ___________ is a key concept in international marketing because it is required on small matters as well as large ones. A. Profit perception B. Adaptation C. Standardization D. Correlation E. Individualization


Type: Comprehension

35. (p. 127) As a guide to adaptation, all of the following criteria would be appropriate EXCEPT: A. open to tolerance. B. flexibility. C. humility. D. profit motive. E. awareness.

Difficulty: Hard

Type: Comprehension


1-103

36. (p. 127) A liking for others, open to tolerance, flexibility, and ability to adjust to varying tempos would all be criteria for achieving ___________ in international marketing. A. profit perception B. adaptation C. standardization D. correlation E. individualization Difficulty: Moderate

Type: Comprehension

37. (p. 127) With respect to business customs, customs that must be recognized and accommodated are called: A. imperatives. B. electives. C. exclusives. D. non-traditional. E. standardized.


Type: Knowledge

38. (p. 127) With respect to business customs, customs to which adaptation is helpful, but not necessary are called: A. imperatives. B. electives. C. exclusives. D. non-traditional. E. standardized.

Difficulty: Easy

Type: Knowledge


1-104

39. (p. 127) With respect to business customs, customs in which the outsider must not participate are called: A. imperatives. B. electives. C. exclusives. D. non-traditional. E. standardized. Difficulty: Moderate

Type: Knowledge

40. (p. 128) Which of the following would most likely be characterized as being an imperative business custom? A. establishing friendships B. speaking the language C. understanding the native religions D. drinking the local drinks E. having a knowledge of trading law

Difficulty: Hard

Type: Application

41. (p. 129) Simon Peters is very conscious of his behavior as he greets prospective Japanese clients at a local Tokyo restaurant. Though he invites all of the guests to drink sake from lacquered trays, he abstains because of a severe stomach ulcer. He perceives his abstention to be permissible in Japanese society because drinking sake would be considered to be a cultural ___________ for foreign guests. A. imperative B. elective C. exclusive D. non-tradition E. standard


Type: Application


1-105

42. (p. 129) Betty Roberts became an embarrassment to her company when she joked about the ruling monarchy in England before a group of visiting English businessmen and women. Betty should have known that political ridicule by a foreigner is rarely accepted. Ms. Roberts has violated what is known as a cultural: A. imperative. B. elective. C. exclusive. D. landmark. E. standard. Difficulty: Moderate

Type: Application

43. (p. 129-130) There are many different views regarding the most important ideas on which normative U.S. cultural concepts are based. All of the following are generally accepted as acceptable ideas with this respect EXCEPT: A. "Master of destiny" viewpoint. B. independent enterprise as the instrument of social action. C. wide sharing in decision-making. D. the collective good outweighs the individual gain. E. competition yields efficiency.


Type: Comprehension

44. (p. 129-130) Competition yielding efficiency, "master of destiny" viewpoint, and wide sharing of decision making would characterize which of the following country's cultural concepts in business? A. Germany B. France C. Japan D. China E. United States


Type: Application


1-106

45. (p. 130) Which of the following would be the best description of the "master of destiny" philosophy that is fundamental to U.S. management thought? A. A skill that must be mastered is foretelling one's destiny. B. A manager must control all employees' destinies if profit is to be made. C. People can substantially influence the future--they are in control of their own future. D. The "state" is the master of its citizens' destiny. E. Society is the determining element or factor of one's destiny. Difficulty: Moderate

Type: Comprehension

46. (p. 130) There is a very strong belief in the United States that business decisions (and the managers that make these decisions) should be based on a scientific approach and made from a non-emotional posture. Which of the following terms best describes this approach? A. Master of destiny B. Independent enterprise C. Objective analysis D. Wide sharing in decision-making E. Never-ending quest for improvement


Type: Comprehension

47. (p. 131) A key value underlying the American business system is reflected in the notion of __________. A. financial stability B. success comes from hard work C. never-ending quest for improvement D. lifelong employment security E. labor unions

Difficulty: Easy

Type: Knowledge


1-107

48. (p. 132) No matter how thoroughly prepared a marketer may be when approaching a foreign market, a certain amount of __________ occurs. A. culture shock B. envy C. success D. jealousy E. momentum Difficulty: Easy

Type: Knowledge

49. (p. 131) Adam Smith in his Wealth of Nations stated, "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intended to promote it." Which of the following notions is most closely associated with this view as stated by Adam Smith? A. Master of destiny B. Caveat emptor C. Greed is good D. The invisible hand E. Survival of the fittest

Difficulty: Hard

Type: Application

50. (p. 132) In countries with high- _____________, subordinates would be unlikely to contradict bosses, but in low- ___________ countries they often do. A. religious values B. Position Distance Indexes (PDIs) C. decision-making models D. wealth quotients E. mobility tendencies


Type: Application


1-108

51. (p. 133) Which of the following forms of business decision-making characterizes most Asian countries? A. independent B. contractual C. dual D. consensus E. dictatorial Difficulty: Hard

Type: Comprehension

52. (p. 134) Personal security and job mobility relate directly to basic human motivation. Assume that you wanted to work for a company that had a strong paternalistic orientation and would probably employ you for your entire life. In which of the following countries would you find that the majority of companies would follow the employment model you have described? A. France B. United States C. Canada D. England E. India

Difficulty: Hard

Type: Application

53. (p. 134) For international marketers operating in authoritative and delegated societies, the chief problem is: A. paying sufficient bribes to the right people. B. identifying the individual with authority. C. coming to consensus with the group dynamic. D. convincing each member of the decision-making group. E. address the decision-maker by correct title.

Difficulty: Hard

Type: Application


1-109

54. (p. 134) Many U.S. companies are reconsidering __________. A. temporary employees B. flextime work arrangements C. 40-hour work week D. international trade E. loyalty oaths Difficulty: Easy

Type: Knowledge

55. (p. 134) For many individuals, ________________ takes priority over profit, security, or any other goal. A. religious freedom B. education C. social status D. a good personal and/or family life E. personal possessions


Type: Comprehension

56. (p. 136) Gen Akoi has worked for Mitsubishi for all of his adult life. In fact, Mitsubishi is his life. When asked what he does for a living he immediately responds, "I work for Mitsubishi!" Even though he is a crane operator, Mr. Akio most closely identifies with his employer. Which of the following terms most accurately describes the work identification present in Gen Akoi's life? A. feudalism B. dictatorship C. complete servitude D. group E. hopelessness


Type: Application


1-110

57. (p. 136-137) Edward T. Hall wrote a book entitled "The Silent Language of Overseas Business." Which of the following phrases or terms would most likely be covered in his book? A. how deaf people are treated in Japan B. feng shui C. the symbolic importance (lack of importance) of time D. gender bias E. quiet attempts to use English Difficulty: Moderate

Type: Application

58. (p. 137, Exhibit 5.2) In a high context implicit communication environment who says something, how it is said, and when it is said is very important. Which of the following countries would we find to be "high context implicit" with respect to communication practices? A. Switzerland B. Saudi Arabia C. France D. United States E. Germany

Difficulty: Hard

Type: Application

59. (p. 137, Exhibit 5.2) In a low-context explicit communication culture one would expect to find that verbal exactness in communication dominates other communication variables. Which of the following countries has been described as being low context explicit with respect to communication practices? A. Switzerland B. Japan C. Saudi Arabia D. England E. Italy

Difficulty: Hard

Type: Application


1-111

60. (p. 138) Many international marketing companies address the Internet language problem by: A. using only English on their Web sites. B. using language translation software whenever possible. C. having country-specific Web sites. D. using foreign language blocking software to screen international communications. E. using America OnLine global Internet portal services. Difficulty: Easy

Type: Knowledge

61. (p. 139) One of the communications issues associated with Web sites in international marketing is: A. paying for Internet access in each country. B. soliciting sales tax versus value added tax correctly. C. always using the correct English translation. D. examining sites for symbols, icons, and other nonverbal impressions that could be misinterpreted by foreign consumers. E. unpredictability of international Internet connections.

Difficulty: Hard

Type: Knowledge

62. (p. 140) Time is viewed differently around the world. For example, in Spain "those who rush arrive first at the grave" is a description of feelings toward time. In which country would we expect to hear the description of time as being "time is money"? A. France B. Japan C. Hong Kong D. England E. United States

Difficulty: Easy

Type: Application


1-112

63. (p. 140) In the United States, Switzerland, Germany, and Norway one thing at a time receives attention with respect to time. This would be called: A. P-time--polychronic time. B. B-time--bimodal time. C. D-time--dual time. D. M-time-monochronic time. E. S-time-sequence time. Difficulty: Moderate

Type: Application

64. (p. 140) As Luci Chen sits in her office in Shanghai she is looking at her daily appointment calendar. Even though she has many appointments, she knows that she will spend quality time with each person. After all, being involved with people and being sensitive to relationships is just as important (if not more important) than sticking to a schedule. Ms. Chen could be characterized following which of the following time models? A. P-time--polychronic time. B. B-time--bimodal time. C. D-time--dual time. D. M-time-monochronic time. E. S-time-sequence time.

Difficulty: Hard

Type: Application

65. (p. 140) Ramon Garcia is excited about his first visit to the United States. As a representative of a Mexican vegetable producer, Ramon knows that he will have to forget "Mexican time" and be aware of "American time." As he shifts to "American time," which of the following time models will Mr. Garcia need to understand and follow if he is to be successful during his stay in America? A. P-time--polychronic time. B. B-time--bimodal time. C. D-time--dual time. D. M-time-monochronic time. E. S-time-sequence time.

Difficulty: Hard

Type: Application


1-113

66. (p. 141, Exhibit 5.3) Even though speed is relative in a cultural context, we would expect workers from which of the following countries to be so obsessed with speed (walking, accomplishing tasks, and accuracy of time pieces) that this country ranks number one in the world? A. Switzerland B. Japan C. Germany D. Brazil E. United States Difficulty: Moderate

Type: Application

67. (p. 141, Exhibit 5.3) As Mark Hall examines markets for his company's new digital watch product, he has reservations about market potential in some countries. He knows that countries that are addicted to speed with respect to time would make better markets than those that are not. According to rankings of speed (with respect to time) appreciation, which of the following markets would most likely be a good one for Mr. Hall to pursue first with his company's new product? A. China B. Mexico C. Germany D. Canada E. Indonesia


Type: Application

68. (p. 141) The basic elements of an international business negotiation include all of the following EXCEPT: A. price and terms B. services C. product D. politics E. friendship between vendor and customers.

Difficulty: Hard

Type: Knowledge


1-114

69. (p. 141-142) Many American companies are increasingly adopting a __________ whereas companies in other countries have been slow to change from the more traditional __________. A. product orientation, marketing orientation B. strategic approach, short-term approach C. promotion orientation, sales orientation D. marketing orientation, product orientation E. high tech orientation, conventional methods Difficulty: Moderate

Type: Comprehension

70. (p. 144) When a U.S. female is selected for an international assignment the going might be difficult given the attitude of many foreign organizations toward females in positions of authority. In addition to training, which of the following would be a key to the female's success in a foreign assignment? A. amount of money to be paid for the assignment B. bonus options C. social background D. age E. strength of the firm's backing


Type: Application

71. (p. 145) According to various views around the world, all of the following have been defined or viewed as being corruption EXCEPT: A. profits. B. individualism. C. rampant consumerism. D. intellectual property laws. E. conservative dress.


Type: Application


1-115

72. (p. 145) According to information presented in the text, which of the following would be considered to be corruption (or a corrupt practice) in India? A. profits B. individualism C. rampant consumerism D. intellectual property laws E. currency speculators Difficulty: Moderate

Type: Application

73. (p. 145) AIDS is rampant in many sub-Saharan African nations. Because of this fact, which of the following would most likely be viewed as a corrupt practice (or corruption) by African nations and their leaders? A. capitalism B. individualism C. rampant consumerism D. intellectual property laws E. currency speculators

Difficulty: Hard

Type: Application

74. (p. 147) The decision to pay a bribe can be seen as creating a major conflict between what is ethical and proper and what is profitable and sometimes necessary for business. Led by the U.S. many nations have now signed an accord by the member nations of the ________________________ to force their companies to follow anti-bribery rules similar to those followed in the U.S. A. United Nations B. Organization of American States C. NAFTA D. NATO E. Organization for Economic Cooperation and Development (OECD)


Type: Comprehension


1-116

75. (p. 148) Which of the following organizations is dedicated to "curbing corruption through international and national coalitions encouraging governments to establish and implement effective laws, policies, and anticorruption programs"? A. Organization of American States (OAS) B. United Nations (UN) C. The Hague D. Transparency International (TI) E. World Trade Organization (WHO) Difficulty: Moderate

Type: Knowledge

76. (p. 148, Exhibit 5.5) Transparency International (TI) scores countries with respect to their prevalence for bribe taking. Bribery is least tolerated in which of the following countries? A. United States B. Japan C. Germany D. Israel E. Denmark

Difficulty: Hard

Type: Knowledge

77. (p. 148, Exhibit 5.5) Transparency International (TI) scores countries with respect to their prevalence for bribe taking. Bribery is most tolerated in which of the following countries? A. Singapore B. Canada C. Germany D. Australia E. France

Difficulty: Easy

Type: Knowledge


1-117

78. (p. 149, Exhibit 5.6) It is often said that it takes two to bribe--one to receive and one to pay. In which of the following countries would companies be least likely to pay a bribe to obtain business or gain favor? A. United States B. Australia C. Spain D. Taiwan E. Japan Difficulty: Moderate

Type: Knowledge

79. (p. 148, Exhibit 5.5) According to the 2007 Transparency International Corruption Perception Index rankings in the text, __________ is more corrupt than __________. A. USA; Japan B. Germany; Belgium C. Switzerland; Canada D. Japan; USA E. France; China


Type: Comprehension

80. (p. 151) Voluntarily offered payment by someone seeking unlawful advantage is called: A. extortion. B. subordination. C. lubrication. D. agent's fees. E. bribery.

Difficulty: Easy

Type: Knowledge


1-118

81. (p. 151) ___________ involves a relatively small sum of cash, a gift, or service that is intended to facilitate or expedite the normal, lawful performance of a duty by an official. A. Extortion B. Subordination C. Lubrication D. Agent's fees E. Bribery. Difficulty: Moderate

Type: Knowledge

82. (p. 151) A finance minister in a third-world country demands a heavy payment be made to him or he will stall or veto a multi-million dollar contract that is on his desk. This practice would be called: A. extortion. B. subordination. C. lubrication. D. agent's fees. E. bribery.

Difficulty: Easy

Type: Knowledge

83. (p. 153) Perhaps the best guide to good business ethics is to follow all of the guidelines (principles) shown below EXCEPT: A. utilitarian ethics. B. rights of the parties. C. profit. D. fairness. E. justice.


Type: Comprehension


1-119

84. (p. 154) According to Lester Thurow, a _____________ form of capitalism is practiced in Japan and Germany where there is cooperation among government, management, and labor. A. individualistic B. communistic C. communitarian D. universal E. docile Difficulty: Moderate

Type: Application

85. (p. 156, Exhibit 5.7) Which of the following orientations (synthesis) of culture would be described by a culture that is low-context, has individualism, low power distance, and uses monochromic time? A. Information-oriented (IO) B. Relationship-oriented (RO) C. Government-oriented (GO) D. Worker-oriented (WO) E. Capitalist-oriented (CO)

Difficulty: Hard

Type: Comprehension

86. (p. 156, Exhibit 5.7) Which of the following orientations (synthesis) of culture would be described by a culture that is high-context, has collectivism, high power distance, and uses polychronic time? A. Information-oriented (IO) B. Relationship-oriented (RO) C. Government-oriented (GO) D. Worker-oriented (WO) E. Capitalist-oriented (CO)

Difficulty: Hard

Type: Comprehension



1-120

87. (p. 126) A lack of empathy for and knowledge of foreign business practices can create _____________________ to successful business relations. insurmountable barriers Difficulty: Easy

Type: Comprehension

88. (p. 126, photo caption) Nothing causes more problems for Americans negotiating in other countries than their __________. impatience

Difficulty: Easy

Type: Knowledge

89. (p. 127) A cultural ___________ is a custom that must be recognized and accommodated. imperative


Type: Knowledge

90. (p. 127) A cultural __________ is a custom to which adaptation is helpful, but not necessary. elective


Type: Knowledge

91. (p. 127) A cultural ____________ is a custom in which an outsider must not participate. exclusive


Type: Knowledge


1-121

92. (p. 129) The phrase "I'll curse my brother, but if you curse him, you'll have a fight" would be associated with what is called a cultural _____________. exclusive Difficulty: Moderate

Type: Application

93. (p. 130) A "Master of Destiny" viewpoint would be most associated with the culture of __________ (a country). United States

Difficulty: Easy

Type: Comprehension

94. (p. 130) There is a very strong belief in the United States that business decisions are based on ____________ analysis and that managers strive to be scientific in their decision-making. objective


Type: Comprehension

95. (p. 135) In the United States, the two-week vacation is standard. In Europe, most workers take vacations that last ______________. 4 to 6 weeks

Difficulty: Hard

Type: Knowledge

96. (p. 137) In a __________-context culture the emphasis is on who, when, and how something is said. high


Type: Knowledge


1-122

97. (p. 137) Communication in a high-context culture depends heavily on ____, _____, and ____ things are said. who; when; how Difficulty: Moderate

Type: Application and Fact

98. (p. 140) __________ time typifies most North Americans, Swiss, Germans, and Scandinavians where the emphasis is on one thing at a time. M-time (monochromic time)


Type: Knowledge

99. (p. 141) The extent of a company's __________ orientation has been shown to be positively related to profits. marketing

Difficulty: Easy

Type: Knowledge

100. (p. 145) The Japanese have a saying that says, "The nail that sticks up gets hammered down." This would be an illustration of how ____________, so important to Americans, can also be seen as a kind of corruption. individualism


Type: Comprehension

101. (p. 151) If payments are extracted under duress by someone in authority from a person seeking only what they are lawfully entitled to, __________ has occurred. extortion


Type: Knowledge


1-123

102. (p. 151) _____________ involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law. Lubrication Difficulty: Moderate

Type: Knowledge

103. (p. 156, Exhibit 5.7) If a country is considered to be high-context, has a collectivist view, has high power distance, linguistic indirectness, and follows polychronic time, the country would be considered to ___________-oriented as to its dimension of culture. relationship


Type: Application

Essay Questions

104. (p. 126) If a manager wished to gain knowledge of the management style used in a foreign organization, what three areas would the manager need to study to gain an appreciation of management style?

The manager would need to study the business culture, management values, and business methods and behaviors.


Type: Comprehension


1-124

105. (p. 127) As a guide to adaptation, there are ten basic criteria that all who wish to deal with individuals, firms, or authorities in foreign countries should be able to meet. List and briefly describe five of these criteria.

The criteria are: (1) open to tolerance, (2) flexibility, (3) humility, (4) justice/fairness, (5) ability to adjust to varying tempos, (6) curiosity/interest, (7) knowledge of the country, (8) liking for others, (9) ability to command respect, and (10) ability to integrate oneself into the environment. Descriptions of the above items can be obtained by examining the various sections of the chapter or making conclusions. Discussion can be dropped if necessary.

Difficulty: Hard

Type: Comprehension

106. (p. 127-129) Demonstrate the differences among cultural imperatives, electives, and exclusives.

Cultural imperatives are customs that must be recognized and accommodated. Cultural electives are customs to which adaptation is helpful, but not necessary. Cultural exclusives are customs in which an outsider must not participate. Examples are demonstrated in the chapter.


Type: Comprehension

107. (p. 129-132) The text identifies seven cultural concepts that seem to be at the core of the United States culture in a business sense. List and briefly identify each of these cultural concepts.

The core concepts are (1) "Master of destiny" viewpoint, (2) independent enterprise as the instrument of social action, (3) personnel selection and reward based on merit, (4) decisions based on objective analysis, (5) wide sharing in decision making, (6) never-ending quest for improvement, and (7) competition yielding efficiency. Discussion or examples of each concept can be found by examining pages 129-132.

Difficulty: Hard

Type: Comprehension


1-125

108. (p. 132-136) Management objectives and aspirations in the United States are often different than in other parts of the world. Describe the U.S. view toward security and mobility and how this might be different from a European business.

In the U.S. security relates to individualism and how one can take of oneself. Mobility is desirous. In European companies, there is a strong paternalistic orientation, and it is assumed that individuals will work for one company for the majority of their lives. Many Europeans have less mobility than Americans (or the English) because emphasis is placed on competent supervision, sound company policies, fringe benefits, security, and comfortable work conditions.


Type: Comprehension

109. (p. 140) Explain the differences between countries that follow M-time (monochronic) and P-time (polychronic).

Monochronic time typifies most North Americans, Swiss, Germans, and Scandinavians. These Western cultures tend to concentrate of one thing at a time. They divide time into small units and are concerned with promptness. Polychronic time is more dominant in high-context cultures, where the completion of a human transaction is emphasized more than holding to schedules. P-time is characterized by the simultaneous occurrence of many things and by "a great involvement with people."


Type: Application

110. (p. 145-146) The text suggests that corruption could have many definitions (views) around the world. Characterize three definitions (views).

Corruption can be seen as profits (in a Communist country), individualism (in Japan where group is important), rampant consumerism (in India where resources might be wasted needlessly), intellectual property laws (in African nations where life-saving medicines might be withheld), or currency speculation (in Asian nations where there is an economic and financial crisis). The text also mentions a form of cultural corruption in Asia brought about by Barbie where children reject old ways and orient toward Western values and looks.

Difficulty: Hard

Type: Application


1-126

111. (p. 127) Simone Balzac has just moved from France to Indonesia and is anxious to adapt to her new environment. She has studied the Indonesian culture while in school and knows about the cultural heritage between the two countries. Since Simone wishes to adapt, give her a list of six criteria (as suggested by the text) that she should especially emphasize and consider as she attempts to integrate herself into the Indonesian society.

Simone should consider the following criteria as she makes her cultural adjustment (students should list six of these criteria): (1) open to tolerance, (2) flexibility, (3) humility, (4) justice/fairness, (5) ability to adjust to varying tempos, (6) curiosity/interest, (7) knowledge of the country, (8) liking for others, (9) ability to command respect, and (10) ability to integrate oneself into the environment.

Difficulty: Hard

Type: Application

112. (p. 127-129) Rob Snyder has just been invited to his first business social function in Tokyo. Though he has been in the country for one week, this is his first real opportunity to interact with Japanese businessmen. During the festivities Rob will be exposed to Sake drinking, bowing, exchanging business cards, and interaction with top Japanese executives. Which of these interaction events should Rob consider as cultural imperatives, electives, and exclusives? Comment and explain.

There are no exclusives mentioned. The other areas (depending on one's point of view) can be considered to be either imperatives or electives. Rob will want to exchange business cards (which is also an American tradition) and interact with the business executives as politeness dictates. It is elective to drink Sake (though most would at least accept a cup). Bowing is not necessary, however, most would find it to be a way of integrating one's self into the culture. Many Japanese also shake hands. Many Japanese also smoke and if Rob does not smoke he would not offend by saying so. Student opinions may vary; examine justifications.


Type: Application


1-127

113. (p. 156) Jason Marx has been asked to write a position paper about the Japanese culture relevant to the Japanese view of relationships. From his studies before starting his writing effort, Jason learned that Japan is characterized as a relationship-oriented culture with respect to dimension of culture. Summarize the characteristics of a relationship-oriented culture that Mr. Marx will want to include in his paper on Japan relationships.

First, review Exhibit 5.7 on page 156. The characteristics of a relationship-oriented culture are: (1) high-context, (2) collectivism, (3) high power distance, (4) bribery more common, (5) high distance from English, (6) linguistic indirectness, (7) polychronic time, (8) face-to-face, (9) background, and (10 reduce transaction costs. If the instructor would like to reduce the number of requirements for this question, please do so.


Type: Application

Chapter 06

The Political Environment: A Critical Concern


1. (p. 162) Companies that have thoroughly studied political considerations before constructing their business models do not have to concern themselves with the political environment when attempting to do business abroad. FALSE

Difficulty: Easy

Type: Comprehension

2. (p. 162) International law recognizes the sovereign right of a nation to grant or withhold permission to do business within its political boundaries and to control where its citizens conduct business. TRUE


Type: Knowledge


1-128

3. (p. 162) Sovereignty refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. TRUE


Type: Knowledge


1-129

4. (p. 162) Adherence to World Trade Organization (WTO) rules means a loss of sovereignty to its member nations. TRUE Difficulty: Moderate

Type: Comprehension

5. (p. 163) At the top of the list of political issues concerning foreign businesses is the issue of taxation and tariffs. FALSE

Difficulty: Hard

Type: Comprehension

6. (p. 163) According to the text if China raised the value of its currency that would make it even easier for Chinese firms and government to purchase American companies. TRUE


Type: Knowledge

7. (p. 165) Saudi Arabia permits women to vote if they are at least 18 years old and married or 21 years old, if single. FALSE


Type: Knowledge

8. (p. 165) The three forms of government are dictatorship, aristocracy, and democracy. TRUE


Type: Application


1-130

9. (p. 167) Knowledge of the philosophies of all major political parties within a country is important to international marketers. TRUE Difficulty: Moderate

Type: Knowledge

10. (p. 167) Socialism can best be described as an intense feeling of national pride and unity, an awakening of a nation's people to pride in their country. FALSE

Difficulty: Easy

Type: Knowledge

11. (p. 170) Foreign investors, while sometimes feared as a dominant tyrant threatening economic development, are often sought after as a source of needed capital investment. TRUE


Type: Knowledge

12. (p. 169-170) Foreign companies are usually not affected by changes in nationalistic feelings in the countries where they operate. FALSE


Type: Application

13. (p. 169) A good illustration of nationalistic feelings that can cause riffs between allies is the one that occurred between France and the United States over the Iraq/U.S. war. TRUE

Difficulty: Easy

Type: Comprehension


1-131

14. (p. 169) Three hot issues in 2008 were the undervalued Chinese currency, the ban on beef imports into Japan, and Chinese subsidies in apparent violation of WHO rules. TRUE Difficulty: Moderate

Type: Knowledge

15. (p. 169) Confiscation (as a political risk) is the seizing of a company's assets without payment. TRUE

Difficulty: Easy

Type: Knowledge

16. (p. 169) Expropriation occurs when a host country gradually cause the transfer of foreign investment to national control and ownership through a series of government decrees by mandating local ownership and greater national involvement in a company's management. FALSE

Difficulty: Hard

Type: Knowledge

17. (p. 170) Exchange controls stem from shortages of foreign exchange held by a country. TRUE


Type: Knowledge

18. (p. 171) As an example of what are called local-content laws NAFTA requires 62 percent local content for all cars coming from member countries. TRUE


Type: Application


1-132

19. (p. 171) Taxes are always considered as a political risk by foreign and domestic investors. FALSE Difficulty: Hard

Type: Knowledge

20. (p. 172) Political sanctions have proved to be a sure-fire method of controlling outlaw nations. FALSE


Type: Comprehension

21. (p. 172) Political and social activists (PSAs) and nongovernmental organizations (NGOs) almost always interrupt the normal flow of trade. FALSE


Type: Comprehension

22. (p. 174) Nongovernment organizations (NGOs) sometimes use foreign companies and their personnel as pawns in domestic disputes. FALSE


Type: Knowledge

23. (p. 173) The newest form of terrorism is called information terrorism because it prevents Third World countries from receiving information. FALSE


Type: Comprehension


1-133

24. (p. 174-175) The authors state that there is reason to believe that international warfare is fast becoming obsolete. TRUE Difficulty: Moderate

Type: Knowledge

25. (p. 176) A good illustration of a product class that is likely to be politically sensitive is one that has an impact on exchange rates. TRUE


Type: Comprehension

26. (p. 179) Relationships between governments and multinational corporations (MNCs) are generally positive if the investment contributes to the welfare of political leaders. FALSE


Type: Application

27. (p. 180) One of the methods for reducing political vulnerability and risk is to license products, services, or technology. TRUE


Type: Application

28. (p. 180) Planned domestication is a policy that rarely has a positive impact on political vulnerability or risk. FALSE


Type: Application



1-134

29. (p. 162) When the United States and the European Union get into trade disputes, where do both sides go to settle the matter? A. The United Nations B. The World Court C. The Organization of American States D. The World Trade Organization E. The North Atlantic Treaty Organization Difficulty: Moderate

Type: Application

30. (p. 161, Global Perspective) When the World Trade Organization attempted to settle what was called a "banana war," what was the outcome? A. The European Union won and received payments from the United States. B. The matter was declared a draw. C. Both sides in the matter were instructed to cease and desist. D. The WTO ruled in favor of the United States, however, the EU ignored the ruling. E. The WTO ruled in favor of the United States and the matter was ended.

Difficulty: Hard

Type: Application

31. (p. 162) In the context of international law, a _____________ state is independent and free from all external control. A. bounded B. sovereign C. legal D. free-born E. neutral

Difficulty: Easy

Type: Knowledge


1-135

32. (p. 162) A sovereign state, in the context of international law, has all of the following characteristics EXCEPT: A. is obligated to be a member of the United Nations. B. is independent. C. enjoys full legal equality with other states. D. governs its own territory. E. is free from all external control. Difficulty: Moderate

Type: Comprehension

33. (p. 162) __________ refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. A. Sovereignty B. Government C. A cartel D. An international partnership E. A trade pact


Type: Knowledge

34. (p. 164) The ideal political climate for a multinational firm is: A. a country where there are no laws. B. a country where favors can be purchased cheaply. C. a stable, friendly government. D. a government where absolute power is a reality. E. an authoritarian government that can be dealt with through non-legal channels.


Type: Comprehension


1-136

35. (p. 164) At the top of the list of political issues concerning foreign businesses is the: A. ruling party of a country. B. the political history of a country. C. the voting process of a country. D. the court system of a country. E. the stability or instability of prevailing government policies. Difficulty: Moderate

Type: Comprehension

36. (p. 165) The five main causes of instability in international markets include trade disputes and all of the following EXCEPT: A. some forms of government seem to be inherently unstable B. changes in political parties C. nationalism D. U.S. domestic political policies E. animosity targeted toward specific countries


Type: Knowledge

37. (p. 163) The proposed purchase of Unocal by the Chinese national oil company was opposed by the U.S. __________. A. because the offer was unrealistically low B. as retaliation for not allowing similar purchases in China by American firms C. because Germany had proposal a high offer D. as a threat to United States' soverignty E. because China could divert oil from Unocal to China


Type: Knowledge


1-137

38. (p. 165) The only country that precludes women from voting and appears to be still completely in the dark ages with regards to suffrage. A. Croatia B. Iran C. Bolivia D. Saudi Arabia E. Venezuela Difficulty: Moderate

Type: Knowledge

39. (p. 165-166) Which of the following is NOT one of the common forms of government? A. democracy B. aristocracy C. oligopoly D. monarchy E. dictatorship

Difficulty: Hard

Type: Knowledge

40. (p. 164) The election of Vicente Fox as President of Mexico was an example of: A. overthrowing a corrupt regime. B. peaceful political change. C. U.S. interference in international politics. D. cultural adjustment to global expectations. E. corrupt national election.


Type: Knowledge


1-138

41. (p. 166-167) For most countries around the world it is important for international marketers to know the philosophies of all the major political parties, since one them might become dominant and affect: A. the status of WTO control. B. the overall business climate. C. global warming. D. international support for the United Nations. E. liberal or conservative. Difficulty: Hard

Type: Application

42. (p. 167) An intense feeling of national pride and unity, an awakening of a nation's people to pride in their country is called: A. socialism. B. communism. C. fascism. D. nationalism. E. polarism.

Difficulty: Easy

Type: Knowledge

43. (p. 167) The phrase "Buy American" would most closely be associated with which of the following? A. Socialism B. Jingoism C. Nationalism D. Mercantilism E. Polarism


Type: Application


1-139

44. (p. 169) No nation-state will tolerate penetration by a foreign company into its market if it perceives a(n) ______________ its well-being. A. sympathy for B. synergistic relationship to C. economic boost D. threat to E. profitable outcome Difficulty: Easy

Type: Knowledge

45. (p. 169) With respect to political risk that can be faced by a company seeking to invest abroad, which of the following presents the most severe political risk? A. confiscation B. expropriation C. domestication D. exchange controls E. local-content laws


Type: Application

46. (p. 169) The seizing of a company's assets without payment is called: A. confiscation. B. expropriation. C. domestication. D. exchange controls. E. local-content laws.


Type: Application


1-140

47. (p. 169) When a government seizes an investment of a foreign investor but some reimbursement for the assets is made, the government is following a process called: A. confiscation. B. expropriation. C. domestication. D. exchange controls. E. local-content laws. Difficulty: Moderate

Type: Knowledge

48. (p. 169) Often an expropriated investment becomes ____________ (i.e., it becomes a government-run entity). A. democratized B. domesticated C. nationalized D. prioritized E. socialized

Difficulty: Easy

Type: Application

49. (p. 169-170) _____________ occurs when host countries gradually cause the transfer of foreign investment to national control and ownership through a series of government decrees by mandating ownership and greater national involvement in a company's management. A. Confiscation B. Expropriation C. Domestication D. Exchange controls E. Local-content laws


Type: Knowledge


1-141

50. (p. 169-170) The government in Chile recently informed Clint Travis' company that his retail grocery chain in Chile would have to be gradually turned over to the people of Chile by the year 2050. Additionally, starting next year fifty percent of the board of directors of the Chilean operation must be Chileans. Which of the following political risk actions is Mr. Travis facing in Chile? A. Confiscation B. Expropriation C. Domestication D. Nationalism E. Dictatorship Difficulty: Moderate

Type: Application

51. (p. 170) The national telephone company in Mexico was privatized; this meant that the Mexican government sold its operation to _________________. A. investors B. regional state regulatory groups. C. democrats D. outsourcers. E. foreigners.


Type: Knowledge

52. (p. 170-171) All of the following are considered to be economic risks that can be faced by international companies EXCEPT: A. exchange controls. B. local-content laws. C. import restrictions. D. tax controls. E. production costs.


Type: Comprehension


1-142

53. (p. 170) If there is a substantial amount of capital leaving the country, the country is likely to implement which of the following to control the situation? A. exchange controls B. local-content laws C. import restrictions D. tax controls E. price controls Difficulty: Moderate

Type: Comprehension

54. (p. 170) In Thailand, it is required that any milk sold in the country must contain at least 50 percent milk from Thai dairy farmers. This would be an illustration of which of the following economic risks faced by international producers of milk? A. exchange controls B. local-content laws C. import restrictions D. tax controls E. price controls

Difficulty: Easy

Type: Application

55. (p. 171) When Toyota Motor Company built automobile manufacturing plants in Tennessee and Ohio, it faced economic risks associated with _____________. This occurred because the United States required that 50 percent of all parts used in an automobile constructed in the United States must contain parts that were manufactured in the United States. The United States wanted to promote it "Buy American" policy. A. exchange controls. B. local-content laws. C. import restrictions. D. tax controls. E. price controls.

Difficulty: Hard

Type: Application


1-143

56. (p. 171) Since the government of Nigeria is strapped for cash, it has decided to tax all foreign investments (such as oil production equipment) by up to forty percent of appraised value. The Nigerian government has found that this is the handiest and quickest means of finding operating funds. This form of economic risk is associated with which of the following? A. exchange controls B. local-content laws C. import restrictions D. tax controls E. price controls Difficulty: Moderate

Type: Application

57. (p. 171) In North Korea there is little foreign investment. One of the reasons is the severe application of ________________. Any foreign investor or producer is required to sell its products at prices stated by the North Korean government rather than letting market value and demand determine prices. A. exchange controls B. local-content laws C. import restrictions D. tax controls E. price controls

Difficulty: Easy

Type: Application

58. (p. 172) Stopping or refusing to trade with another nation for political reasons is called: A. activism. B. boycotting. C. confiscation. D. democratization. E. expropriation.

Difficulty: Easy

Type: Knowledge


1-144

59. (p. 172) Which of the following statements most accurately describes the impact of boycotts? A. In general, these policies normally control and rectify situations that caused the boycotts. B. Boycotts are generally not very successful. C. Boycotts are illegal. D. The United Nations encourages boycotts as a means of settling a dispute as opposed to armed conflict. E. Boycotts are least effective against consumer goods. Difficulty: Moderate

Type: Application

60. (p. 173) Crossing Borders 6.2 "Trade Does Not Work as a Stick, Only as a Carrot" suggests: A. Thomas Jefferson understood how to get the French and English to stop fighting. B. The U.S. was able to get the Soviet Union out of Afghanistan by boycotting the Moscow Olympics. C. The U.S. needs to increase its embargo against Myanmar. D. Coercion does not work, exchange does. E. Industrial goods trade is less successful than consumer goods trade.

Difficulty: Hard

Type: Knowledge

61. (p. 174) Which of the following would NOT be the best illustration of a NGO (nongovernmental organization) group? A. Red Crescent B. Red Cross C. Amnesty International D. Oxfam E. FedEx

Difficulty: Easy

Type: Comprehension


1-145

62. (p. 174) Which of the following is NOT a common goal of terrorists? A. Use victims as pawns in political or social disputes. B. Develop military management capability. C. Inflict fear within a country. D. To generate funds E. To embarrass a government. Difficulty: Easy

Type: Comprehension

63. (p. 174) Why do terrorism experts predict multinational businesses will be targeted by terrorists more frequently? A. They are rich and they are powerful. B. They are capitalists and what they sell. C. They are less well defended and what they symbolize. D. They are destroy the environment. E. They are subterfuge for espionage agents.


Type: Knowledge

64. (p. 174) __________ is fast becoming obsolete; the greater threats to peace are civil strife and terrorism. A. International warfare B. Print media C. Patriotism D. International prejudice E. Religion

Difficulty: Hard

Type: Comprehension


1-146

65. (p. 175) The newest form of terrorism directed toward a peaceful world is: A. germ warfare. B. nuclear warfare. C. cyberterrorism. D. hate crimes. E. extortion. Difficulty: Easy

Type: Comprehension

66. (p. 176) Slammer, Melissa, and "Goner worm" are all examples of: A. viruses damaging the Internet B. politically sensitive products C. third-world diseases. D. hackers intent on attacking multinational businesses. E. new video games espousing Internet crime.


Type: Knowledge

67. (p. 177) Although some products are more vulnerable than others with regard to political sensitivity in foreign markets, ______________ have often been the lightning rods for groups opposed to foreign companies. A. grocery chains B. Wal-Mart stores C. fast-food restaurants D. clothing stores E. travel agencies

Difficulty: Hard

Type: Comprehension


1-147

68. (p. 176) Some products and issues are more politically sensitive in international trade than others. Which of the following would likely be LEAST the politically sensitive? A. the environment. B. exchange rates. C. national and economic security. D. space travel. E. publicly visible assets. Difficulty: Easy

Type: Comprehension

69. (p. 177) Brian is attempting to forecast political instability and help management identify and evaluate political events and their potential influence on current and future international business decisions. Brian is engaged in: A. political risk assessment. B. political security. C. democratization. D. risk abatement. E. quantification of risk.


Type: Knowledge

70. (p. 179) Relations between governments and multinational corporations are generally positive if: A. products impact national security. B. products are only directed toward the consumer sector. C. products are only directed toward the business sector. D. products can be purchased via the Internet. E. the investment makes tax contributions.


Type: Application


1-148

71. (p. 179) Relations between governments and multinational corporations are generally positive if investments: A. are tied to national security. B. are only oriented toward the consumer sector. C. are under $1 million. D. create jobs. E. do not involve extensive Internet business. Difficulty: Moderate

Type: Application

72. (p. 179) Relations between governments and multinational corporations are generally positive if investments do all of the following EXCEPT: A. transfers capital, technology, or skills. B. creates jobs. C. makes tax contributions. D. uses locally produced resources. E. is tied to national security.

Difficulty: Hard

Type: Application

73. (p. 179) Juliet is concerned with the potential for political harassment when her company enters a new international market. To reduce the risk of political harassment she will consider using _______________ to enter the market. A. importing B. sole-proprietorships C. multinational corporations D. joint ventures E. all of the above are equal with respect to political harassment

Difficulty: Easy

Type: Comprehension


1-149

74. (p. 179-181) All of the following would be considered to be strategies that multinational corporations can use to minimize vulnerability and risk EXCEPT: A. joint ventures. B. sole-proprietorship. C. expanding the investment base. D. planned domestication. E. licensing. Difficulty: Moderate

Type: Comprehension

75. (p. 180) Which of the following strategies minimizes political risks for the multinational corporation that wishes to expand into overseas markets? A. joint ventures B. licensing C. expanding the investment base D. planned domestication E. multi-facilities


Type: Comprehension

76. (p. 179-181) All of the following strategies can be effective in forestalling or minimizing the effect of a total takeover of a multinational corporation's holdings by a foreign government EXCEPT: A. joint ventures. B. licensing. C. expanding the investment base. D. advertising. E. planned domestication.


Type: Comprehension


1-150

77. (p. 180) The most effective solution to a situation where a foreign government is demanding local participation in a multinational corporation's business activities in the host country is: A. joint ventures. B. licensing. C. expanding the investment base. D. planned domestication. E. political payoffs. Difficulty: Moderate

Type: Comprehension

78. (p. 181) Which of the following best describes the U.S. government's policy toward multinational corporations that are confronted with situations where bribery is an issue? A. A bribe may be paid as long as it is not a domestic situation. B. A bribe is justified is if is the documented traditional practice in a country. C. A bribe may be paid in a foreign country if there is a tie to national security. D. It is illegal for a U.S. citizen to pay a bribe--period. E. The issue revolves around the customs of the country and each issue is decided separately.


Type: Application

79. (p. 181) The most important reason to encourage foreign investment is to: A. accelerate world peace. B. accelerate the development of an economy. C. accelerate the development of the Internet. D. stall the effects of communism and socialism. E. make profits.

Difficulty: Hard

Type: Comprehension


1-151

80. (p. 181) A cynical way to look at the motivation behind corporate social responsibility in general is its use as a __________ with foreign publics and governments. A. deception tool B. public relations image C. marketing ploy D. positioning guise E. bargaining chip Difficulty: Easy

Type: Knowledge

81. (p. 182) The principle U.S. agency that supports U.S. business abroad is the: A. State Department. B. Better Business Bureau. C. Department of Commerce. D. Department of Foreign Relations. E. Department of Defense.

Difficulty: Easy

Type: Knowledge


82. (p. 162) The term __________ refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members. sovereignty


Type: Knowledge

83. (p. 164) At the top of the list of political issues concerning foreign businesses is the ___________ of prevailing government policies. stability (instability)

Difficulty: Hard

Type: Comprehension


1-152

84. (p. 163) Foreign investment can be perceived as a threat to __________. sovereignty Difficulty: Easy

Type: Knowledge

85. (p. 165) __________ is the only country that appears to be still completely in the dark ages with regards to suffrage. Saudi Arabia

Difficulty: Easy

Type: Knowledge

86. (p. 165) Socioeconomic and political change are sometimes caused by a surge in ________________. nationalistic pride


Type: Knowledge

87. (p. 167) ___________ can best be described as an intense feeling of national pride and unity, an awakening of a nation's people to pride in their country. Nationalism

Difficulty: Easy

Type: Knowledge

88. (p. 167) Feelings of ___________ are expressed in a variety of ways such as a call to "buy our country's products only" or "Buy American." nationalism

Difficulty: Easy

Type: Application


1-153

89. (p. 169) ___________ is the seizing of a company's assets without payment. Confiscation Difficulty: Moderate

Type: Knowledge

90. (p. 169) __________ occurs when a government seizes an investment but some reimbursement for the assets is made. Expropriation


Type: Knowledge

91. (p. 169) When host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees by mandating local ownership and greater national involvement in a company's management, _____________ has occurred. domestication

Difficulty: Hard

Type: Knowledge

92. (p. 170) _________ controls stem from shortages of foreign exchange held by a country. Exchange

Difficulty: Easy

Type: Comprehension

93. (p. 170) __________________ laws require any product sold within a country to contain at least some locally made parts. Local-content

Difficulty: Easy

Type: Knowledge


1-154

94. (p. 171) _________ may be classified as a political risk when used as a means of controlling foreign investments. In such cases, they are raised without warning and in violation of formal agreements. Taxes Difficulty: Moderate

Type: Comprehension

95. (p. 172) When country initiates a _________________ it stops all trade between itself and another country. boycott


Type: Knowledge

96. (p. 172) Greenpeace actions to bring attention to environmental issues are an illustration of an organization that would be labeled as a __________ (PSA). political and social activist

Difficulty: Hard

Type: Comprehension

97. (p. 175-176) A virus which overload websites with a flood of electronic messages is considered to be a form of terrorism called _______________. cyberterrorism

Difficulty: Easy

Type: Application

98. (p. 175) According to the text, the greater threats to peace and commerce for the 21st Century remain __________ and __________. civil strife; terrorism

Difficulty: Easy

Type: Knowledge


1-155

99. (p. 180) Many companies engage in _______________, lobbying and other efforts to avoid potential political risks in countries where they do business. political bargaining Difficulty: Moderate

Type: Comprehension

100. (p. 179) A ____________ with locals helps to minimize anti-MNC feelings and limit financial exposure. joint venture


Type: Comprehension

101. (p. 180) A ______________ strategy minimizes or eliminates almost all risks international marketing risks. licensing

Difficulty: Easy

Type: Comprehension

102. (p. 180) _______________ is a gradual process of participating with nationals in all phases of company operations resulting in gradual withdrawal of the company from an ownership and control position. Planned domestication

Difficulty: Easy

Type: Comprehension

Essay Questions


1-156

103. (p. 162) Describe the characteristics of a sovereign state.

A sovereign state is independent and free from all external control; enjoys full legal equality with other states; governs it own territory; selects its own political, economic, and social systems; and has the power to enter into agreements with other nations.


Type: Comprehension

104. (p. 167) Describe the concept of nationalism.

Nationalism can best be described as an intense feeling of national pride and unity, an awakening of a nation's people to pride in their country. This pride can take an anti-foreign business bias, and minor harassment and controls of foreign investment are supported, if not applauded.


Type: Comprehension

105. (p. 169-170) Discuss and compare the terms confiscation, expropriation, and domestication.

Confiscation is the seizing of a company's assets without payment. Expropriation occurs where the government seizes and investment but some reimbursement of assets is made. Domestication occurs when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees by mandating local ownership and greater national involvement in a company's management. For additional information see page 169-170.


Type: Knowledge


1-157

106. (p. 170-171) List and briefly discuss the various economic risks that international companies must face when they seek to market abroad.

The text lists six economic risks--exchange controls, local-content laws, import restrictions, tax controls, price controls, and labor problems. See pages 170-171 for analysis and discussion of the various economic risks.

Difficulty: Hard

Type: Comprehension

107. (p. 179) Local governments are usually receptive to MNC's investment when the MNC's actions are perceived as beneficial. What are the five types of benefits most local governments consider beneficial?

The five situations are if the investment: (1) improves the balance of payments by increasing exports or reducing imports through import substitution; (2) uses locally produced resources; (3) transfers capital, technology, or skills; (4) creates jobs; or (5) makes tax contributions.

Difficulty: Hard

Type: Comprehension

108. (p. 169-170) Brazil would like to increase its control and ownership of foreign investments in its country. However, Brazil does not want to cut off or discourage foreign investment. Cite and describe a political risk strategy that Brazil could follow that would meet the aforementioned objective.

Brazil could choose domestication (planned domestication). Domestication occurs when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees by mandating local ownership and greater national involvement in a company's management. For additional information see pages 169-170.

Difficulty: Hard

Type: Application


1-158

109. (p. 179) Richard Branch is considering a multi-million dollar investment in Chile. He hopes that the investment will be positively received by the Chilean government. He does not want anti-MNC feelings to block the deal. Relations between MNC and foreign investors can be positive. What actions should Mr. Branch consider to ensure that his investment offer would be positively received by the Chilean government?

According to information presented in the text, Mr. Branch should make sure that his investment provides at least one of the following benefits to the Chilean government and/or the people of Chile--benefits should (1) improve the balance of payments by increasing exports or reducing imports through import substitution; (2) use locally produced resources; (3) transfer capital, technology, or skills; (4) create jobs; or (5) make tax contributions.

Difficulty: Hard

Type: Application

Chapter 07

The International Legal Environment: Playing by the Rules


1. (p. 186) If a company plans to market products abroad, securing expert legal advice is a wise decision because of the complicated nature of international law. TRUE

Difficulty: Easy

Type: Comprehension

2. (p. 186) The form of law found in the United States and England is classified as civil or code law. FALSE


Type: Knowledge


1-159

3. (p. 186) The form of law found in Germany, France, and Japan is called civil or code law. TRUE


Type: Knowledge

4. (p. 187) Common law is based on an all-inclusive system of written rules of law. FALSE


Type: Knowledge


1-160

5. (p. 187) Under code law, the legal system is generally divided into three separate codes: commercial, civil, and criminal. TRUE Difficulty: Easy

Type: Knowledge

6. (p. 188) The basis for Islamic Law is interpretation of the Koran. TRUE

Difficulty: Easy

Type: Knowledge

7. (p. 189) Under Marxist-socialist tenets (law) it would be illegal to pay interest on a loan. FALSE

Difficulty: Hard

Type: Knowledge

8. (p. 190) The World Court can settle disputes between governments. TRUE

Difficulty: Easy

Type: Comprehension

9. (p. 190) When dealing with foreign countries, a domestic marketer should refer to "international commercial law" for guidance. FALSE


Type: Comprehension


1-161

10. (p. 191) Most disputes that arise in commercial transactions are settled informally. TRUE Difficulty: Easy

Type: Comprehension

11. (p. 191) Another term for conciliation is mediation. TRUE

Difficulty: Easy

Type: Knowledge

12. (p. 191) If conciliation is not used to settle a difference in an international business dispute or an agreement cannot be reached, the next step is litigation. FALSE

Difficulty: Hard

Type: Comprehension

13. (p. 193) Mick Masters had an arbitration clause added to a contract between his Australian company and the German government because he knows that enforcing an arbitration agreement is relatively easy and almost always binding in international law disputes. FALSE


Type: Application

14. (p. 194) One of the deterrents to litigation with respect to disputes in the international business arena is the fear of creating a poor image and damaging public relations. TRUE


Type: Comprehension


1-162

15. (p. 194-195) The piracy industry has grown so sophisticated that many counterfeit goods are almost impossible to distinguish from the original. TRUE Difficulty: Easy

Type: Comprehension

16. (p. 194) To prevent piracy companies are developing new technologies that make it impossible for counterfeiters to overcome. FALSE

Difficulty: Easy

Type: Knowledge

17. (p. 195) China, Russia, Japan, and Vietnam have made major progress in reducing software piracy. TRUE

Difficulty: Easy

Type: Knowledge

18. (p. 197) In the United States, a common-law country, ownership of intellectual property rights is established by registration versus prior use (whoever registers first is considered to be the rightful owner). FALSE

Difficulty: Hard

Type: Application

19. (p. 197) In many code-law countries, ownership of intellectual property rights is established by registration rather than by prior use--the first to register a trademark or other property right is considered to be the rightful owner. TRUE


Type: Application


1-163

20. (p. 201) All countries have laws regulating marketing activities in promotion, product development, labeling, pricing, and channels of distribution. TRUE Difficulty: Moderate

Type: Comprehension

21. (p. 200) A creative non-traditional way for companies with intellectually property to make money in China is to employ the oldest strategy of all, i.e., charging what the market will bear. TRUE


Type: Knowledge

22. (p. 203) In Germany, any implied or stated superiority in comparison advertisements is not subject to legal challenges. FALSE

Difficulty: Easy

Type: Knowledge

23. (p. 204) The United States passed the most stringent green marketing laws that regulate the management and recycling of packaging waste. FALSE


Type: Knowledge

24. (p. 205) Many countries have modeled their antitrust laws after U.S. laws. TRUE


Type: Comprehension


1-164

25. (p. 205) Leaving the political boundaries of a home country with a business venture has been interpreted to mean that a company is then exempt from home-country laws because business is not being conducted in that home-country. FALSE Difficulty: Moderate

Type: Comprehension

26. (p. 206) The U.S. Foreign Corrupt Practices Act (FCPA) makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. TRUE

Difficulty: Easy

Type: Knowledge

27. (p. 207) U.S. firms, their subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country in which the sale is considered by the U.S. government to affect national security. TRUE


Type: Comprehension

28. (p. 209) One of the purposes of U.S. antitrust legislation is to protect American export and investment opportunities against any privately imposed restrictions. TRUE


Type: Comprehension

29. (p. 209) In general, U.S. firms are allowed to participate in foreign-based boycotts as long as the U.S. firm can demonstrate that they would loose business in the foreign country if they did not participate in the boycott. FALSE

Difficulty: Hard

Type: Comprehension


1-165


30. (p. 186) The _________ of a legal system profoundly affects how the law is written, interpreted, and adjudicated. A. foundation B. legality C. cost D. religious ties E. politics

Difficulty: Easy

Type: Comprehension

31. (p. 186) Which of the following forms of law was derived from English law? A. code law B. common law C. religious law D. civil law E. universal law


Type: Knowledge

32. (p. 186) Which of the following types of law is primarily found in the United States, England, Canada, and other countries once under English influence? A. code law B. common law C. religious law D. civil law E. universal law


Type: Knowledge


1-166

33. (p. 186) Another term for code law is: A. business law B. common law C. religious law D. civil law E. universal law Difficulty: Moderate

Type: Knowledge

34. (p. 186) Civil or code law was derived from which of the following? A. English law B. economic law C. Greek law D. Persian law E. Roman law


Type: Knowledge

35. (p. 197) Which of the following countries has ownership of IP rights established by prior use—whoever can establish first use is typically considered the rightful owner? A. Japan B. Brazil C. Saudi Arabia D. France E. United States

Difficulty: Hard

Type: Application


1-167

36. (p. 187) The basis for which of the following is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings? A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition Difficulty: Moderate

Type: Knowledge

37. (p. 187) If law is founded on tradition, past practices, legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings, it is called: A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition


Type: Knowledge

38. (p. 187) Which of the following is based on an all-inclusive system of written rules of law that is generally divided into commercial, civil, and criminal sections? A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition

Difficulty: Hard

Type: Knowledge


1-168

39. (p. 187) ___________ is considered complete as a result of catchall provisions found in most of this type of law's system. A. Common law B. Code law C. Islamic law D. Marxist-socialist tenets E. legal tradition Difficulty: Moderate

Type: Knowledge

40. (p. 188) The overriding objective of ___________ is social justice. A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition

Difficulty: Hard

Type: Knowledge

41. (p. 188) The basis of ___________ is the Koran. A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition

Difficulty: Easy

Type: Knowledge


1-169

42. (p. 188) Among the unique aspects of Islamic law is the prohibition against the payment of: A. taxes. B. profits. C. interest. D. equity. E. accounting fees. Difficulty: Hard

Type: Knowledge

43. (p. 189) Under _____________, the legal system is subordinate to prevailing economic conditions. A. common law B. code law C. Islamic law D. Marxist-socialist tenets E. legal tradition


Type: Knowledge

44. (p. 189) Because of political changes in the late twentieth century, which of the following countries has had to build from scratch an entire commercial legal system? A. France B. Germany C. Taiwan D. Russia E. Saudi Arabia


Type: Application


1-170

45. (p. 190) Which of the following supranational system of laws governs world commerce today? A. U.S. law B. English law C. traditional Roman law D. code law as explained by French courts E. there is no supranational system of laws that governs behavior Difficulty: Hard

Type: Application

46. (p. 190) The World Court can adjudicate disputes between which of the following? A. disputes between governments B. disputes between a company and a government C. disputes between two companies D. disputes between a private citizen and a government E. the World Court does not adjudicate in any of the above matters


Type: Comprehension

47. (p. 190) In international commercial disputes, jurisdiction is generally determined in any of the following ways EXCEPT: A. on the basis of the money involved in a contract (who gains the most). B. on the basis of jurisdiction clauses included in contracts. C. on the basis of where a contract was entered into. D. on the basis of where the provisions of the contract were performed. E. on the basis of legal documents that define the business transaction.

Difficulty: Hard

Type: Comprehension


1-171

48. (p. 191) In settling international commercial transaction disputes, which of the following methods accounts for the majority of settlements? A. conciliation B. informal settlement C. arbitration D. litigation E. coercion Difficulty: Hard

Type: Comprehension

49. (p. 191) Another name for conciliation as a means for settling a dispute in international commerce is: A. mediation. B. informal settlement. C. arbitration. D. litigation. E. coercion.


Type: Knowledge

50. (p. 191) A nonbonding agreement between parties to resolve disputes by asking a third party to mediate differences is called: A. conciliation. B. informal settlement. C. arbitration. D. litigation. E. coercion.


Type: Knowledge


1-172

51. (p. 191) Ralph Richards has been attempting to solve a problem that his company has with a contract default by the Dutch government. He has tried conciliation but the two parties could never find any common ground on which to begin a fruitful negotiation for settlement. Which of the following will most likely be the course of action that both of the two parties will try next? A. mediation B. informal settlement C. arbitration D. litigation E. coercion Difficulty: Moderate

Type: Application

52. (p. 191) In the usual ______________ procedure, parties select a disinterested and informed party or parties to sever as a referee to determine the merits of the case and make a judgment that both parties agree to honor. A. conciliation B. informal settlement C. arbitration D. litigation E. coercion


Type: Knowledge

53. (p. 193) The first step that most arbitrators try to resolve a dispute between two parties is to attempt: A. conciliation. B. informal settlement. C. fault finding or wrong doing. D. litigation. E. coercion.


Type: Comprehension


1-173

54. (p. 193) Most arbitration is successful, but success depends on the: A. amount of the judgment. B. personalities of the complainants. C. nationalities of the complainants. D. willingness of both parties to accept the arbitrator's rulings. E. amount of money involved in the dispute. Difficulty: Hard

Type: Comprehension

55. (p. 193) Which of the following is usually placed in the arbitration clause that is becoming standard in many international contracts? A. the names of arbitrators to be involved. B. the place of the arbitration (city and/or country). C. the titles of the arbitrators to be involved. D. the age of the arbitrators to be involved. E. the nationalities of the arbitrators.


Type: Comprehension

56. (p. 193) Arbitration clauses require agreement on two counts. Which of the following is one of those accounts? A. The complainants agree on who is right and who is wrong. B. The complainants agree on litigation issues. C. The complainants agree to abide by the awards resulting from the arbitration. D. The complainants agree to not hire legal counsel. E. The complainants agree to hear the case before the World Court if the arbitration fails.

Difficulty: Easy

Type: Application


1-174

57. (p. 193) When all else fails in an international commercial dispute, the final step is: A. conciliation. B. to encourage one's government to force the other party to comply. C. to find fault or wrong doing as a public relations device. D. litigation. E. coercion. Difficulty: Moderate

Type: Comprehension

58. (p. 194) All of the following are considered to be deterrents to litigation EXCEPT: A. fear of creating a poor image and damaging public relations. B. fear of unfair treatment in a foreign court. C. difficulty in collecting a judgment that may otherwise have been collected in a mutually agreed settlement through arbitration. D. the relatively low cost and time required when bringing legal action. E. loss of confidentiality.


Type: Comprehension

59. (p. 194) One authority suggests that settlement of every dispute should follow four steps. Which of the following is considered to be the first step in this process? A. conciliate B. arbitrate C. coerce D. try to placate the injured party E. litigate

Difficulty: Easy

Type: Comprehension


1-175

60. (p. 196) One counterfeiting problem for international marketers is: A. the ease with which consumers can tell the difference between real and counterfeit products. B. the theft of products by pirates during shipping. C. government regulations legitimizing counterfeiting. D. collusion between contract manufacturers and illegitimate sellers. E. the worldwide availability of duplication software. Difficulty: Hard

Type: Application

61. (p. 194) In the constant vigilance and battle against counterfeiting and piracy, companies are increasingly developing new __________. A. regulations B. products C. technologies D. strategies E. licenses

Difficulty: Easy

Type: Knowledge

62. (p. 195) According to the text Vietnam, Russia, Japan and __________ made major progress in reducing software piracy from 2003 to 2006. A. Tunisia B. India C. Iran D. China E. Myanmar

Difficulty: Easy

Type: Knowledge


1-176

63. (p. 194) Companies spend millions of dollars establishing brand names and trademarks primarily to symbolize: A. U.S. marketing power. B. environmentally-friendly production processes. C. local content. D. consistency with generic products. E. quality. Difficulty: Hard

Type: Application

64. (p. 195-196) Which of the following commonly counterfeited products has the potential for doing the greatest harm to the consuming public? A. toys B. CDs C. pharmaceuticals D. software E. clothing

Difficulty: Easy

Type: Knowledge

65. (p. 196) A famous case occurred in Japan where a Japanese business registered McDonald's world famous trademark before McDonald's did and was given permission to use the trademark. McDonald's eventually got the trademark back after a lengthy court battle and a monetary award to the Japanese company. McDonald's learned that trademarks registered in the United States: A. must be ratified by the United Nations trademark protection agency. B. are worthless. C. are protected in the European Union under the Geneva Convention but not in Japan. D. need to be registered with the World Court. E. are not protected in other countries.

Difficulty: Hard

Type: Application


1-177

66. (p. 197) In a common-law country, ownership of intellectual property rights is established by: A. prior use. B. registration. C. design proof. D. the "common sense mandate." E. the "golden rule of property." Difficulty: Moderate

Type: Knowledge

67. (p. 197) In a common-law country, ownership of intellectual property rights is established by "prior use versus registration." What does the phrase "prior use versus registration" mean? A. One must register a trademark to gain rightful ownership of it. B. One must pay for the right to own a trademark. C. Whoever can establish first use of a trademark is typically considered the rightful owner. D. Ownership of a trademark can only be established in a court of law. E. Ownership of a trademark is global and is established by the United Nations.


Type: Application

68. (p. 197) Which of the following international conventions was established to recognize intellectual property rights? A. the Paris Convention B. the Munich Agreement C. the Tokyo Convention D. the Eurasian Convention E. the Kyoto Protocol

Difficulty: Hard

Type: Knowledge


1-178

69. (p. 197) Which of the following conventions is responsible for the promotion of the protection of intellectual property rights? A. the Paris Convention B. the Madrid Arrangement C. the Tokyo Agreement D. the Eurasian Convention E. The United Nation's WIPO Difficulty: Hard

Type: Knowledge

70. (p. 201) ALL countries have laws regulating all of the following marketing activities EXCEPT: A. promotion B. product development C. labeling D. channels of distribution E. production volume

Difficulty: Easy

Type: Knowledge

71. (p. 204) Which of the following acts developed by the European Union erases legal and trade differences that have existed for decades between the member nations? A. European Sanctity Act B. European Antitrust Act C. European Unification Act D. Single European Market Act E. No European Union Act exists

Difficulty: Hard

Type: Comprehension


1-179

72. (p. 200) Which of the following is NOT one of the traditional remedies by American companies to protect intellectual property: A. threats to withdraw products from country B. complaints to U.S. government and WTO C. negotiation and dispute resolution D. preventative steps such as local representation E. complaints to country's government Difficulty: Easy

Type: Comprehension

73. (p. 200) A creative way for intellectually property rich companies to make money in China is __________. A. enlist the Chinese government to sell their products B. to charge what the market will bear C. to sell older instead of the latest versions of their products D. to sell only in select populated areas, i.e., major cities E. to provide an extreme discount on next purchase


Type: Comprehension

74. (p. 204) Which of the following countries has enacted the most stringent green marketing laws that regulate the management and recycling of packaging waste? A. Britain B. France C. Germany D. United States E. Japan

Difficulty: Hard

Type: Comprehension


1-180

75. (p. 205) Which of the following is NOT one of the areas of antitrust enforcement in the European Union and elsewhere? A. full-line forcing B. price discrimination C. supply restrictions D. competitiveness councils E. antimonopoly Difficulty: Easy

Type: Comprehension

76. (p. 206) The question of jurisdiction of U.S. law over acts committed outside the territorial limits of the country has been settled by the courts through application of a long-established principle of international law called the: A. the right of imminent domain. B. the legal transfer of power. C. the rights of foreign powers and citizens. D. the objective theory of jurisdiction. E. the McNeil Principle of International Law.

Difficulty: Hard

Type: Knowledge

77. (p. 206) The ________________ of the United States makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. A. Constitution B. Bill of Rights C. Foreign Corrupt Practices Act D. Best Practices Act E. International Codes of Law


Type: Knowledge


1-181

78. (p. 207) U.S. firms, their foreign subsidiaries, or foreign firms that are licensees of U.S. technology cannot sell a product to a country in which the sale is considered by the U.S. government to affect: A. the competitive balance of world trade. B. the competitive balance of free competition inside the U.S. C. relationship with the world community. D. the overall balance of payments of the United States. E. the national security of the United States. Difficulty: Easy

Type: Application

79. (p. 209) Antitrust enforcement has two purposes in international commerce. Which of the following accurately describes one of those purposes? A. Protection of American consumers by ensuring that they benefit from products and ideas produced by foreign competitors as well as by domestic competitors. B. Protection of the trade balance of the United States. C. Protection of the U.S. dollar abroad. D. Protection of the right to compete abroad. E. Protection of American consumers from contaminated foreign food products.


Type: Comprehension

80. (p. 209) Which of the following U.S. government agencies oversees antitrust enforcement in international commerce? A. Department of State B. Department of Justice C. Department of Commerce D. Department of Defense E. Department of Home Land Security

Difficulty: Hard

Type: Application


1-182

81. (p. 209) Under the Antiboycott Law, U.S. companies are forbidden to participate in any unauthorized foreign boycott. Which of the following situations brought about the Antiboycott Law in the U.S.? A. The boycott of Cuba by the U.S. B. The boycott of South Africa by the world community. C. The boycott of Israel by the Arab League. D. The boycott of Iraq by the United States. E. The boycott of the U.S. by the U.S.S.R. (the wheat embargo). Difficulty: Hard

Type: Application

82. (p. 210) Even though each nation is considered to be sovereign, many nations consider the extraterritoriality of U.S. laws to be a threat. Which of the following best describes the most realistic of these threats as interpreted by foreign governments? A. the threat to annex a foreign country. B. the threat to boycott a foreign country. C. the threat to go to war with a foreign country. D. the threat of influencing a foreign government through American government policy on their economies through U.S. multinationals E. the threat of germ warfare


Type: Knowledge

83. (p. 211) According to the text, _____________ buy and register descriptive nouns, geographic names, ethnic groups, pharmaceutical substances and other similar descriptors and hold them until they can be sold at an inflated price. A. cyberterrorists B. cybersquatters C. cyberpirates D. cybermarkers E. cyberghosts


Type: Knowledge



1-183

84. (p. 186) Civil or code law was derived from _________ law. Roman Difficulty: Moderate

Type: Comprehension

85. (p. 187) The basis for __________ law is tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. common

Difficulty: Easy

Type: Knowledge

86. (p. 186) Another term for civil law is __________ law. code

Difficulty: Easy

Type: Knowledge

87. (p. 188) The basis for Islamic law is interpretation of the _________. Koran

Difficulty: Easy

Type: Knowledge

88. (p. 189) Countries moving away from Marxist-socialist tenets (laws) need to establish business-related laws regarding private ownership, ____________, and ___________. contracts; due process

Difficulty: Easy

Type: Knowledge


1-184

89. (p. 191) Another term for conciliation is __________. mediation Difficulty: Moderate

Type: Knowledge

90. (p. 191) If two parties cannot reach agreement through conciliation, the next step to resolve the dispute is _________. arbitration


Type: Comprehension

91. (p. 193) The final step to solving a dispute (if all other steps have failed) is __________. litigation

Difficulty: Easy

Type: Comprehension

92. (p. 194) Companies spend considerable sums creating brand names and trademarks symbolizing_________________. quality

Difficulty: Hard

Type: Knowledge

93. (p. 194) To prevent piracy companies are developing new __________ but counterfeiters are relentless in overcoming the most sophisticated security measures. technologies


Type: Knowledge


1-185

94. (p. 197) In common law countries ownership of intellectual property rights is established by ___________________. prior use versus registration Difficulty: Moderate

Type: Knowledge

95. (p. 204) Legislation that addresses environmental issues is called __________ legislation. green (green marketing)

Difficulty: Easy

Type: Comprehension

96. (p. 206) In the United States, the ______________ Act makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. Foreign Corrupt Practices Act


Type: Knowledge

97. (p. 209) The U.S. enforcement agency that oversees antitrust laws as they apply to international commerce is the Department of ___________. Justice


Type: Knowledge

98. (p. 210) When U.S. multinational corporations (MNCs) subsidiaries are prohibited from making a sale in violation of the U.S. _________ Act, host governments react with hostility toward the extraterritorial application of U.S. foreign policy. Trading with the Enemy

Difficulty: Hard

Type: Application


1-186

99. (p. 211) Jake Lloyd's company specializes in buying and registering descriptive nouns, geographic names, ethnic groups, pharmaceutical substances and other similar descriptors and holding them until they can be sold at an inflated price. Though Jake may not like the description of his company, his company is called a cyber ______ by others in business. (cyber)squatter Difficulty: Moderate

Type: Application

Essay Questions

100. (p. 186-190) The text identifies three heritages (four forms) that form the bases for the majority of legal systems in the world. What are the four forms of law and what are the heritages linked to these forms of law?

The first form is common law that is derived from English law. The second form is code or civil law that was derived from Roman law. The third form is Islamic law that was derived from the interpretation of the Koran. The fourth form is Marxist-socialist tenets derived from this view of economics.


Type: Comprehension

101. (p. 197) Compare the differences between "prior use" and "regiatration" ownership of intellectual property rights.

According to the text, the United States, a common-law country, ownership of IP rights is established by prior use. Whoever can establish first use is typically considered the rightful owner. Whereas in many code law countries, ownership is established by registration rather than prior use. Whoever registers the property right is considered the rightful owner. The differences between the United States and Japan with respect to interpretation of patent law.


Type: Comprehension


1-187

102. (p. 187) What is the difference between common and code law?

Common law is based on tradition, past practices, and legal precedents set by the courts through interpretations of statutes, legal legislation, and past rulings. Code or civil law is based on an all-inclusive system of written rules of law.


Type: Comprehension

103. (p. 188-190) What is the difference between Islamic law and Marxist-socialist tenets?

The basis for Islamic law is the Koran. It encompasses religious duties and obligations as well as the secular aspect of law regulating human acts. In the Marxist-socialist approach, the premise of law is based on prevailing economic conditions.


Type: Comprehension

104. (p. 190) Legal disputes arise between and among what three groups? Disputes between which groups does the World Court adjudicate?

Legal disputes can arise between governments, between a company and a government, and between two companies. The World Court can adjudicate disputes between governments only.


Type: Comprehension

105. (p. 191) With respect to the resolution of international disputes, what is conciliation?

Conciliation (or mediation) is a nonbonding agreement between parties to resolve disputes by asking a third party to mediate differences. For additional information see page 191.

Difficulty: Easy

Type: Comprehension


1-188

106. (p. 191-192) Describe what might happen in an arbitration process between two international groups that have a dispute with one another.

The usual arbitration procedure is for the parties involved to select a disinterested and informed party or parties as referee to determine the merits of the case and make a judgment that both parties agree to honor. For more information see page 191-192.


Type: Comprehension

107. (p. 194) What are the deterrents to litigation as a means for settling an international commerce dispute cited by the text?

(a) Fear of creating a poor image and damaging public relations; (b) fear of unfair treatment in a foreign court; (c) difficulty in collecting a judgment; (d) the high cost and time required when bringing legal action; and (e) loss of confidentiality. For additional information see page 194.

Difficulty: Hard

Type: Comprehension

108. (p. 206-207) What is the purpose of the Foreign Corrupt Practices Act?

The Act makes it illegal for companies to pay bribes to foreign officials, candidates, or political parties. Stiff penalties can be assessed against company officials, directors, employees, or agents found guilty of paying a bribe or of knowingly participating in or authorizing the payment of a bribe.

Difficulty: Easy

Type: Comprehension


1-189

109. (p. 187) Sam Fitch is trying to decide whether to pursue a business venture in France. He has heard that the French system of business law is different from that of the United States. Research has told him that France (and other European countries) follows what is called code law. Describe code law for Mr. Fitch. What are the advantages and disadvantages of such a legal system?

After reviewing the material in the text, students should see that code law is based on an all-inclusive system of written rules (codes) of law. This is different from common law practiced in the United States. Code law is considered to be complete by those that practice it because there are many catchall provisions in a code-law country. Students can build their own case for or against code law (see information in the text), however, all students should see the value of hiring a French lawyer to interpret French law. See pages 187 for additional information.

Difficulty: Hard

Type: Application

110. (p. 191) Your company has just entered into an agreement with a Chinese company to do a joint venture in China. However, problems occurred almost immediately. Which of the forms of international dispute resolution would probably be best to pursue to solve your problems with the Chinese so that business may continue? Explain your choice.

Conciliation is considered to be especially effective when resolving disputes with Chinese business partners because they feel less threatened by conciliation than arbitration. The Chinese believe that when a dispute occurs, informal, friendly negotiation should be used first to solve the problem; if that fails, conciliation should be tried. For additional information see page 191.


Type: Application

mktg 485 exam 1 - test bank

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