Tapping into Global Markets Part II

32) BestFoods Inc., a well-known producer of breakfast cereals, has decided to hire producers in different countries so that the cereals marketed under their brand are locally produced in the respective countries. This would not only appeal more to consumers who preferred domestically produced goods, but would also create jobs in the host-country enhancing the brand's image further. This is an example of ________. A) management contracting B) franchising C) greenfield venturing D) contract manufacturing E) straight extension Answer: D 33) Which of the following statements is true about licensing? A) It is one of the most complex ways to engage in international marketing. B) The licensor gains entry into the new market at low risk. C) The licensee has no access to proprietary information. D) The licensee receives a fee or royalty. E) The only benefit for a licensee is the production expertise it gains. Answer: B 34) Hotel chains such as Hyatt sell a variation of the licensing agreement called ________ to the owners of foreign hotels to manage these businesses for a fee. A) greenfield venturing B) management contracts C) strategic alliance D) indirect exporting E) direct exporting Answer: B 35) In which of the following modes of licensing does the firm hire local producers to produce the product, giving the company less control over the manufacturing process? A) contract manufacturing B) management contracts C) direct investment D) joint venture production E) greenfield venturing Answer: A 36) A company can enter a foreign market through a ________, which is a complete form of licensing in which the company offers a complete brand concept and operating system. A) contract manufacturing B) cooperative agreement C) management contract D) joint venture E) franchising arrangement Answer: E 37) Which of the following can cause a firm to choose joint ventures as a mode of expansion into foreign markets? A) excellent managerial resources B) lack of sufficient finances C) lack of redtapism in the host country D) preferences of target consumers in the host country E) psychic proximity of the host country Answer: B 38) Identify a benefit of using joint ventures to enter a foreign market. A) It entails minimum risk. B) It provides access to an established distribution network in the host country. C) It yields the highest returns. D) It retains full control of its investment in the host country. E) It is the best strategy for countries with psychic proximity. Answer: B 39) Which of the following is true about direct investment as a mode of international expansion? A) It allows a firm to retain full control over its investment. B) It yields the lower returns than joint ventures. C) It involves the least amount of risk. D) It involves the least cost. E) It does not allow the firm to diversify. Answer: A 40) A Canadian software company decides to buy majority stakes in a Chinese firm producing software. The company even adds to its Chinese production capacity. Which of the following could be a potential disadvantage of this direct investment? A) The Canadian firm will find it difficult to achieve economies of scale. B) This is the least financially rewarding mode of international expansion. C) The Canadian firm will have very limited control on its Chinese investment. D) The Canadian firm will be subject to the piracy problems in China. E) The Canadian firm will be subject to a higher cost of production in China. Answer: D 41) Whirlpool took a 53% stake in the Dutch electronics group Phillips' home appliances business to leapfrog into the European market. This is an example of a ________. A) straight extension B) joint venture C) contract manufacturing agreement D) licensing agreement E) franchising agreement Answer: B 42) Your firm has decided to enter the international market with your product called "Trema," a new pocket organizer that can also be used as a cell phone. While discussing the marketing plans, your CMO decides that no changes will be necessary in either the marketing mix or the product for export. What form of marketing strategy is the CMO advocating? A) distributive marketing mix B) leveraged marketing mix C) adapted marketing mix D) engineering-driven marketing mix E) standardized marketing mix Answer: E 43) In an adapted marketing mix, the company ________. A) ensures that uniform practices are adopted across countries B) focuses more on brand image than consumer preferences C) ignores differences in the legal environment D) ensures the lowest cost marketing program is adopted E) tailors the marketing programs to each target market Answer: E 44) A standardized marketing mix involves ________. A) adopting the strategy that best fits a given target market B) consistently using the communication and distribution channels that entail the lowest costs C) adjusting the product to suit market preferences D) changing the features of the product to accommodate the host country E) changing only the communication message to suit the different target markets Answer: B 45) Which of the following is one of Hofstede's four cultural dimensions that differentiate countries? A) customer relationship management versus power distance B) strategic management versus marketing management C) weak versus strong uncertainty avoidance D) total quality management versus JIT deliveries E) marketing management versus customer relationships Answer: C 46) In collectivist societies, ________. A) all property is owned by the government B) the self-worth of the individual is rooted more in the social system than in individual achievement C) the culture is dominated by the need to maintain low power distance and reduce income inequality D) the culture is dominated by a nurturing attitude as opposed to an assertive attitude E) people are highly risk-averse Answer: B 47) According to Hofstede, cultures with low power distance are ________. A) collectivist B) assertive C) egalitarian D) risk-averse E) risk-tolerant Answer: C 48) According to Hofstede, cultures with weak uncertainty avoidance are best described as ________. A) collectivist B) hierarchical C) egalitarian D) risk-averse E) risk-tolerant Answer: E 49) A risk averse attitude is associated with ________. A) high uncertainty avoidance B) high femininity C) high power distance D) high individualism E) high collectivism Answer: A 50) A market survey by LG revealed that Indians preferred not to mix vegetarian and nonvegetarian food items. Hence, LG refrigerators in India include a special convertible box with separate compartments to store and control the temperature of vegetarian and non-vegetarian food. This is an example of customizing ________ to local needs. A) advertising media B) product features C) packaging D) brand name E) labeling Answer: B 51) Straight extension of the product means ________. A) introducing the product to the foreign market without any changes to the product B) introducing the product to the foreign market with minor changes to the product C) introducing the product to the foreign market with major changes to the product D) introducing a customized product to the foreign market with a new marketing strategy E) introducing a customized product to the foreign market with existing marketing strategy Answer: A 52) Which of the following is most likely to be successful when introduced in foreign markets as a straight extension? A) laundry detergent B) khaki pants C) dessert mixes D) digital camera E) condensed soup Answer: D 53) For the launch of "Trema," your company's new pocket organizer that can also be used as a cell phone, the CMO has decided that the product can be launched in international markets without any changes in its features or the marketing strategy. This introduction can described as a ________. A) dual adaptation B) straight extension C) product adaptation D) forward invention E) backward invention Answer: B 54) Finnish cellular phone giant, Nokia, customized its 6100 series mobile phone for every major market in which it is present. In Asia, for example, the series came with higher ring volume so that it could be heard on the crowded Asian streets. This is an example of ________. A) straight extension B) forward invention C) regional version D) city version E) country version Answer: C 55) In an attempt to tailor its products to suit the requirements of consumers in India, LG introduced the aero-comfort system. A remote control is programed to regulate both the airconditioning and the ceiling fan. Consumers can switch off the AC and increase the ceiling fan's flow once the desired temperature is achieved. This not only increases convenience, but also cuts down electricity charges. LG's aero comfort system is an example of which of the following? A) backward invention B) dual invention C) country version product D) straight extension E) communication adaptation Answer: C 56) Your firm has decided to enter the international market with your product called "Trema," a combination of a pocket organizer and cell phone. Even though the product has been a huge success in the home country, market research suggests some changes may be required before it can be introduced in Europe. Your CMO is of the opinion that the product requires certain extra features and the product will also have to be marketed differently. Your CMO is advocating ________. A) product invention B) dual adaptation C) straight extension D) forward adaptation E) product standardization Answer: B 57) Product adaptation involves ________. A) altering the product to meet local preferences with no change in communication strategy B) altering the product to meet minimum acceptable standards C) altering both the product and the communication strategy to meet local preferences D) altering neither the product nor the communication strategy while entering a new market E) developing a new product and adapting the communication strategy to enter a new market Answer: A 58) Backward invention occurs when a firm ________. A) creates a new product to meet a need in another country B) reintroduces earlier product forms adapted to suit another country's needs C) invents products that are similar to competing offerings D) takes an existing product into a new market E) produces its own raw materials Answer: B 59) Forward invention is ________. A) creating a new product to meet a need in another country B) creating a new product to meet the need in the home country C) inventing products that are superior to competing offerings D) taking an existing product into a new market E) inventing something that as yet has no "market" Answer: A 60) Companies can run the same marketing communications programs as used in the home market or change them for each local market, a process called ________. A) product communications B) market development C) dual adaptation D) diversification E) communication adaptation Answer: E 61) If a company adapts or changes both the product and the communications, the company engages in a process called ________. A) straight extension B) product reinvention C) product adaptation D) dual adaptation E) full adaptation Answer: D