Tapping into Global Markets Part I

Tapping into Global Markets 1) What is a global firm? A) A firm that operates in one country and exports its goods and services to foreign countries. B) A firm that operates in more than one country and has a sales and marketing staff in those countries. C) A firm that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages not available to purely domestic competitors. D) A firm that sells its products and services across the world but restricts manufacturing to the home country. E) A firm that operates in more than one country but restricts the sale of its products to the home country. Answer: C 2) Which of the following can induce a firm to expand into the international arena? A) Consumer preferences in the domestic market vary widely. B) Average income level of domestic consumers is high. C) The firm operates in an industry that caters to the mass market. D) The firm finds that the domestic market is almost saturated. E) The firm is yet to achieve economies of scale even though the domestic market has potential. Answer: D 3) Zodiac Inc. is one of the leading producers of designer bags in its country. The company is considering shifting some of its production to India. Which of the following could have prompted this move? A) People in India prefer imported designer bags. B) Zodiac can target a niche market of high-profile consumers who have a high income. C) Zodiac can improve its market share if it can offer better prices than its competitors. D) People in the home country have an ethnocentric approach. E) Market research indicates that Indian consumers have a low per-capita income. Answer: C 4) Which of the following is a risk that firms must consider prior to expanding abroad? A) The domestic consumers prefer low-priced products. B) The market in the foreign country may be too similar to the domestic market. C) Consumers in the foreign country are very particular about the quality of the goods they consume. D) The foreign country has very low pollution control standards. E) The foreign country's business culture may be too different from the domestic country. Answer: E 5) Which of the following is the first stage of the internationalization process that can induce firms to enter the international arena? A) no regular export activities B) export via independent representatives (agents) C) establishment of one or more sales subsidiaries D) establishment of production facilities abroad E) adoption of a flexible exchange rate regime Answer: A 6) Once a firm decides to enter the international market, what is the next step in the decisionmaking process? A) deciding on the marketing organization B) deciding on the marketing program C) deciding how to enter the market D) deciding how to adapt the product to the new market E) deciding which markets to enter Answer: E 7) WayToGrow Inc. is one of the most popular brand of toys in its home market. The company decides to expand its business abroad and its board of directors feel that instead of trying to establish its presence all at once in multiple markets, it is better to expand one country at a time. This would limit their risk and allow them to analyze customer response, after which they could expand to other similar countries. WayToGrow is following a ________. A) shotgun approach B) continuous approach C) born global approach D) sprinkler approach E) waterfall approach Answer: E 8) When innovation at Siemens enables the company to offer solutions that can make the generation of hydroelectricity more environment-friendly, the company will want to reap the benefits of being the first to introduce such a product across countries. In this case, which of the following approaches is likely to be the best approach to entering foreign markets? A) the rifle approach B) the continuous approach C) the born global approach D) the sprinkler approach E) the waterfall approach Answer: C 9) A2Z Inc. is a producer of a wide variety of consumer goods in Brazil. It has successfully captured a huge share of the domestic market and has been able to create a very strong brand. It is now considering a foray into foreign markets. Its board of directors decide to first try out some of its products in the neighboring country of Argentina. A2Z plans to eventually expand its presence in other countries, after they analyze the impact of their entry into the Argentine market. A2Z Inc. is following a ________. A) born global approach B) waterfall approach C) sprinkler approach D) franchisee approach E) shotgun approach Answer: B 10) In a waterfall approach to international expansion, ________. A) firms enter countries gradually in a sequence B) firms enter those countries first where the demand for the product is greatest C) countries are entered based upon the availability of government subsidies D) firms enter those countries first where the supply of raw material is greatest E) countries are entered based upon ease of entry Answer: A 11) In a sprinkler approach to international expansion, ________. A) countries are entered when competition is limited B) countries are gradually entered sequentially C) countries in which the supply of raw material is greatest are entered first D) countries in which the demand for the product is greatest are entered first E) many countries are entered simultaneously Answer: E 12) When first-mover advantage is crucial and a high degree of competitive intensity prevails, the ________ approach is better. A) waterfall B) born global C) rifle D) sprinkler E) franchisee Answer: D 13) "BRIC" is an acronym for ________. A) Brazil, Russia, India, and China B) Bolivia, Russia, Indonesia, and China C) Brazil, Russia, Indonesia, and China D) Bolivia, Russia, India, and Canada E) Bolivia, Russia, Indonesia, and Canada Answer: A 14) A2Z Inc. is a producer of a huge variety of consumer goods, from soaps to shower gels, and shampoos to detergents. It is a market leader in the United States and is planning to tap the immense potential in the emerging markets. Market research, however, indicates that the Brazilian culture and society are substantially different from their American counterparts. If the company wants to target the masses, which of the following options is most likely to succeed? A) A2Z can use a price skimming strategy to increase market share. B) The company's existing strategies in the U.S. will work just as well in Brazil. C) A2Z can introduce smaller "sachets" of shampoos and detergents that are priced lower. D) The company can introduce large family packs of shampoos and soaps even if they are priced higher than competitors. E) A2Z can use a predatory pricing strategy to capture the market. Answer: C 15) Which of the following causes a difference between marketing in the developed countries and marketing in the developing countries? A) The cost of production varies substantially between the developed and the developing world. B) The disparity between the rich and the poor in the developing world is reducing. C) There are substantial cultural differences between the developed and the developing world. D) Marketing in developing countries is far more expensive than in the developed world. E) The developing countries have more trade barriers in place than the developed countries. Answer: C 16) Regional economic integration is defined as the creation of trading agreements between ________. A) a firm and its suppliers and distributors B) firms targeting the same market C) individual firms in an industry D) related industries E) blocs of countries Answer: E 17) ________ is one of the world's largest single markets, with 25 member countries, a common currency, and more than 454 million consumers. A) NAFTA B) MERCOSUR C) The European Union D) APEC E) ASEAN Answer: C 18) Which of the following countries is a member of ASEAN? A) Indonesia B) Japan C) United States D) India E) Brazil Answer: A 19) Many U.S. firms prefer to sell in Canada, England, and Australia—rather than in larger markets such as Germany and France—because they feel more comfortable with the languages, laws, and culture, which reflect the ________ between these countries and the United States. A) self-serving bias B) coincident development C) psychic proximity D) cognitive dissonance E) backward invention Answer: C 20) NAFTA is a free trade zone comprising of which of the following countries? A) Canada, Mexico, and South America B) Canada, Mexico, and Peru C) Mexico, South America, and the United States D) Canada, Mexico, and the United States E) Canada, Japan, and the United States Answer: D 21) MERCOSUR is a free trade zone linking which of the following countries? A) Mexico, Japan, Brazil, Paraguay, and Venezuela B) Mexico, Canada, and the United States C) Brazil, Argentina, Paraguay, and Venezuela D) Canada, Brazil, and the United States E) Brazil, Argentina, Paraguay, Uruguay, and Venezuela Answer: E 22) While choosing countries to invest in, companies sometimes choose psychic proximity to their own country. Psychic proximity can best be defined as ________. A) countries in which the company feels comfortable with the language, laws, and culture B) countries that are located close C) countries that the home country's management team have visited D) countries that have no trade barriers E) countries with good infrastructure and stable political environment Answer: A 23) Which of the following modes of entry into a foreign market involves the maximum commitment and risk? A) franchising B) direct investment C) joint ventures D) licensing E) direct exporting Answer: B 24) Domestic-based export merchants ________. A) buy manufacturers' products and then sell them abroad B) manage a company's export activities for a fee C) buy foreign products and sell them in the domestic country D) seek and negotiate foreign purchases E) carry on exporting activities on behalf of several producers Answer: A 25) Domestic-based export agents perform a valuable service for companies seeking to enter foreign markets. The primary function of these agents is to ________. A) carry on exporting activities on behalf of several producers B) buy the manufacturer's products and then sell them abroad C) buy foreign products and sell them in the domestic country D) seek and negotiate foreign purchases for a commission E) produce and export products to foreign countries Answer: D 26) Companies typically start their international foray with ________, which involves working through independent intermediaries who sell their products abroad. A) indirect exporting B) licensing C) franchising D) direct exporting E) joint ventures Answer: A 27) Indirect exports have two advantages for a firm: they involve less investment and ________. A) less paperwork B) less intrusion by the government C) less risk D) less competition E) less customer suits Answer: C 28) James Franks lives in Miami. He buys local products from manufacturers in Miami and other parts of Florida and sells them abroad, mainly to Caribbean nations. Mr. Franks is a(n) ________. A) domestic-based export merchant B) domestic-based export agent C) cooperative agent D) export-management agent E) direct exporting agent Answer: A 29) Nash & Associates is a firm that takes care of all export procedures on behalf of its clients. In exchange for a fee, the firm acts as the liaison between domestic manufacturers and prospective foreign buyers. It has access to established distribution networks in other countries that domestic small-scale producers are unlikely to have, and facilitates communication between foreign importers and domestic producers. Nash & Associates is most likely a(n) ________. A) domestic-based export merchant B) domestic-based export agent C) cooperative organization D) export-management company E) direct exporter Answer: B 30) ________ agree to manage a company's export activities for a fee. A) Cooperative organizations B) Domestic-based export agents C) Export-management companies D) Domestic-based export merchants E) Contract manufacturing organizations Answer: C 31) After successfully exporting its products through export merchants, Boyes Inc. decides to take control of its exports. It sets up its own unit in the home country that takes care of all export-related activities. Boyes Inc. is most likely using ________. A) foreign-based distributors or agents B) domestic-based export department C) export merchants in foreign countries D) export-management companies E) traveling export sales representatives Answer: B