Chap 6

Chapter 6
Multiple Choice
1. In international marketing, the global market research process includes:
a. Define the problem(s).

b. Develop a research design.
c. Determine the information needs.
d. Collect the data (secondary & primary).
e. All of the above.
Answer: e
Difficulty: Easy
Section: Introduction
2. To some degree, the procedures and methods that are followed to conduct global
marketing research are close to those in the standard _____.
a. domestic market.
b. transnational market.
c. global market.
d. European market.
e. Asian market.
Answer: a
Difficulty: Medium
3. All of the following are steps to be followed to conduct global market research
except:
a. define the research problem(s).

b. develop software to integrate with the Internet databases.
c. determine information needs.
d. collect the data.
e. analyze the data and interpret the results.
Answer: b
Difficulty: Easy
1
4. There are seven steps to follow in conducting global market research. The first
step is to:
a. develop the research design.

b. define the decision problem(s).
c. determine information needs.
d. collect the data (secondary and primary).
e. analyze the data and interpret the results.
Answer: b
Difficulty: Easy
5. All of the following are major challenges that a global marketing researcher might
face except:
a. argument over budget expenditures between international markets.

b. complexity of research design due to environmental differences.
c. lack and inaccuracy of secondary data.
d. time and cost requirements to collect primary data.
e. coordination of multi-country research efforts.
Answer: a
Difficulty: Hard
6. Any research starts off with a precise definition of the _____.
a. location problems.
b. sample problems.
c. data problems.
d. decision problem(s).
e. none of the above.
Answer: d
Difficulty: Easy
Section: Research Problem Formulation
2
7. In marketing research, once the problem has been identified it is translated into:
a. a secondary research search.

b. a primary research search.
c. specific research questions.
d. a sampling process.
e. a choice of scales to be used in measurement.
Answer: c
Difficulty: Medium
8. In global marketing research, the marketing research problem formulation is often

hindered by the _____ where a person’s habit is to fall back on their own cultural
norms and values.
a. gender bias
b. culture bias
c. proximity effect
d. global distance factor
e. self-reference criterion
Answer: e
Difficulty: Hard
9. _____ should be consulted at every step of the research process if the study will
affect their operations.
a. Transnational subsidiaries
b. European subsidiaries
c. Asian subsidiaries
d. Local subsidiaries
e. African subsidiaries
Answer: d
Difficulty: Easy
3
10. A major difficulty in formulating the research problem in the global marketing
research effort is the unfamiliarity with the _____.
a. foreign mass media

b. laws governing marketing research
c. foreign environment
d. domestic environment’s attitude toward foreign research
e. people who will actually conduct the research
Answer: c
Difficulty: Hard
11. In a foreign market, the _____ survey is probably the most economical way to
gather preliminary information on target markets.
a. upper-middle class
b. omnibus
c. environmental
d. demographic specific
e. local distributor
Answer: b
Difficulty: Hard
12. _____ surveys are regularly scheduled surveys that are conducted by research
agencies with questions from multiple clients.
a. Demographic
b. Cultural
c. Syndicated
d. Omnibus
e. Focus
Answer: d
Difficulty: Hard
4
13. A major disadvantage of the omnibus surveys is that:
a. it is usually culturally biased.

b. it is very expensive.
c. clients cannot incorporate their own questions in the survey.
d. the survey does not usually contain many consumer-related questions.
e. only a limited amount of company-relevant information is obtainable.
Answer: e
Difficulty: Hard
14. A(n ) _____ is particularly suitable when you need to ask a few simple questions
across a large sample of respondents.
a. geometric survey
b. omnibus survey
c. simple survey
d. restricted survey
e. matrix survey
Answer: b
Difficulty: Medium
15. The prime benefit of an omnibus survey is _____.
a. rapid results
b. global reach
c. large sample size
d. low cost
e. small standard deviation
Answer: d
Difficulty: Medium
5
16. When market researchers find information that might be useful in their
exploration process to already be available (usually collected for some other
purpose by other data gathers), this type of information is called:
a. public information.
b. primary data.
c. unrestricted information.
d. secondary data.
e. used information.
Answer: d
Difficulty: Easy
Section: Secondary Global Marketing Research
17. When data is collected specifically for the purpose of the research study, it is
called:
a. public information.
b. primary data.
c. unrestricted information.
d. secondary data.
e. used information.
Answer: b
Difficulty: Easy
18. The OECD is an acronym _____.
a. Organization for Economic Cooperation & Deregulation

b. Organization for Economic Cooperation & Development
c. Organization for Economic Cooperation & Datamation
d. Organization for Economic Cooperation & Distribution
e. Organization for Economic Cooperation & Demographics
Answer: b
Difficulty: Medium
Section: Secondary Data Sources
6
19. Many countries have a network of government-sponsored commercial delegations
that provide valuable information to firms that desire to do business in that
country. One of the most noteworthy of these is found in _____ and is called
_____.
a. Britain; Britannia Net

b. Canada; Canada First
c. Japan; Japan External Trade Organization (JETRO)
d. the United States; Buy American
e. Mexico; the Mexican Organization of Commercial Enterprise (MOCE)
Answer: c
Difficulty: Hard
20. All of the following are major sources of problems for the market researcher
wishing to use secondary data obtained either about or from foreign markets
except:
a. government control of data for taxing purposes.

b. accuracy of data.
c. age of data.
d. reliability of data over time.
e. comparability of data.
Answer: a
Difficulty: Easy
Pages: Problems with Secondary Data Research
21. Accuracy of data in foreign markets may be suspect. This is especially true if it
neglects to record significant commercial and non-commercial activity. One
example of data that is often not recorded (though it might be significant) is:
a. trade across national borders.

b. trade by mail.
c. smuggling activities.
d. trade carried by package shippers such as FedEx or UPS.
e. trade with foreign banks.
Answer: c
Difficulty: Medium
Section: Problems with Secondary Data Research
7
22. _____ reflects the degree to which a given concept has the same meaning in
different environments.
a. Functional equivalence
b. Conceptual equivalence
c. Demographic equivalence
d. Psychographic equivalence
e. Primary equivalence
Answer: b
Difficulty: Medium
Page Problems with Secondary Data Research
23. Comparability might also be hindered by the lack of _____. This refers to the
degree to which similar activities or products in different countries fulfill similar
functions.
a. conceptual equivalence
b. functional factors
c. functional equivalence
d. lumping of data
e. comparison equivalence
Answer: c
Difficulty: Medium
24. The comparison of money-based indicators (e.g., income figures, consumer

expenditures, and trade statistics) is hampered by the need to convert such figures
into a _____.
a. common currency
b. euro currency
c. euro dollar
d. Swiss franc
e. Italian lira
Answer: a
Difficulty: Easy
8
25. To avoid the difficulty of “lumping of data” encountered in conducting
international marketing research, all of the following questions should be asked
except:
a. When were the data collected?

b. How were the data collected?
c. How much did it cost to collect the data?
d. Have the variables been redefined over time?
e. Who collected the data?
Answer: c
Difficulty: Medium
26. If a marketing researcher asks “who collected the data?” they would probably be
trying to overcome one of the major difficulties of collecting data in the
international marketplace. Which of the following best describes the effect that
the researcher is trying to overcome?
a. conceptual equivalence.
b. functional factors.
c. functional equivalence.
d. lumping of data.
e. comparison equivalence.
Answer: d
Difficulty: Hard
27. Primary data can be collected in several ways. Which of the following is not one
of those ways?
a. Test markets
b. Government date
c. Observational research
d. Surveys
e. Focus groups
Answer: b
Difficulty: Hard
9
28. Primary research can be collected in several ways. One method that is excellent to
use when doing exploratory research is:
a. mail surveys.
b. telephone surveys.
c. mall intercept.
d. home interviews.
e. focus groups.
Answer: e
Difficulty: Medium
Section: Focus Groups
29. As a research technique, a _____ is a loosely structured free-flowing discussion

among a small group of target customers facilitated by a professional moderator.
a. mall intercept
b. contra-group design
c. Delphi-group
d. focus group
e. probe panel
Answer: d
Difficulty: Medium
30. All of the following are typical uses of the focus group research technique except:
a. to generate information to guide the quantitative research projects.

b. to obtain data on unproductive or problem employees.
c. to reveal new product opportunities.
d. to test out new product concepts.
e. to test out new ad images.
Answer: b
Difficulty: Medium
Pages: Focus Groups
10
31. Getting focus groups to work in certain societies (because of their view on group
dynamics and proper decorum) is difficult. Which of the following countries
would be most difficult for successful focus groups?
a. Japan
b. United States
c. Canada
d. Britain
e. Germany
Answer: a
Difficulty: Easy
32. _____ are the most common vehicle to gather primary data.
a. Scanners
b. Focus groups
c. Questionnaires
d. Interviews
e. Cluster analysis
Answer: c
Difficulty: Medium
Section: Survey Methods for Cross-Cultural Marketing Research
33. The astute marketing researcher must be aware of the need for conceptual and
functional equivalence in designing questionnaires for the international market. In
addition, it is also necessary to fulfill two additional criteria. They are:
a. time and cost evaluation.

b. translation and scalar equivalence.
c. translation and polar equivalence.
d. religious and bias equivalence.
e. polar and scalar equivalence.
Answer: b
Difficulty: Hard
11
34. Two procedures that can overcome problems with sloppy questionnaire
translation in conducting international marketing research is to provide for:
a. polar and psychographic translation.

b. lifestyle and psychographic translation.
c. back-translation and parallel translation.
d. forward-translation and parallel translation.
e. lifestyle and parallel translation.
Answer: c
Difficulty: Hard
35. _____ translation involves using multiple interpreters who translate the same
questionnaire independently.
a. Polar
b. Parallel
c. Back
d. Forward
e. Lifestyle
Answer: b
Difficulty: Medium
36. To make findings of cross-country market research projects meaningful, it is

paramount to pursue _____ (where scores from subjects of different countries
should have the same meaning and interpretation).
a. time evaluation
b. scalar equivalence
c. polar equivalence
d. bias equivalence
e. focus equivalence
Answer: b
Difficulty: Medium
12
37. The purpose of _____ is to get scores from subjects of different countries to have
the same meaning and interpretation.
a. time evaluation
b. scalar equivalence
c. polar equivalence
d. bias equivalence
e. focus equivalence
Answer: b
Difficulty: Medium
38. Survey research in _____ is further hampered by low levels of education.
a. developed countries
b. rich countries
c. developing countries
d. emerging markets
e. low-tech countries
Answer: c
Difficulty: Medium
39. With respect to asking scaled questions to determine the degree of agreement or
disagreement, in illiterate societies scaled questions often use:
a. numbers (such as 1-10).

b. letters (such as a-z).
c. use symbols (such as stars).
d. use degrees of smiling or funny faces (from happy to sad).
e. use number of animals (ownership demonstrated by one through seven
goats or cows).
Answer: d
Difficulty: Medium
13
40. With respect to conducting marketing research in countries that are unfamiliar
with survey research, it is advisable to avoid:
a. references to the government.

b. lengthy questionnaires or open-ended questions.
c. references to religion.
d. questioning females.
e. any scaled questions.
Answer: b
Difficulty: Hard
41. _____ is the only foolproof way to debug the questionnaire and spot embarrassing
mistakes.
a. Pre-testing
b. Post-testing
c. Using approved software
d. Using standard questionnaire formats
e. Having a linguist read the questionnaire
Answer: a
Difficulty: Easy
42. To collect data, the researcher has to draw a _____ from the target population.
a. group item
b. reference list
c. sample
d. quota
e. portion
Answer: c
Difficulty: Easy
14
43. A sampling plan centers around three issues: sampling unit, sample size, and
_____.
a. demographic procedure
b. sampling procedure
c. psychographic procedure
d. geographic procedure
e. none of the above
Answer: b
Difficulty: Medium
44. Which of the following questions is most associated with the term “sampling
unit?”
a. Who cannot be considered as a valid respondent?

b. How much will the survey cost?
c. What is our target population? Who should be surveyed?
d. How many people should be surveyed?
e. How should prospective respondents be chosen from the target
population?
Answer: c
Difficulty: Medium
45. Which of the following questions is most associated with the term “sample size?”
a. Who cannot be considered as a valid respondent?

b. How much will the survey cost?
c. What is our target population?
d. How many people should be surveyed?
e. How should prospective respondents be chosen from the target
population?
Answer: d
Difficulty: Medium
15
46. When drawing a sample, the researcher needs a ____, that is, listing of the target
population (e.g., a telephone directory).
a. sampling mirror
b. sampling frame
c. sampling group
d. sampling questionnaire
e. sampling behavior
Answer: b
Difficulty: Easy
47. With respect to approved sampling theory, heterogeneous cultures (e.g., India)
demand _____ samples than homogeneous cultures (e.g. South Korea).
a. bigger
b. smaller
c. less stratified
d. more randomized
e. less randomized
Answer: a
Difficulty: Easy
48. When preparing a sampling plan, the researcher needs to decide how to contact
prospective subjects for the survey. The most common choices are:
a. mail, telephone, and Internet.

b. mail, telephone, and optical scan.
c. mail, telephone, and personal interview.
d. observation, personal interview, and experimentation on a person-by-
person basis.
e. observation, telephone, and personal interview.
Answer: c
Difficulty: Medium
16
49. Once collection of data in a research project begins, there can be many problems
with collection. A very common problem in the international arena is nonresponse
due to:
a. a reluctance to be photographed.
b. a reluctance to talking with strangers.
c. a reluctance to talking with officials or official pollsters.
d. a fear of government reprisals.
e. a fear of cultural conflict.
Answer: b
Difficulty: Medium
50. When conducting research, several biases may be present. The _____ bias is
present when the respondent feels a desire to be polite toward the other person.
a. yea-or nay-saying
b. social desirability
c. gender
d. tradition
e. courtesy
Answer: e
Difficulty: Easy
51. The courtesy bias with respect to marketing research responses is fairly common
in:
a. the United States.

b. France.
c. Germany.
d. Asia and the Middle East.
e. Mexico.
Answer: d
Difficulty: Medium
17
52. Besides traditional primary data collection methods, companies also rely on less
conventional methods such as _____.
a. geographic research
b. multi-graphic research
c. psychographic research
d. ethnographic research
Answer: d
Difficulty: Hard
Section: Observational Research
53. Which of the following would be problematic in using the Internet in global
research?
a. obtaining a representative sample

b. download time for website pages
c. incorrect e-mail addresses
d. poor response rates
e. all of the above
Answer: c
Difficulty: Hard
Section: Leveraging the Internet for Global Market Research Studies
54. All of the following are methods that can be fruitfully employed to assess the size
of the market for any given product except:
a. analogy method.
b. Latin square.
c. trade audit.
d. chain ratio method.
e. cross-sectional regression analysis.
Answer: b
Difficulty: Hard
Pages: Market Size Assessment
18
55. The procedure for the _____ of assessing market size is to pick a country that is at
the same stage of economic development as the country of interest and for which
the market size is known. This country then becomes an indicator for the market
size of the country that is under question.
a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis
Answer: a
Difficulty: Medium
Section: Method of Analogy
56. Suppose that a consumer electronics company wants to estimate the market size
for DVD players in the Ukraine but does not have much information about that
market. Instead, it chooses Poland (a country for which it does have information)
and uses it as an indicator for the market in Poland. This method of determining
market size most resembles which of the following methods?
a. analogy method
b. Latin square
c. trade audit
Answer: a
Difficulty: Medium
57. This approach to determining a sample size requires the researcher to choose a
proxy variable that correlates highly with the demand for the product of interest.
a. analogy method
b. Latin square
c. trade audit
Answer: a
Difficulty: Hard
19
58. One common problem with using the analogy method of determining market size
is:
a. cost.
b. language problems.
c. consumption patterns are not comparable across countries due to strong
cultural disparities.
d. different monetary units.
Answer: c
Difficulty: Hard
59. An alternative way to derive market size estimates is based on local production
and import and export figures for the product of interest. This method is best
described as being a(the):
a. analogy method.
b. Latin square.
c. trade audit.
d. chain ratio method.
e. cross-sectional regression analysis.
Answer: c
Difficulty: Medium
Section: Trade Audit
60. The _____ method of assessing market size begins with a rough base-number as
an estimate for the market size (such as the entire population for the country) and
systematically fine-tunes by applying a string of percentages (such as birth rate) to
come up with the most meaningful estimate possible.
a. analogy method
b. Latin square
c. trade audit
Answer: d
Difficulty: Medium
Section: Chain Ratio Method
20
61. If a company wishing to sell baby monitors (to help with infants that have trouble
breathing) wanted to estimate the size of their potential market in a developing
country for which little data was available, they could get the population size,
examine the number of births per year, focus on cities that had the highest
birthrates, and contact hospitals that had the most problems with SIDS (sudden
infant death syndrome). This logic most closely approximates which of the
following methods listed below?
a. analogy method
b. Latin square
c. trade audit
Answer: d
Difficulty: Medium
62. One method for determining market size estimates takes the variable of interest
(such as market size) and relates it to a set of predictor variables (indicators
closely related to demand). This method would be best described as being which
of the following?
a. analogy method
b. Latin square
c. trade audit
Answer: e
Difficulty: Hard
Section: Cross-Sectional Regression Analysis
63. If a researcher were to take ten Central and Eastern European countries where per
capita income and automobile ownership by per capita were known, trying to find
the overall picture of market size for the market could probably be done by using
which of the following methods?
a. analogy method
b. Latin square
c. trade audit
Answer: e
Difficulty: Hard
21
64. Point-of-sale (POS) store scanners obtain sales movement data from the _____ of
retail outlets.
a. checkout scanner tapes

b. company headquarter
c. regional warehouses
d. international warehouses
Answer: a
Difficulty: Easy
Section: New Market Information Technologies
65. The emergence of _____ data, coupled with rapid developments in computer
hardware and software has led to a revolution in market research.
a. the Internet
b. scanner
c. cost efficient
d. mail-in rebate
e. direct-feedback
Answer: b
Difficulty: Hard
66. Innovations in marketing decision support systems have spurred several major
developments in the marketing area. One of most dramatic has been:
a. the shift from mass to micro marketing.

b. the shift from a demand to a supply economy.
c. the fact that everyone now has a personal computer.
d. the overcrowding of the Internet.
e. home shopping on the Internet.
Answer: a
Difficulty: Medium
22
67. Scanning data are also increasingly used for _____.
a. sample management
b. electronic management
c. the Internet management
d. category management
e. supply management
Answer: d
Difficulty: Hard
68. One should be concerned about choosing a local agency for marketing research
because:
a. local agencies understand cultural nuance better

b. they might lack the expertise for state-of-the art research
c. they may not be trustworthy with secrets
d. local agencies are relatively inexpensive
e. both b and c
Answer: e
Difficulty: Medium
Section: Selecting a Research Agency
69. With respect to standardization of research results, even when dealing with cross-
country marketing research, which of the following entities usually desires
standardization of data collection, sampling procedures, and survey instruments?
a. the local government

b. the local research agency
c. the local subsidiary
d. the home office
e. the home research agency
Answer: d
Difficulty: Easy
Section: Coordination of Multicountry Research
23
70. Two approaches are common in global marketing research:
a. Emic and ethic.

b. Emic and etic.
c. Emic and eco-centric.
d. Emic and geo-centric.
e. None of the above.
Answer: b
Difficulty: Medium
71. In the area of multicountry research coordination, the _____ focuses on the
peculiarities of each country.
a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school
Answer: e
Difficulty: Hard
72. In the area of multicountry research coordination, the _____ focuses on the
universal behavior and attitudinal traits.
c. etic school
d. planning school
e. emic school
Answer: c
Difficulty: Hard
24
73. In cross-cultural market research, the need for comparability favors the _____.
c. etic school
d. planning school
e. emic school
Answer: c
Difficulty: Hard
25
True/False
74. To gain familiarity with a foreign environment, one can undertake an omnibus
survey.
Answer: True
Difficulty: Medium
75. In the area of age of data, the frequency of census does not vary from country to
country.
Answer: False
Difficulty: Hard
76. Government data is a source of primary data.
Answer: False
Difficulty: Easy
Section: Primary Global Marketing Research
77. Focus groups are a source of primary data.
Answer: True
Difficulty: Easy
78. Surveys are a source of primary data.
Answer: True
Difficulty: Easy
79. Observational research is a source of primary data.
Answer: True
Difficulty: Easy
80. Test markets are a source of primary data.
Answer: True
Difficulty: Easy
26
81. Focus group data comes mainly from what participates say during the meeting.
Answer: False
Difficulty: Hard
82. Focus groups normally include 30-40 people.
Answer: False
Difficulty: Hard
83. Focus groups are the most common vehicle to gather primary data in marketing
research.
Answer: False
Difficulty: Easy
84. Surveys are the most common vehicle to gather primary data in marketing
research.
Answer: True
Difficulty: Easy
85. Observational research is the most common vehicle to gather primary data in
marketing research.
Answer: False
Difficulty: Easy
86. Test markets are the most common vehicle to gather primary data in marketing
research.
Answer: False
Difficulty: Easy
87. One of the procedures used in practice to avoid sloppy translation of

questionnaires is forward-translation.
Answer: False
Difficulty: Medium
27
88. Strong writing and double-checking the translation is the only foolproof way to
debug the questionnaire and spot embarrassing and often expensive mistakes.
Answer: False
Difficulty: Medium
89. A sampling frame is a listing of the target population.
Answer: True
Difficulty: Medium
90. A telephone directory could be a sampling frame.
Answer: True
Difficulty: Medium
91. The more homogeneous the culture, the larger the sample size that is required.
Answer: False
Difficulty: Easy
92. Most researchers prefer some form of convenience sampling, especially in

developed countries.
Answer: False
Difficulty: Easy
93. Back-translation requires that the survey be translated three times.
Answer: False
Difficulty: Medium
94. Parallel translation uses a single translator who translates the survey into another
language and then back into the original language after waiting a day or two.
Answer: False
Difficulty: Medium
28
95. Using the “Funny Faces Scale” would be one way to overcome literacy problems
among developing countries in answering marketing research questionnaires.
Answer: True
Difficulty: Easy
96. Probabilistic sampling is required to make statistical inferences about the

collected data.
Answer: True
Difficulty: Easy
97. The Internet is not a viable contact method for market research.
Answer: False
Difficulty: Easy
98. Market research is much more expensive in less developed countries like
Bangladesh, India, Serbia, and Bulgaria.
Answer: False
Difficulty: Easy
99. Probably the most severe problem in market research is nonresponse.
Answer: True
Difficulty: Easy
100. In many cultures, the only way to cope with nonresponse is to account for
it when determining sample sizes.
Answer: True
Difficulty: Easy
29
101. Extreme response style (ERS) is another frequently met issue in survey-
based global marketing research. This bias refers to the tendency of respondents
to react very poorly or even violently to strangers asking questions.
Answer: False
Difficulty: Medium
102. Focus groups can be conducted online.
Answer: True
Difficulty: Easy
103. For an online focus group, all the participants must be online at the same
time.
Answer: True
Difficulty: Easy
104. The chain ratio method starts with a very rough base-number as an
estimate for the market size.
Answer: True
Difficulty: Medium
105. Cross-sectional regression analysis do not produce market size estimates.
Answer: False
Difficulty: Easy
106. Consumer panel data is where companies track purchases for the same
consumers over time using POS data.
Answer: False
Difficulty: Easy
30
107. Single-source data are continuous data that combine for any given
household member TV viewing and internet browsing behavior with purchase
transaction information.
Answer: True
Difficulty: Easy
31
Fill in the Blank
108. The first step in the marketing research process is described as _____.
Answer: defining the decision problem

Difficulty: Medium
109. _____ data are collected specifically for the purpose of the research study.
Answer: Primary
Difficulty: Easy
110. If a company were to go to JETRO (the Japanese External Trade

Organization) for data on exporting to Japan, they would be engaging in a _____
data search.
Answer: secondary
Difficulty: Hard
73. OECD stands for _____.
Answer: Organization for Economic Cooperation & Development

Difficulty: Easy
111. With respect to comparability of data, _____ equivalence refers to the

degree to which similar activities or products in different countries fulfill similar
functions.
Answer: functional
Difficulty: Medium
112. A _____ is a loosely structured free-flowing discussion among a small

group of target customers facilitated by a professional moderator.
Answer: focus group

Difficulty: Medium
32
113. There are various methods for estimating market size. The _____ method
starts by picking a country that is at the same stage of economic development as
the country of interest and for which the market size is known.
Answer: analogy
Difficulty: Hard
114. In the area of multicountry research coordination, the _____ focuses on

the peculiarities of each country.
Answer: emic school

Difficulty: Hard
115. In the area of multicountry research coordination, the _____ focuses on

the universal behavior and attitudinal traits.
Answer: etic school

Difficulty: Hard
33
Essay
116. List the stages of the marketing research process. What is considered the
most important step?
Answer:
a. Define the decision problem(s).

b. Develop a research design.
c. Determine information sources.
d. Collect the relevant data (secondary and primary).
e. Analyze the data, interpret and summarize the results.
f. Communicate the findings to the key decision makers
Any market research study begins with a precise definition of the managerial
problem(s) to be addressed. The mantra of a well-defined problem being a half-
solved problem definitely applies in a global setting. Fancy data-analytical tools
will not compensate for poorly defined problems. Once the nature of the
managerial problem(s) becomes clear, the issues need to be translated in specific
research questions.
Difficulty: Easy
Pages: Introduction
117. Discuss the function, purpose, limitations, and benefits of omnibus

surveys.
Answer:
Omnibus surveys are conducted by research agencies at regular intervals. The

survey generally contains a wide variety of consumer-related questions. The
surveys are usually administered to a very large sample of consumers (sometimes
a panel). Marketers can then use these general comments to better design specific
surveys.
The major benefits of the omnibus survey is that cost expenses of the survey are
shared by the subscribers. It is a very economical way to get data on large
numbers of consumers (especially if general information is what is primarily
needed). However, the major disadvantage is that only a limited amount of
company relevant information is obtainable through the omnibus survey format.
Also, the panel (used to obtain the data) is usually not representative of the firm’s
target market profile.
Difficulty: Medium
Pages: Research Problem Formulation
34
118. What are the generally accepted problems associated with collecting and
using secondary data research?
Answer:
a. Accuracy of data--the accuracy of secondary data is often questionable for

various reasons. The definition used for certain indicators often differs across
countries. The quality of information may also be compromised by the
mechanisms that were used to collect them. The purpose for which the data were
collected could affect the data’s accuracy.
b. Age of data--data may be outdated. Many countries collect data on a much less
frequent basis than developed countries.
c. Reliability over time--historical trends are hard to accumulate in the

international environment. Sudden changes can often jeopardize data
accumulation.
d. Comparability of data--comparison of cross-country indicators can be a very

real problem in international marketing research. One method to overcome this is
to triangulate data.
Different sources on a given item often produce contradictory information.

Reconciliation can be achieved through triangulation. In other words, obtain
information on the same item from at least three different sources and speculated
on possible reasons behind these differences. It is also wise to consider functional
or conceptual equivalence of data and data accumulation.
e. Lumping of data--many times lumping compromises the accuracy of data.

Categories often conflict from one country to another.
Difficulty: Hard
35
119. Discuss the major issues that a marketing researcher would want to
consider for focus group discussions in an international market environment.
Answer:
Focus groups can be used for many different purposes: to generate information to
guide the quantitative research projects, to reveal new product opportunities, to
test new product concepts, and so forth. Rules that should be followed are to hire
a trained moderator, make sure cultural sensitivity is part of the process, make
sure the group is homogeneous and able to bond, make sure the moderator is
skilled in group dynamics, and make sure the moderator can recognize consensus.
Lastly, analysis and interpretation of non-verbal cues is just as important as
recording the verbal cues.
Difficulty: Medium
36
120. List the four primary methods of estimating market size. Discuss why
market size estimates may differ depending on the method being used. How can
such differences be reconciled? Which method do you think is the best? Explain
your reasoning.
Answer:
a. analogy method--the method starts by picking a country that is at the same

stage of economic development as the country of interest and for which the
market size is known.
b. trade audit--derive market estimates based on local production and import and
export figures for the product of interest.
c. chain-ratio method-- method of assessing market size begins with a rough base-
number as an estimate for the market size (such as the entire population for the
country) and systematically fine-tunes by applying a string of percentages (such
as birth rate) to come up with the most meaningful estimate possible.
d. cross-sectional regression analysis-- this method for determining market size

estimates takes the variable of interest (such as market size) and relates it to a set
of predictor variables (indicators closely related to demand).
Market size estimates in the international area are many times “guesstimates.”
The lack of quality data is the cause. The chapter describes four methods that can
be used to approximate market size. The marketing manager is advised to use
more than one measure to improve their decision making ability. The methods are
the method of analogy, the trade audit, the chain ration method, and cross-
sectional regression analysis. Factors considered cause differences between these
methods. An averaging, as well as a common sense approach, help to resolve
differences. The watchword, however, is caution. Do not make numbers out to be
more than they are. Observe where the data came from, how it was collected, the
validity of the data, the recency of the data, and what the data included and
excluded.
Students may choose whichever method they prefer to as a “best” method. They
should, however, be required to justify their answer.
Difficulty: Hard
Section: Market Size Assessment
Chapter 7
Multiple Choice
1. 1. Variation in customer needs is the primary reason for _____.
37
a. market segmentation.
b. product segmentation.
c. country segmentation.
d. quality segmentation.
e. sales segmentation.
Answer: a
Difficulty: Easy
Page Introduction
2. The goal of market segmentation is to break down the market for a product or a
service into different groups of consumers so the firm can:
a. tailor its marketing mix to each individual segment.

b. make the sales job easier.
c. offer a customized product to every consumer.
d. offer a standard product to every consumer.
e. make more money.
Answer: a
Difficulty: Medium
Page Reasons for International Market Segmentation
3. Market segmentation is a logical outgrowth of:
a. the demand function.

b. the supply function.
c. efficiency in inventory control.
d. the marketing concept.
e. the product life cycle.
Answer: d
Difficulty: Medium
Section: Reasons for International Market Segmentation
38
4. Which of the following is not a property that segments ideally should possess?
a. Identifiable
b. Sizable
c. Defensible
d. Accessible
e. Actionable
Answer: c
Difficulty: Hard
5. With respect to properties that an international market segment should ideally

possess, the _____ property is easily met for the target country when the
researcher examines socioeconomic variables (such as per capita income).
a. identifiable
b. sizable
c. defensible
d. accessible
e. actionable
Answer: a
Difficulty: Medium

possess, the _____ property is important when the target country has differences
in the quality of the media infrastructure (such as the absence of commercial
television).
a. identifiable
b. sizable
c. stable
d. accessible
e. actionable
Answer: d
Difficulty: Medium
39
possess, the _____ property is important (for market segmentation to be
meaningful) when effective marketing programs involving the 4 Ps can be
developed to evoke the desired response from the target segment.
a. measurable
b. sizable
c. responsive
d. accessible
e. actionable
Answer: e
Difficulty: Medium
8. All of the following are reasons for international marketers to implement

international market segmentation except:
a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.
Answer: b
Difficulty: Hard
9. When market analysts examine indicators and classify countries into

consideration piles (based on some criteria) that are doing _____.
a. country screening
b. government research
c. global market research
d. positioning strategy
e. country quadrant positioning
Answer: a
Difficulty: Medium
Section: Country Screening
40
10. _____ plays a major role in global marketing research.
a. Business segmentation
b. Quality segmentation
c. Firm segmentation
d. Country screening
e. Local segmentation
Answer: d
Difficulty: Hard
Section: Global Marketing Research
11. Given the sheer number of countries in which many companies operate, doing
marketing research in each one of them is often inefficient. One approach to
reduce this problem is to narrow the list of those countries that might be examined
by grouping prospective markets into _____ countries.
a. financial categories for

b. clusters of homogeneous
c. clusters of heterogeneous
d. dissimilar qualifiers for
e. statistical tracts for
Answer: b
Difficulty: Hard
Section: Global Marketing Research
12. Cadbury-Schweppes was confident about launching Schweppes tonic water in

Brazil, given that the beverage had done well in culturally similar countries such
as Mexico. This would be an example of which of the following reasons why
international marketers implement international market segmentation?
e. entry decisions.
Answer: e
Difficulty: Medium
Section: Entry Decisions
41
13. Cathay Pacific (a Hong Kong based airline carrier) recently wanted to increase
services to its Asian customers. It added a wide variety of Asian meals and
entertainment and introduced a new advertising slogan “The Heart of Asia.” This
would be an example of which of the following reasons why international
marketers implement international market segmentation?
e. entry decisions.
Answer: d
Difficulty: Medium
Section: Positioning Strategy
14. A persistent problem faced by international marketers is how to strike the balance
between standardization and customization. Using international marketing
segmentation to shed some light on this issue would be an example of which of
the following reasons why international marketers implement international market
segmentation?
b. marketing mix policy.
e. entry decisions.
Answer: b
Difficulty: Medium
Section: Marketing Mix Policy
15. A persistent problem faced by international marketers is how to strike the balance
between _____.
a. standardization and generalization.

b. standardization and globalization.
c. standardization and customization.
d. standardization and positioning strategies.
e. standardization and marketing mix.
Answer: c
Difficulty: Hard
Section: Marketing Mix Policy
42
16. A very common international segmentation procedure classifies prospect
countries geographically on a _____ dimension or on a set of _____criteria.
a. single, multiple
b. single, three
c. single, five
d. single, eight
e. single, nine
Answer: a
Difficulty: Hard
Section: International Market Segmentation Approaches
17. In disaggregate international consumer segmentation, the focus is on _____

consumer(s).
a. one
b. two
c. four
d. six
e. eight
Answer: a
Difficulty: Medium
18. Another name for universal segments is:
a. local.
b. regional.
c. transnational.
d. global.
e. multi-regional.
Answer: d
Difficulty: Medium
Section: Segmentation Scenarios
43
19. Redd’s, a beer-like brand sold by SAB Miller (an “apple-infused malt beverage
with a citrus flavor,” aimed specifically at women) is an example of a product that
is targeted to a a(n) _____ segment.
a. diverse
b. universal
c. combination
d. customized
e. international
Answer: b
Difficulty: Medium
20. When marketers use a(n) _____ segment, they are seeking to accommodate the
existence of substantial gaps in cross-country customer needs and preferences.
a. unique/diverse
b. universal
c. combination
d. customized
e. international
Answer: a
Difficulty: Easy
21. The first step in doing international market segmentation is deciding:
a. which criteria to use in the task.

b. which criteria to fund.
c. which customers must be evaluated.
d. how best to spend research funds.
Answer: a
Difficulty: Hard
Section: Bases for International Market Segmentation
44
22. _____ variables are among the most popular segmentation criteria:
a. Demographic
b. Geographic
c. Psychographic
d. Consumption
e. Lifestyle
Answer: a
Difficulty: Easy
Section: Demographic
23. Which of the following bases would probably be in use if a researcher were
examining population size, age structure, urbanization degree, and ethnic
composition?
a. psychographics.
b. socioeconomic variables.
c. culture.
d. political conditions.
e. demographics.
Answer: e
Difficulty: Medium
Section: Demographic
24. The “blue banana” (“banane bleue”) refers to:
a. A chain of stores in French-speaking countries

b. A new product category
c. A difficult product to launch in new markets
d. A blue curve of light revealed in satellite photos taken of the European
continent at night
Answer: d
Difficulty: Medium
Section: Socioeconomic Variables
45
25. PPP is an acronym for:
a. people power parity.

b. purchasing power parity.
c. planning power parity.
d. purpose power parity.
e. positioning power parity.
Answer: b
Difficulty: Easy
26. All of the following are shortcomings of standard “per capita income”
segmentation processes except:
a. monetization of transactions within a country.

b. reflecting the true buying power of a currency
c. gray and black sectors of the economy being accounted for.
d. income disparities.
e. a huge middle class.
Answer: e
Difficulty: Medium
Pages: Socioeconomic Variables
27. _____ sectors of the economy are transactions that arise outside the legitimate
sector of a country’s economy.
a. Gray and black

b. Gray and white
c. Gray and blue
d. Gray and green
e. Gray and yellow
Answer: a
Difficulty: Easy
46
28. Another alternative to analyze buying power in a set of countries is via _____.
a. demographic strata analysis

b. geographic strata analysis
c. psychographic strata analysis
d. socioeconomic strata analysis (SES)
Answer: d
Difficulty: Hard
29. _____ publishes PPP statistics every year.
a. The World Bank

b. The International Monetary Fund
c. The World Trade Organization
d. The European Union
Answer: a
Difficulty: Medium
30. The Human Development Index is published by the _____.
a. United Nations
b. World Bank
c. IMF
d. Asian Development Bank
e. African Development Bank
Answer: a
Difficulty: Medium
47
31. Behavior segmentation criteria includes the following criteria except:
a. brand/supplier loyalty.
b. brand equity.
c. usage rate.
d. product penetration.
e. benefits sought.
Answer: b
Difficulty: Hard
Section: Behavior-Based Segmentation
32. Lifestyle segmentation is popular in _____.
a. manufacturing circles
b. finance circles
c. distribution circles
d. management circles
e. advertising circles
Answer: e
Difficulty: Easy
Section: Lifestyle and Values
33. Value-based segmentation schemes are not always _____.
a. profitable
b. collectable
c. actionable
d. measurable
Answer: c
Difficulty: Medium
48
34. _____ are not stable, since values typically change over time.
a. Value segments
b. Political segments
c. Economic segments
d. International segments
e. Global segments
Answer: a
Difficulty: Easy
35. According to the text, some marketing scholars refer to _____ as the fifth P (next
to product, price, promotion, and place) because of its importance in target
marketing.
a. power
b. planning
c. positioning
d. purchasing
e. people
Answer: c
Difficulty: Medium
Section: International Positioning Strategies
36. In the international market segmentation game, developing a positioning theme

involves the quest for a:
a. large segment.
b. profitable segment.
c. unique selling proposition (USP).
d. strong manager.
e. a friendly host government.
Answer: c
Difficulty: Medium
49
37. Within the arena of positioning strategy, the battle is for:
a. the mind of your target customer.

b. the high ground.
c. the new territory.
d. the competition’s heartland.
e. the best market share.
Answer: a
Difficulty: Easy
38. The formulation of positioning strategy includes the following except:
a. identify the relevant set of competing products or brands.

b. determine current perceptions held by consumers about the products.
c. brainstorm to develop possible positioning themes.
d. screen the positioning alternatives and select the most appealing one.
e. develop a uniform positioning strategy for every brand in the company.
Answer: e
Difficulty: Medium
39. Two positioning strategies available to international marketers include:
a. uniform and computerized positioning strategies.

b. uniform and regional positioning strategies.
c. universal and localized positioning strategies.
d. uniform and localized positioning strategies.
Answer: d
Difficulty: Medium
Section: Uniform versus Localized Positioning Strategies
50
40. In the area of international positioning, _____ themes often run the risk of being
bland and not very inspired.
a. external
b. universal
c. internal
d. local
Answer: b
Difficulty: Easy
41. If the firm decides to opt for different segments on a country-by-country basis, the
norm is to also _____ the positioning appeals.
a. externalize
b. customize
c. internalize
d. globalize
Answer: b
Difficulty: Easy
42. Very rarely do _____ themes work globally.
a. positioning
b. psychograhic
c. demographic
d. geographic
e. segmentation
Answer: a
Difficulty: Easy
51
43. The “global citizen” theme encourages:
a. local positioning.
b. regional positioning.
c. bi-lateral positioning.
d. universal positioning.
Answer: d
Difficulty: Easy
Section: Global, Foreign, and Local Consumer Culture Positioning
44. Appeals that work in one culture do not necessarily work in others because of the
following reasons except:
a. human resources.
b. cultural characteristics.
c. buying power.
d. competitive climate.
e. product life cycle stage.
Answer: a
Difficulty: Hard
45. Land Rover is an example of a brand where _____ positioning is hard to

implement.
a. transnational
b. European
c. global
d. local
e. regional
Answer: c
Difficulty: Medium
52
46. A special case where universal positioning clearly makes sense is the _____.
a. regional citizen
b. global citizen
c. European citizen
d. Asian citizen
Answer: b
Difficulty: Easy
Section: Universal Positioning Appeals
47. GCCP stands for _____.
a. global consumer culture protocol

b. global consumer culture positioning
c. global consumer culture planning
d. global consumer culture perception
e. global consumer culture psychology
Answer: b
Difficulty: Hard
48. FCCP stands for _____.
a. foreign consumer culture positioning

b. fast consumer culture positioning
c. financial consumer culture positioning
d. French consumer culture positioning
Answer: a
Difficulty: Hard
53
49. LCCP stands for _____.
a. legal consumer culture positioning

b. longitudinal consumer culture positioning
c. local consumer culture positioning
d. labor consumer culture positioning
Answer: c
Difficulty: Hard
50. Which of the following is not a positioning strategy?
a. LCCP
b. FCCP
c. ACCD
d. GCCP
Answer: c
Difficulty: Hard
51. A firm’s positioning strategy depends on the following factors except:
a. strategic alliances.
b. target market.
c. product category.
d. positioning approach used by local competition.
e. level of economic development.
Answer: a
Difficulty: Medium
54
52. In emerging markets that are still in an early stage of economic development, a
_____ approach might be more beneficial than _____.
a. GCCP; UCCP
b. GCCP; NCCP
c. GCCP; XCCP
d. GCCP; LCCP
Answer: d
Difficulty: Hard
53. Sometimes local brands fight it out with global brands by using a _____ strategy.
a. GCCP
b. LCCP
c. FCCP or LCCP
d. GCCP or LCCP
e. GCCP or FCCP
Answer: e
Difficulty: Hard
54. _____ is an umbrella term that embraces a collection of statistical procedures for
dividing objects into groups.
a. The mean
b. The median
c. Cluster analysis
d. Correlation analysis
e. Regression analysis
Answer: c
Difficulty: Medium
Section: Appendix
55
55. With respect to comparing country segmentation (classifying countries into
groups), when only one segmentation tool is used, the researcher could:
a. simply compute the mean or median and split the countries into two
groups.
b. simply compute chi-square and look for differences.
c. use cluster analysis.
d. use correlation analysis.
e. use nonparametric statistics.
Answer: a
Difficulty: Medium
Section: Appendix
56. If the researcher uses _____ to study relationships between countries, they assume
that there exists a relationship between a response variable (Y) and one or more
so-called predictor variables (X).
a. the mean
b. the median
c. cluster analysis
d. Latin square design analysis
e. regression analysis
Answer: e
Difficulty: Hard
Section: Appendix
57. Data in the European market was gathered on the penetration of microwave
ovens. The data collected consisted of three potential segmentation variables
(income, participation of women in the labor force, and per-capita consumption of
frozen foods). Which of the following methods would probably be used to obtain
a picture of the segments for microwave usage?
a. the mean
b. the median
c. random block design analysis
d. Latin square design analysis
e. regression analysis
Answer: e
Difficulty: Hard
Section: Appendix
56
58. The _____ tells us whether or not predictor variable has a “significant”
(statistically speaking) relationship with the dependent variable.
a. a value
b. b value
c. t value
d. m value
e. n value
Answer: c
Difficulty: Hard
Section: Appendix
59. The higher the _____value, the better the ability of your regression model to
predict your data.
a. R 2
b. A 2
c. G 2
d. M 2
e. N 2
Answer: a
Difficulty: Medium
Section: Appendix
57
True/False
60. Variation in customer needs is the primary motive for market segmentation.
Answer: True
Difficulty: Easy
Section: Chapter Overview
61. The goal of market segmentation is to ensure profit for all product categories and
promote customization to meet customer needs.
Answer: False
Difficulty: Medium
62. If target markets change their composition or behavior over time, marketing
efforts devised for these targets are far more likely to succeed since they can track
these changes.
Answer: False
Difficulty: Medium
63. The requirements for effective market segmentation in the domestic environment
are significantly different than those of the international environment.
Answer: False
Difficulty: Easy
64. The size of segments (in the international environment) based on cultural or
lifestyle indicators are typically easy to gauge and to factor into overall planning.
Answer: False
Difficulty: Medium
65. Companies usually do a preliminary screening of countries before identifying

attractive market opportunities for their product or service. In this screening, all
countries being considered are divided into “go” or “no go” categories.
Answer: False
Difficulty: Hard
Section: Country Screening
58
66. Environmental changes or shifting consumer preferences often force a firm to
rethink its positioning strategy.
Answer: True
Difficulty: Easy
Section: Positioning Strategy
67. Countries where a company has high competitive strength and high growth
potential are called “Wildcat Countries.”
Answer: False
Difficulty: Easy
Section: Resource Allocation
68. Countries where a company has low competitive strength and low growth
potential are called “Dog Countries.”
Answer: True
Difficulty: Easy
69. Countries where a company has high competitive strength and high growth
potential are called “Cash Cow Countries.”
Answer: False
Difficulty: Easy
70. For two-stage international segmentation, the first step is microsegmentation.
Answer: False
Difficulty: Hard
71. For two-stage international segmentation, the second step is macrosegmentation.
Answer: False
Difficulty: Hard
72. In a “country-as-segments or aggregate segmentation,” countries are classified

only on a single dimension.
Answer: False
Difficulty: Hard
59
73. In most instances, there is no mixture of universal, regional, and country-specific
market segments.
Answer: False
Difficulty: Easy
74. The first step in doing international market segmentation is deciding which
country.
Answer: False
Difficulty: Easy
Section: Bases for International Market Segmentation
75. Demographic variables (e.g., age, gender, and family status) are among the most
popular segmentation criteria. One reason for their popularity is that they are very
easy to observe.
Answer: False
Difficulty: Easy
Section: Demographics
76. One segment that marketers often overlook is pet owners.
Answer: False
Difficulty: Easy
77. One segment that marketers often overlook are the youth.
Answer: False
Difficulty: Easy
78. In developing countries, the youth are the fastest growing segment of the
population.
Answer: False
Difficulty: Easy
79. Gerber’s launch of a baby food-like product line called Senior Citizen proved to
be a huge success due to the growing elder population.
Answer: False
60
Difficulty: Easy
80. Consumer wealth or a country level of economic development has no impact on

consumption patterns.
Answer: False
Difficulty: Easy
81. Consumers from countries at the same stage of economic development often show
similar needs in terms of the per capita amount and types of goods they desire.
Answer: True
Difficulty: Easy
82. Currency conversion using the official exchange rates provide an excellent basis
for comparing buying power of different currencies.
Answer: False
Difficulty: Easy
83. Many communities also thrive on a substantial gray sector, involving transactions
that are outright illegal.
Answer: False
Difficulty: Easy
84. A popular behavior variable for behavior-based segmentation is purchase

occasion.
Answer: True
Difficulty: Easy
Section: Behavior-Based Segmentation
85. Fast food restaurants are also known as QSR.
Answer: True
Difficulty: Easy
Section: Global Perspective 7-2
61
86. Many firms position a brand that is mainstream in its home market as a premium
brand in their overseas markets, thereby targeting a narrower segment that is
willing to pay a premium for imports.
Answer: True
Difficulty: Easy
87. According to the “Best Countries Study,” Japan is the best country overall.
Answer: False
Difficulty: Easy
88. According to the “Best Countries Study,” Switzerland is the best country overall.
Answer: True
Difficulty: Easy
89. According to the “Best Countries Study,” the United States is the best country
overall.
Answer: False
Difficulty: Easy
90. Countries often try to influence perceptions that global citizens hold about them.
Answer: True
Difficulty: Medium
91. The return on investment of a strong country image campaign can be huge.
Answer: False
Difficulty: Medium
92. Local brands do not enjoy a pioneering advantage by the fact of being the first
one in the market.
Answer: False
Difficulty: Medium
62
93. In China, Pizza Hut is positioned as a fine dining restaurant.
Answer: False
Difficulty: Medium
94. Emotional appeals (e.g. lifestyle positioning) are usually difficult to translate into
a universal theme.
Answer: True
Difficulty: Medium
Section: Universal Positioning Appeals
95. GCCP stands for global consumer culture protocol.
Answer: False
Difficulty: Hard
96. GCCP is a positioning strategy.
Answer: True
Difficulty: Hard
97. LCCP is a positioning strategy.
Answer: True
Difficulty: Hard
98. FCCP is a positioning strategy.
Answer: True
Difficulty: Hard
99. DCCP is a positioning strategy.
Answer: False
Difficulty: Hard
63
100. Sometimes local brands fight it out with global brands by using GCCP or
LCCP.
Answer: False
Difficulty: Hard
101. The lower the R value, the better the ability of the regression model to
2
predict the data.
Answer: False
Difficulty: Hard
Section: Appendix
102. When only one segmentation variable is used, classifying countries in

distinct groups is quite straightforward.
Answer: True
Difficulty: Easy
Section: Appendix
103. As a rule of thumb, a t value (in absolute value) larger than 2.0 would
indicate a significant effect of the predictor variable on the response variable.
Answer: True
Difficulty: Easy
Section: Appendix
104. Regression can be used as a segmentation tool.
Answer: True
Difficulty: Easy
Section: Appendix
64
Fill in the Blank
105. Global segments are also called _____ segments.
Answer: universal
Difficulty: Medium
106. _____ variables are among the most popular segmentation criteria.
Answer: Demographic
Difficulty: Easy
107. If in exchange for a dental checkup, a television repairman fixes the

dentist’s TV set, it’s an example of: _____.
Answer: gray sector, gray market, gray market transaction

Difficulty: Medium
108. An example of a brands that is mainstream in their home market but has a
premium image in the international marketplace is _____
Answer: answer can include Heineken, Levi’s, and Budweiser

Difficulty: Easy
Page: Uniform versus Localized Positioning Strategies
109. GCCP stands for ______.
Answer: global consumer culture positioning

Difficulty: Hard
110. _____ is an umbrella term that embraces a collection of statistical

procedures for dividing objects into groups.
Answer: Cluster analysis

Difficulty: Medium
Section: Appendix
65
111. The _____ tells us whether or not predictor variable has a “significant”
(statistically speaking) relationship with the dependent variable.
Answer: t value
Difficulty: Hard
Section: Appendix
66
Essay
112. The requirements for effective market segmentation in a domestic

marketing context also apply in international market segmentation. List and
briefly describe the properties that these segments should ideally possess.
Answer:
a. Identifiable--the segments should be easy to define and measure. This criterion

is easily met for “objective” country traits such as socioeconomic variables (e.g.,
per capita income).
b. Sizable--the segments should be large enough to be worth going after. Some

small segments become more attractive if they are lumped across borders.
c. Accessible--the segments should be easy to reach via the media. Quality in

media infrastructure must be analyzed.
d. Stable--the segments should be easy to survive in the case of market changes.
e. Responsive--the segments should respond differently to be differentiated in the

market.
f. Actionable--for market segmentation to be meaningful, it is important that

effective the segments are actionable and are consistent with the goals and the
core competencies of the company.
Difficulty: Medium
67
113. Discuss the major reasons why international marketers implement
international market segmentation.
Answer:
There are six primary reasons why international marketers implement

international market segmentation. They are:
a. Country screening--companies usually do a preliminary screening of countries

before identifying attractive market opportunities for their product or service. For
preliminary screening, market analysts rely on a few indicators for which
information can usually be easily identified. Different criteria is used for each
product category.
b. Global marketing research--country segmentation plays a role in global market

research. Companies increasingly make an effort to design products or services
that meet the needs of customers in different countries. In order to pursue a policy
of standardization, companies need segmentation information to do market
research to make sure that the proper ingredients are in the marketing mix.
c. Entry decisions--when a product does well in one country, it is hoped that it

will do well in other similar countries. Market segmentation can help to identify
the significant characteristics that transcend borders and markets.
d. Positioning strategy--segmentation decisions are instrumental in setting the

company’s product positioning strategy. Once the firm has selected the target
segments, management needs to develop a positioning strategy to embrace the
chosen segments. Basically, the company has to decide on how it wants to
position its product or services in the mind of the prospective target customers.
e. Resource allocation—market segmentation helps allocate the company’s scarce

marketing resources across different countries. The decisions are also determined
by market share and competitive position.
f. Marketing mix policy--country segmentation decisions will guide the global

marketer’s mix decisions. The mix decisions are especially important when
deciding between a standardization and customization policy.
Difficulty: Hard
Pages: Reasons for International Market Segmentation
68
114. Comment on when marketers should pursue universal/global segments,
regional segments, and unique/diverse segments.
Answer:
Marketers should pursue universal or global market segments when

characteristics or segments are found that transcend national borders. Marketers
appealing to universal segments have two approaches to reach their targets. One
option is to adopt a largely standardized strategy. Alternatively, they might go for
a country-tailored strategy that recognizes differences between various countries.
The undifferentiated approach will lead to economies of scale. The country-
tailored approach (a differentiated strategy) often creates more demand and is
more market-oriented. In regional segments, the similarity in customer needs and
preferences exists at regional level. In unique/diverse segments, marketing mix
programs must be localized to meet local needs.
Difficulty: Easy
115. Socioeconomic variables are among the most important bases to be

considered when segmenting markets. Comment on the major issues that might be
faced when making the decision on whether to use per capita GDP or GNP as a
country segmentation criterion.
Answer:
One method of segmenting countries is to use monetization of transactions within

a country (a socio-economic variable). To compare measures such as per capita
GNP across countries, figures based on a local currency need to be translated into
a common currency. However, official exchange rates seldom reflect the
purchasing power parity (PPP) of a currency. So, income figures based on GNP or
GDP do not really tell one how much a given household in a given country is able
to buy.
The PPP (especially in countries with wide income disparity) protects against the
shortcomings of the standard “per capita income” segmentation measures.
Another method is the Socio-Economic Strata analysis (SES). Under this method,
income classes are created and studied.
Difficulty: Hard
69
116. For many years researchers and academics believed that lifestyle
segmentation (which was often a very successful technique in a home country’s
domestic market) was a valid segmentation technique. However, recently doubts
have been raised. Discuss the weaknesses of lifestyle based segmentation
schemes. Think of applications when lifestyle segmentation might be the most
appropriate.
Answer:
Using this method, segmentation occurs on a consumer’s attitudes, opinions, and

values. This is a popular method in advertising circles, however, some of these
schemes can be very general and not related to a specific product category.
Lifestyle segmentation has been applied to the positioning of new brands, the
repositioning of existing ones, identifying new product opportunities, and the
development of brand personalities. Concerns are that: a) values are too general to
relate to consumption patterns or brand choice behavior within a specific product
category; b) value-based segmentation schemes are not always “actionable;” c)
value segments are not stable since values typically change over time; d) their
international applicability is quite limited since lifestyles vary greatly.
Difficulty: Medium
Chapter 8
Multiple Choice
1. People in India watching CNN and Star TV now know instantaneously what is
happening in the world. Such information access creates demand that would not
have existed before and it restricts the power of governments to influence
consumer choice. This is an example of:
a. stable demand structure in the international marketplace.

b. the explosion of information technology that has changed global
competition.
c. a growing travel industry.
d. how the Japanese are changing global competition.
e. how the governments of the world distrust the mass media.
Answer: b
Difficulty: Hard
2. Geographical boundaries and distances have become less of a constraint in

designing strategies for the global market because of:
70
a. a stable demand structure in the international marketplace.
b. a growing travel industry.
c. the revived role of the United Nations.
d. the explosion of information technology that has changed global
competition.
e. the expanding role of government in international trade.
Answer: d
Difficulty: Medium
71
3. Since the 1980s, the explosion of _____ has forever changed the nature of
competition around the world. Geographical distance has become increasingly
less relevant in designing global strategy.
a. new product designs

b. genetic breakthroughs
c. information technology
d. fuel efficient automobiles
e. interest in the stock market
Answer: c
Difficulty: Medium
4. The chief executive officer of a firm can know the previous day’s sales down to a
penny because of the increased capacity of information technology. This leads to
_____.
a. lags
b. real-time management
c. cyclical trends
d. confusion in strategic planning
e. None of the above
Answer: b
Difficulty: Medium
Section: Real-Time Management
5. Top retailers such as Wal-Mart and Costco get information from their stores
around the world every two hours via telecommunications. This would be an
example of _____ in action.
a. productivity management
b. trend management
c. a very costly procedure
d. management by objectives
e. real-time management
Answer: e
Difficulty: Medium
72
6. Ordering and purchasing components, which was once a cumbersome, time-
consuming process, is now done by _____, reducing the time involved in such
transactions from weeks to days and eliminating a considerable amount of
paperwork.
a. Electronic Data Systems (EDS)

b. Purchasing International Network (PIN)
c. Electronic Data Interchange (EDI)
d. Global Buying Network (GBN)
e. Internet Buying Network (IBN)
Answer: c
Difficulty: Hard
7. Which of the following is not a characteristic of blockchain technology?
a. It creates a shared system of record among business network members

b. Each member of the network must have access privileges
c. Computerized mining equipment is required
d. Information is shared only on a need-to-know basis
e. Consensus is required from all members and all validated transactions are
permanently recorded.
Answer: c
Difficulty: Medium
Section: Blockchain Technology
8. This company has now adopted blockchain technology into its supply chain
management for its global cargo shipments.
a. Amazon
b. FedEx
c. US Postal Service
d. General Motors
e. United Parcel Service
Answer: b
Difficulty: Medium
73
9. Which of these is not an advantage of online communication?
a. sales reps are in constant contact with their offices and customers
b. information can be transmitted instantly
c. sequential problem solution
d. customers can seek assistance 24/7 from around the globe
e. All of the above are pluses.
Answer: e
Difficulty: Easy
Section: Online Communication
10. Field representatives using laptop computers, faxes, and satellite uplinks to
communicate with the field and the home office are all examples of:
a. internet buying.
b. intranet buying.
c. extranet data exchange.
d. online communication.
e. nonpersonal communication.
Answer: d
Difficulty: Medium
11. In 1995, only 4 percent of Americans used the Internet every day. In 2016, the
figure was what?
a. 47 percent
b. 58 percent
c. 68 percent
d. 78 percent
e. 85.8 percent
Answer: e
Difficulty: Medium
Section: Electronic Commerce (E-Commerce)
74
12. In 2016, about what percentage of the world population used the internet?
a. 47 percent
b. 58 percent
c. 68 percent
d. 78 percent
e. 85.8 percent
Answer: a
Difficulty: Medium
13. _____ is the largest e-commerce market in the world.
a. Ireland
b. China
c. Singapore
d. Taiwan
e. US
Answer: b
Difficulty: Medium
14. _____ is the second largest e-commerce market in the world.
a. Ireland
b. China
c. Singapore
d. Taiwan
e. US
Answer: e
Difficulty: Medium
75
15. An increasing number of multinational firms have begun to use internal Web
servers on the Internet to facilitate communications and transactions among
employees, suppliers, independent contractors, and distributors. This would be an
example of which of the following organizational forms?
a. vertical
b. horizontal
c. matrix
d. consensus
e. e-company
Answer: e
Difficulty: Easy
Section: E-Company
16. Product diffusion times in this century have:
a. increased—there are more people in the world, so it takes longer.

b. stayed the same as in the 1900s.
c. decreased, but only in the developed nations.
d. decreased mostly for high tech products.
e. increased for all products because the choices are more numerous.
Answer: d
Difficulty: Easy
Section: Faster Product Diffusion and Connectivity
17. One of the major impacts of information technology is:
a. lengthened product life cycles.

b. dispersed product life cycles.
c. vertical product life cycles
d. horizontal product life cycles.
e. shorter product life cycles.
Answer: e
Difficulty: Medium
76
18. Thanks to the development of _____, products that used to be considered
completely different and separate, such as smartphones and home appliances, are
getting increasingly interconnected with each other.
a. WiFi
b. internet
c. the internet of things
d. Bluetooth
Answer: c
Difficulty: Easy
19. A contributing factor in the globalization of markets is the spread of _____ as the
international language of international business.
a. German
b. English
c. French
d. Chinese
e. Hindi
Answer: b
Difficulty: Easy
Section: Global Citizenship
20. Because of its complexities, _____ development presents one of the stiffest
challenges for international managers.
a. local strategy
b. regional strategy
c. multidomestic strategy
d. transnational strategy
e. global strategy
Answer: e
Difficulty: Easy
Section: Global Strategy
77
21. _____ are defined as those industries where a firm’s competitive position in one
country is affected by its position in other countries, and vice versa.
a. Interdependent industries
b. Global industries
c. Transcontinental industries
d. Transnational industries
e. Multidomestic industries
Answer: b
Difficulty: Easy
Section: Global Industry
22. By 2014, Honda boosted its North American production capacity by 40 percent.
This would be an example of a firm that sees itself as being in a(n):
a. hybrid industry.
b. global industry.
c. transcontinental industry.
d. supercompetitive industry.
e. expert industry.
Answer: b
Difficulty: Medium
Section: Global Industry
23. Industry globalization forces include the following except:
a. cost forces.
b. market forces.
c. social forces.
d. government forces.
e. competitive forces.
Answer: c
Difficulty: Medium
Section: Global Industry, Exhibit 8-1
78
24. Market globalization forces include the following except:
a. converging per capita incomes.

b. global customers and channels.
c. global advertising.
d. rich consumers in emerging markets.
e. manufacturing.
Answer: e
Difficulty: Hard
Section: Market Forces
25. With respect to industry globalization forces, _____ depend on the nature of
customer behavior and the structure of channels of distribution.
a. cost forces
b. competitive forces
c. quality forces
d. government forces
e. market forces
Answer: e
Difficulty: Medium
26. All of the following are examples of market forces except:
a. common customer needs.

b. global customers and channels.
c. transferable marketing.
d. experience curves.
e. spread of global and regional media
Answer: d
Difficulty: Medium
79
27. Which of the following would be considered a market driver with respect to
industry globalization forces?
a. favorable logistics.
b. steep experience curves.
c. global economics of scale and scope.
d. global sourcing efficiencies.
e. convergence of lifestyles and tastes.
Answer: e
Difficulty: Medium
28. Cost forces include the following except:
a. political parties of host countries.

b. global economies of scale and scope.
c. accelerating technology innovations.
d. shorter product life cycle.
e. high product development costs.
Answer: a
Difficulty: Hard
Section: Cost Forces
29. _____ depend on the economics of the business. These forces particularly affect
production location decisions.
a. Cost forces
b. Competitive forces
c. Quality forces
d. Government forces
e. Market forces
Answer: a
Difficulty: Medium
80
30. All of the following are examples of cost forces except:
a. advances in transportation.
b. low labor costs in newly industrializing countries.
c. global economics of scale and scope.
d. flexible manufacturing.
e. transferable marketing.
Answer: e
Difficulty: Hard
31. Differences in country costs, high product development costs, and fast-changing
technology would all be examples of what kind of industry globalization forces?
a. cost forces
c. quality forces
e. market forces
Answer: a
Difficulty: Medium
32. Government globalization forces include the following except:
a. favorable trade policies.

b. industry deregulation.
c. Privatization
d. establishment of world brands
e. open market economies.
Answer: d
Difficulty: Medium
Pages: Government Forces
81
33. Import tariffs and quotas, nontariff barriers, export subsidies, and local content
requirements are all examples of which kind of industry globalization driver?
a. cost forces
c. quality forces
e. market forces
Answer: d
Difficulty: Easy
Pages: Government Forces
34. Which of the following would not be considered a competitive driver with respect
to industry globalization forces?
a. more countries as key battlegrounds

b. increase in world trade
c. globalized financial markets
d. interdependence in some industries
e. reduction of tariff and nontariff barriers
Answer: d
Difficulty: Medium
Section: Competitive Forces
35. _____ raise the globalization potential of their industry and spur the need for a
response on the global strategy level.
a. Cost forces
b. Competitive forces
c. Quality forces
d. Government forces
e. Market forces
Answer: b
Difficulty: Hard
82
36. All of the following might be considered as being competitive globalization
forces except:
a. high imports and exports.

b. compatible technical standards.
c. competitors from different continents and countries.
d. interdependent countries.
e. globalized competitors.
Answer: b
Difficulty: Hard
37. In a(an) _____ strategy, a firm manages its international activities like a portfolio.
a. interdependent strategy
b. global strategy
c. transcontinental strategy
d. supercompetitive strategy
e. multidomestic strategy
Answer: e
Difficulty: Hard
38. In a(an) _____ strategy, a firm integrates the activities of a firm on a worldwide
basis to capture the linkages among countries and to treat the entire world as a
single, borderless market.
a. interdependent strategy
b. global strategy
c. transcontinental strategy
d. supercompetitive strategy
e. multidomestic strategy
Answer: b
Difficulty: Easy
83
39. In today’s world, _____ also comes from suppliers and customers, as well as
substitute products or services.
a. indirect competition
b. hyper competition
c. unique competition
d. all of the above
Answer: a
Difficulty: Hard
Section: Competitive Industry Structure
40. Which of the following poses the threat of the most profound change to an
industry?
a. government intervention
b. threat of substitute products
c. bargaining power of suppliers
d. hypercompetition
e. bargaining power of channel members
Answer: b
Difficulty: Medium
41. The multidimensional nature of competitive industry structure includes the

following except:
a. language translation
b. bargaining power of suppliers.
c. threat of new entrants.
d. threat of substitute products.
e. bargaining power of buyers.
Answer: a
Difficulty: Medium
84
42. _____ determine the rivalry among existing firms.
a. New entrants to the market

b. The bargaining power of suppliers
c. The bargaining power of buyers
d. The threat of substitute products or services
e. Industry competitors
Answer: e
Difficulty: Medium
43. _____ can be deterred by strong entry barriers.
a. Potential new entrants to the market

b. The bargaining power of suppliers
c. The bargaining power of buyers
d. The threat of substitute products or services
e. Existing rivals or competitors
Answer: a
Difficulty: Medium
44. The strength of Intel as a dominant producer of microprocessors would be an

example of _____ in the PC industry.
a. strength of potential new entrants to the market

b. the bargaining power of suppliers
c. the bargaining power of buyers
d. the threat of substitute products or services
e. existing rivals or competitors
Answer: b
Difficulty: Medium
85
45. Firms using a _____ strategy focus exclusively on a highly specialized segment of
the market.
a. niche
b. supply
c. demand
d. regional
e. global
Answer: a
Difficulty: Easy
Section: Competitive Advantage
46. In global competition, _____ companies may be vulnerable to large-scale

operators.
a. demand-oriented
b. niche players
c. supply-oriented
d. technology-oriented
e. consumer-oriented
Answer: b
Difficulty: Medium
47. A company that uses flexible manufacturing, economies of scale, and perhaps
limited product offerings is likely seeking an advantage as a _____.
a. loser
b. follower
c. cost leader
d. niche player
e. product differentiator
Answer: c
Difficulty: Medium
86
48. Cost leaders may be vulnerable to firms that use:
a. a quality strategy.
b. a timing strategy.
c. a local strategy.
d. a marketing strategy.
e. a product differentiation strategy.
Answer: e
Difficulty: Medium
49. BMW of Germany and Volvo of Sweden are examples of companies using a(n)
_____ strategy to achieve success.
a. product differentiation
b. cost leader
c. price leader
d. innovator
e. niche
Answer: a
Difficulty: Medium
50. Porsche and Saab maintain their competitive strengths in the high-power sports
car enthusiast category by following a(n) _____ strategy.
a. product differentiation
b. cost leader
c. price leader
d. innovator
e. niche
Answer: e
Difficulty: Medium
87
51. Which is not true about economies of scale?
a. economies of scale come about because larger plants are more efficient to
run
b. with economies of scale, per-unit cost of production is less
c. economies of scale are typical in service businesses
d. with economies of scale, overhead costs are allocated across large
volumes of production
e. economies of scale can result from learning effects
Answer: c
Difficulty: Medium
52. The text refers to three primary approaches to gaining competitive advantage.
Which is not one of them?
a. technology-driven approaches
b. financially-focused approaches
c. competitor-focused approaches
d. customer-driven approaches
Answer: b
Difficulty: Medium
53. Which of the following could be used as an advantage by first-movers?
a. infrastructure is there for you to develop as you wish

b. cutting edge technology supports rapid innovation and product
introduction
c. uncertainties of customer desires
d. once in, you can rest on your laurels as market leader
Answer: b
Difficulty: Medium
88
54. The concept of creative destruction assumes continuous change. This is a basic
assumption behind the concept of _____, where the firm’s focus is on disrupting
the market.
a. low differentiation
b. cost leader
c. price leader
d. innovator
e. hypercompetition
Answer: e
Difficulty: Hard
Section: Hypercompetition
55. Estee Lauder has successfully responded to the needs of different market. This
strategy is influenced by:
a. mail-focused approach.
b. linear-focused approach.
c. game-focused approach.
d. customer-focused approach.
e. Internet-focused approach.
Answer: d
Difficulty: Easy
56. What are some of the possible hallmarks of interdependency?
a. reliance on other firms for supplies or technology

b. relocating in foreign markets because of government intervention
c. component standardization
d. technology intensity
e. all of the above
Answer: e
Difficulty: Medium
Section: Interdependency
89
57. According to the textbook, benefits of global marketing strategy may include four
factors:
a. cost reduction, improved products and program effectiveness, customer

preference, and competitive advantage.
b. cost reduction, improved products and program effectiveness, customer
preference, and raw materials.
c. cost reduction, improved products and program effectiveness, customer
preference, and intellectual capital.
d. cost reduction, improved products and program effectiveness, customer
preference, and transportation.
Answer: a
Difficulty: Hard
Section: Benefits of Global Marketing
58. Which of the following are ways that cost reduction can be achieved by following
a program of global marketing?
a. standardized packaging.
b. customized products.
c. using old products from one market for another.
d. hiring more workers.
e. eliminating warranties.
Answer: a
Difficulty: Hard
59. Traditionally, _____ has been concentrated in the headquarters country of a global
company.
a. hiring and firing

b. human resources
c. manufacturing
d. research and development
Answer: d
Difficulty: Easy
90
60. One of the chief barriers or limits to global marketing is the:
a. lack of respect for foreigners.

b. diversity of local environments.
c. amount of poor people in the world.
d. desire for affluent markets.
e. government control of markets.
Answer: b
Difficulty: Medium
Section: Limits to Global Marketing
61. The textbook discusses four different ways of developing a global product policy,
all of which are generally considered an effective means to streamline
manufacturing except:
a. core components standardization.

b. product design families.
c. universal product with all features.
d. universal product with different positioning.
e. local product with core components.
Answer: e
Difficulty: Hard
Section: Operations/ Marketing Interface
62. Successful _____ policy requires development of universal products, or products

that demand no more than a cosmetic change for adaptation to differing local
needs and use conditions.
a. core product
b. global product
c. regional product
d. quality product
e. local product with core components
Answer: b
Difficulty: Medium
91
63. Which of the following is one of the four ways of developing a global product
policy to streamline manufacturing (thus lowering manufacturing cost without
sacrificing marketing flexibility)?
a. dynamic service packages

b. multiple source options
c. universal electrification of components
d. core component standardization
e. universal prices.
Answer: d
Difficulty: Hard
64. Toyota Motor Company offers several car models based on a similar family
design concept, ranging from Lexus models to Toyota Avalon, Camrys, and
Corollas. This is an example of:
a. brand design families.

b. high-tech design families.
c. hybrid design families.
d. unique design families.
e. product design families.
Answer: e
Difficulty: Medium
65. All of the following are examples of global product policies except:
a. core component standardization.

b. core component miniaturization.
c. product design families.
d. universal product with all features.
e. universal product with different positioning.
Answer: b
Difficulty: Medium
92
66. Seiko, a Japanese watchmaker, offers a wide range of designs and models, but
they are based on only a handful of different operating mechanisms. This would
be an example of which of the global product policies listed below?
a. core component standardization

b. core component miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning
Answer: a
Difficulty: Medium
67. Electrolux, a Swedish appliance manufacturer, has adopted which of the

following product policies when offering different products under four different
brand names, but using the same basic designs?
a. core component standardization

b. core component miniaturization
Answer: c
Difficulty: Easy
68. In the area of _____ product with different positioning, a _____ product can be
developed with different market segments in mind.
a. national
b. multinational
c. regional
d. local
e. universal
Answer: e
Difficulty: Easy
93
69. A key to pursuing a product policy of product design families (or product design
standardization) lies in:
a. good engineering.
b. quality control.
c. good die-casts.
d. standardization of components and basic designs.
e. standardization of labor.
Answer: d
Difficulty: Easy
70. When a universal product is developed with different market segments in mind, it
is an example of which of the following product policies?
a. core components standardization

b. core components miniaturization
Answer: e
Difficulty: Medium
71. Honda markets the Honda Accord around the world by positioning it differently
from country to country. The car, however, is almost identical no matter which
market it is sold in. This would be an example of which of the following product
policy options?
a. core components standardization

b. core components miniaturization
Answer: e
Difficulty: Medium
94
72. One of the real sources of Japanese inspiration and competitiveness is that they
excel in the management of the _____ interface.
a. production/quality
b. marketing/R&D
c. purchasing/marketing
d. purchasing/outsourcing
e. budget/manufacturing
Answer: b
Difficulty: Hard
Section: Marketing/R&D Interface
73. Research has shown that the marketplace has become a virtual _____ for Japanese
companies to gain production and marketing experience, as well as to perfect
technology.
a. human laboratory
b. marketing laboratory
c. psychological laboratory
d. R&D laboratory
e. promotions laboratory
Answer: d
Difficulty: Medium
Section: Marketing/R&D Interface
74. Regional strategies can be defined as the _____ in pursuit of regional production,
branding, and distribution advantages.
a. cross-subsidization of market share battles

b. cross-harmonization of market share battles
c. cross-miniaturization of market share battles
d. cross-globalization of market share battles
Answer: a
Difficulty: Medium
Section: Regionalization of Global Marketing Strategy
95
75. Multinational firms using profit gained in a market where they have a strong
competitive position to beef up their competitive position in a weak market is
referred to as the:
a. cross-exploration of markets.
b. cross-harmonization of markets.
c. cross-homogenization of markets.
d. cross-subsidization of markets.
Answer: d
Difficulty: Hard
Section: Cross-Subsidization of Markets
76. A _____ is where unique local competition is nurturing product and service
standards to be adopted by the rest of the world over time.
a. lead market
b. slow market
c. backward market
d. grey market
e. black market
Answer: a
Difficulty: Medium
Section: Use of the “Lead Market” Concept
77. Japanese consumers fond of high-tech gadgets may even set the world standard
for gas pumps that come equipped with online service that offer motorists access
to weather forecasts and traffic information. This is an example of a:
a. grey market.
b. slow market.
c. backward market.
d. lead market.
e. black market.
Answer: d
Difficulty: Easy
96
78. Lead markets represent countries where innovations in particular industries are
prone to take place. All of the following are examples of lead countries except:
a. the United States in smartphones.

b. Japan in fax machines.
c. Germany for industrial control equipment.
d. France for fashion clothing and perfume.
e. Canada for computer hardware.
Answer: e
Difficulty: Easy
79. Local competitors in BEMs can thwart MNCs’ inroads with:
a. superior technology products.

b. better service.
c. cheaper, more durable goods.
d. a combination of b and c.
e. none of the above—BEM companies are doomed to fail.
Answer: d
Difficulty: Medium
Section: Marketing Strategies for Emerging Markets
80. Bajaj is an Indian _____ manufacturer.
a. Scooter
b. Bicycle
c. Steel
d. high-tech
e. shoe
Answer: a
Difficulty: Easy
97
81. Jollibee Foods, a family-owned fast food company is from:
a. South Korea
b. China
c. Japan
d. the Philippines
e. Singapore
Answer: d
Difficulty: Medium
82. One particularly useful technique in analyzing a firm’s competitive position

relative to its competitors is referred to as SWOT which stands for:
a. Strengths, Weaknesses, Organization, Total value.

b. Strengths, Weaknesses, Operations, Training.
c. Strengths, Weaknesses, Opportunities, Total costs.
d. Strengths, Weaknesses, Opportunities, Transfers.
e. Strengths, Weaknesses, Opportunities, Threats.
Answer: e
Difficulty: Easy
Section: Competitive Analysis
98
True/False
83. On a competitive map, financial, trading, and industrial activities across national
boundaries have rendered political borders increasingly irrelevant.
Answer: True
Difficulty: Easy
84. Information access creates demand that would not have existed before and it
restricts the power of governments to influence consumer choice.
Answer: True
Difficulty: Easy
85. Because of the complexity of international competition and markets, real-time

management is not practical for the modern executive seeking new competitive
weapons with which to compete.
Answer: False
Difficulty: Medium
86. A new technology, called internet of things (IoT), is being developed to better
cope with cybersecurity.
Answer: False
Difficulty: Medium
87. Multiple design sites around the world in different time zones can now work
sequentially on the same problem.
Answer: True
Difficulty: Easy
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88. Carrefour is a Swiss company.
Answer: False
Difficulty: Medium
89. More rapid dispersion of technology and the shorter product life cycles in global
suggests that the former country-by-country sequential approach to entering
markets throughout the world is practical.
Answer: False
Difficulty: Easy
90. With the advent of the internet, a global strategy is fairly quick-and-easy to put
together.
Answer: False
Difficulty: Easy
Section: Global Strategy
91. Some common market forces are global economies of scale and scope and a steep
experience curve.
Answer: False
Difficulty: Medium
92. Competitive globalization forces do not raise the globalization potential of their
industry.
Answer: False
Difficulty: Medium
Section: Global Industry, Exhibit 8-1
93. Firms using a niche strategy do not focus on highly specialized segments.
Answer: False
Difficulty: Easy
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94. The bargaining power of suppliers can change the structure of industries.
Answer: True
Difficulty: Easy
95. According to a recent study, implementation of a cost leadership strategy by

developed-country MNCs actually is rarely effective in emerging markets.
Answer: True
Difficulty: Medium
96. A competitive advantage results in higher profits.
Answer: True
Difficulty: Medium
97. Any competitive advantage is temporary.
Answer: True
Difficulty: Medium
98. Established economies of scale function as barriers for potential entrants to a

market.
Answer: True
Difficulty: Easy
99. The basic premise of hypercompetition is the Schumpeterian view that the secret
to success is coordination of competition by negotiation, cooperation, and
alliance.
Answer: False
Difficulty: Medium
100. Research findings do indicate that technology intensity—that is, the

degree of R&D expenditure a firm incurs as a proportion of sales—is a primary
deterrent of cross-border firm integration.
Answer: False
Difficulty: Medium
101
101. Owning a website on the Internet and marketing to consumers is another

way to reduce costs of conducting global marketing
Answer: True
Difficulty: Easy
102. Regionalization can also be defined as cross-subsidization.
Answer: True
Difficulty: Medium
Section: Regionalization of Global Marketing Strategy
103. There is a huge middle-class being developed in Big Emerging Markets

(BEMs).
Answer: True
Difficulty: Medium
104. Consumers in BEMs are not aware of global products and global
standards.
Answer: False
Difficulty: Easy
105. SWOT stands for strengths, opportunities, weaknesses and technology.
Answer: False
Difficulty: Easy
Section: Competitive Analysis
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Fill in the Blank
106. The firm is essentially a collection of activities that are performed to

design, procure materials, produce, market, deliver, and support its product. This
set of interrelated corporate activities is called the _____.
Answer: value chain

Difficulty: Medium
107. EDI stands for:
Answer: Electronic Data Interchange

Difficulty: Medium
108. Cost forces depend on the _____ of the business.
Answer: economics or financial aspects

Difficulty: Hard
109. Favorable trade policies, deregulation of industry, and common marketing

regulations are examples of _____ globalization forces.
Answer: government or political

Difficulty: Medium
Section: Government Forces
110. _____ forces raise the globalization potential of their industry and spur the
need for a response on the global strategy levels.
Answer: Competitive
Difficulty: Medium
111. _____ competitors determine the rivalry among existing firms.
Answer: Industry
Difficulty: Medium
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112. Potential entrants may change the rule of competition but can be deterred
through _____.
Answer: entry barriers

Difficulty: Hard
113. Intel is an example of how the bargaining power of _____ can change the
structure of industries.
Answer: suppliers
Difficulty: Medium
114. Global strategy can help achieve the firm four major benefits which
include: cost reduction, improved products and program effectiveness, enhanced
customer preference, and increased _____.
Answer: competitive advantage

Difficulty: Hard
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Essay
115. Identify and briefly discuss the various factors/forces which determine the
globalization of potential industries. Indicate common examples of each.
Answer:
a. Market globalization forces--these forces depend on the nature of

customer behavior and the structure of channels of distribution. Some common
examples are:
1). Common customer needs.

2). Global customers and channels.
3). Transferable marketing.
4). Lead countries.
b. Cost globalization forces--these forces depend on economics of the

business. These forces particularly affect production location decisions, as well as
global market participation and global product development decisions. Some of
the cost forces are:
1). Global economies of scale and scope.

2). Steep experience curves.
3). Global sourcing efficiencies.
4). Favorable logistics.
5). Differences in country costs.
6). High product development costs.
7). Fast-changing technology.
c. Government globalization forces--rules set by national governments can

affect the use of global strategic decision-making. Some of these rules and
policies include:
1). Favorable trade policies.
2). Compatible technical standards.
3). Common marketing regulations.
4). Government-owned competitors.
5). Government-owned customers.
d. Competitive globalization forces--raise the globalization potential of their

industry and spur the need for a response on the global strategy level. The
common competitive forces include:
1). High exports and imports.
2). Competitors from different continents and countries.
3). Interdependent countries.
4). Globalized competitors.
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Difficulty: Hard
Pages: Market Forces
116. What does the term “hypercompetition” mean? What are the various
arenas of competition covered by this concept?
Answer:
In any given industry, firms jockey among themselves for better competitive
position, given a set of customers and buyers, the threat of substitutes and the
barriers to entry in that industry. A new competitor may emerge from a
completely different industry given the convergence of industries. Such shifts in
competition may follow a Schumpeterian view that says creative destruction
assumes continuous change. This basic assumption is behind the
hypercompetitive environment and strategy that says competition takes place in
three arenas: 1) a firm competes on price-quality basis vis-à-vis its competitors; 2)
on the basis of timing and know-how; 3) on the basis of creating strongholds in
the markets it operates in (this is akin to entry barriers); 4) on the basis of
financial resources to outlast one’s competitors.
Difficulty: Medium
117. Relate the concepts of interdependency and standardization to one another.

Indicate the strategic implications of the terms.
Answer:
Recent research has shown that the number of technologies used in a variety of
products in numerous industries is rising continuously. With resource limitations
of firms circumscribing the number of distinctive competencies that a firm can be
good at, firms now need to access technologies from outside the firm to be able to
build a state-of-the-art product. Since most firms operating globally are subject to
the limitation of lack of all required technologies, it follows that for firms to
develop products that make optimal use of technologies accessed from outside, a
degree of standardization of the components is required. Such component
standardization would enable different firms to develop different end products
using, in a large measure, the same components.
Difficulty: Easy
106
118. Characterize global marketing strategy. Indicate how it is a separate and
distinct form of strategy.
Answer:
Global marketing is not about standardizing the marketing process on a global

basis. While every element of the marketing process (the marketing mix and other
functions of marketing) may be a candidate for standardization, standardization is
one part of a global marketing strategy and it may or may not be used by a
company (depending on the mix of the product-market conditions, stage of market
development, and the inclinations of the management of the multinational firm).
Successful global marketing is a question of coordination.
Difficulty: Easy
Pages: Global Marketing Strategy
119. Describe the benefits and limitations of global marketing strategy.
Answer:
Benefits of global marketing strategy fall into four categories: cost reduction,
improved products and program effectiveness, enhanced customer preference and
increased competitive advantage. The limits to global marketing include diversity
of local markets, the environments (cultural, political, and legal), the question of
standardization versus adaptation (or other derivatives), and the need to have
transnational technology and communication.
Difficulty: Medium
Pages: Global Marketing Strategy
107
120. Is being a first-mover in a market an advantage?
Answer:
Being a first-mover can be an advantage, but isn’t necessarily always one;

sometimes being a first-mover can be a disadvantage.
For many firms, technology is the key to success in markets where significant
advances in product performance are expected. A firm uses its technological
leadership for rapid innovation and introduction of new products. The timing of
such introductions in the global marketplace is an integral part of the firm’s
strategy. However, the dispersion of technological expertise means that any
technological advantage is temporary, so the firm should not rest on its laurels.
The firm needs to move on to its next source of temporary advantage to remain
ahead. In the process, firms that are able to continue creating a series of temporary
advantages are the ones that survive and thrive. Technology, marketing skills, and
other assets that a firm possesses become its weapons to gain advantages in time
over its competitors. The firm now attempts to be among the pioneers, or first-
movers, in the market for the product categories that it operates in. Sony offers an
excellent example of a company in constant pursuit of first-mover advantage with
Trinitron color television, Betamax video recorder, Walkman, 8-mm video
recorder, DVD, and Blue-ray disc technology although not all of its products,
such as MiniDisc, succeeded in the market.
Difficulty: Medium
Chapter 9
Multiple Choice
1. In global market entry, all of the following are entry decisions that must be made
by management before entering an international market except:
a. decide on the time of entry.

b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the target budget.
Answer: e
Difficulty: Medium
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2. When marketers are making the decision to enter an international market or not,
the first step is generally to:
a. decide on the target budget.

b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the time of entry.
Answer: b
Difficulty: Easy
3. Which of the following is a step in the market entry decision process?
a. Forecast a corporate budget.

b. Conduct a marketing audit.
c. Review mode of entry (evaluate if it’s the most appropriate given external
factors and internal objectives).
d. Review transportation strengths.
e. Analyze domestic demand.
Answer: c
Difficulty: Hard
4. Which of the following most accurately describes a critical initial step in the
market entry decision process?
a. Decide on the strategic objectives, from the company’s global mission, are
to be met via new market entry.
b. Decide on the mode of entry.
c. Decide on the time of entry.
d. Decide on the marketing mix plan.
Answer: a
Difficulty: Medium
Section: Country Selection
5. To identify market opportunities for a given product or service, the international

marketer usually starts off with a large pool of candidate countries. To narrow
down this pool, the company will typically do a(n) _____.
a. internal audit.
b. external audit.
c. cross-border budget.
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d. preliminary screen.
e. econometric analysis.
Answer: d
Difficulty: Medium
6. The goals of a preliminary screen to determine market opportunities are to

minimize mistakes of ignoring countries that offer viable opportunities for the
product and:
a. offending local governments.

b. offending local cultures.
c. offending local merchants.
d. violating local advertising laws.
e. not wasting time on countries that offer little or no potential.
Answer: e
Difficulty: Medium
7. The four-step procedure that can be employed for the initial screening process
includes all of the following except:
a. select indicators and data selection.

b. analyze parallel strengths and weaknesses of the market.
c. determine the importance of country indicators.
d. rate the countries in the pool on each indicator.
e. compute the overall scores for each country.
Answer: b
Difficulty: Medium
8. When Colgate-Palmolive sees prospects in countries with purchasing power as a

major driver behind market opportunities and Coca-Cola looks at per capita
income and the number of minutes that it would take someone to work to be able
to afford a Coca-Cola product, they are following which of the following steps of
the initial screening process for market entry?
a. indicator selection and data selection.

e. compute overall scores for each country.
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Answer: a
Difficulty: Hard
9. A four-step procedure that can be employed for the initial screening process
includes the following except:
a. select indicators and collect data.

b. determine importance of country indicators.
c. run a marketing mix evaluation
e. compute overall score for each country.
Answer: c
Difficulty: Hard
10. When Coca-Cola looks at per capita income and the number of minutes that it
would take for somebody to work to be able to afford a Coca-Cola product, the
company is following which of the following steps of the initial screening process
for market entry?
a. indicator selection and data selection.

e. compute overall scores for each country.
Answer: a
Difficulty: Hard
11. A variety of reasons that may cause a positive relationship between entry scale
and post-entry performance. Which is not a reason?
a. large-scale entry may induce volume-driven cost advantages

b. in industries or services where location matters, large-scale entry (e.g.,
with many outlets) can lead to a lock-up of the more attractive locations
c. existing players are less likely to respond aggressively when the entrant
has made substantial investments
d. existing competitors are more likely to expand in the country of origin of
the entering company
e. large-scale entry could deter other prospective players to enter the country
afterward
Answer: d
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Difficulty: Medium
Section: Scale of Entry
12. MetLife, the insurance company, opened a liaison office in Shanghai and Beijing
while it was waiting for permission from the Chinese government to start
operations. This is an example of dealing with_____ in markets.
a. consumer demand analysis

b. government risk
c. cross-fertilization
d. demand conflict
e. unfairness
Answer: b
Difficulty: Medium
Section: Decision Criteria for Mode of Entry
13. In the mode of entry, some companies see liaison office as a low-cost _____.
a. joint venture
b. export management company
c. listening post
d. contract exporter
e. alliance post
Answer: c
Difficulty: Hard
14. The _____ of a market refers to the country’s distribution system, transportation
network, and communication system.
a. demographic environment
b. infrastructure
c. logistical
d. physical distribution
e. physical infrastructure
Answer: e
Difficulty: Medium
15. Markets can be classified in five types of countries based on their respective
market attractiveness. All of the following are part of the classification scheme
except:
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a. platform countries.
b. emerging countries.
c. low-tech countries.
d. growth countries.
e. maturing and established countries.
Answer: c
Difficulty: Easy
market attractiveness. Which of the following of those types can be used to gather
intelligence and establish a network?
c. maturing and established countries.
Answer: a
Difficulty: Easy
market attractiveness. Hong Kong and Singapore would fall into which of the
types listed below (where the purpose would be to gather intelligence and
establish a network)?
Answer: a
Difficulty: Hard
market attractiveness. Which of the following of those types can be used to build
up an initial presence (such as through a liaison office)?
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Answer: b
Difficulty: Medium
market attractiveness. Vietnam and the Philippines would fall into which of the
types listed below (where the purpose would be to build up an initial presence
such as through a liaison office)?
Answer: b
Difficulty: Hard
market attractiveness. Which of the following countries would most likely be
listed as a maturing/established market?
a. China
b. Burma
c. India
d. Taiwan
e. Vietnam
Answer: d
Difficulty: Hard
listed as an established/maturing market?
a. China.
b. the Philippines.
c. India.
d. Vietnam.
e. Japan.
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Answer: e
Difficulty: Medium
listed as a growth country?
a. Hong Kong.
b. Vietnam.
c. China.
d. Taiwan.
e. Japan.
Answer: c
Difficulty: Medium
23. Most companies start their international expansion with _____.
a. exporting
b. joint ventures
c. licensing
d. franchising.
e. contract manufacturing.
Answer: a
Difficulty: Easy
Section: Exporting
24. In the area of exporting, a middleman could be an _____.
a. export outsourcing company

b. export management company
c. export production company
d. export specialist company
e. export manufacturing company
Answer: b
Difficulty: Medium
Section: Exporting
25. Companies that plan to engage in exporting have a choice between indirect,
_____, and direct exporting.
a. licensing
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b. parallel
c. cooperative
d. venture
e. summation
Answer: c
Difficulty: Medium
Section: Exporting
26. _____ means that the firm uses a middleman based in its home market to do the
exporting.
a. Licensing
b. Contract manufacturing
c. Cooperative exporting
d. Venture exporting
e. Indirect exporting
Answer: e
Difficulty: Medium
Section: Exporting
27. _____ offers several advantages. Chief among these are the firm gets instant
foreign market expertise, very little risk is involved, and no major resource
commitments are required.
a. Licensing
b. Parallel exporting
d. Direct exporting
Answer: e
Difficulty: Medium
Section: Exporting
28. _____ has disadvantages. Chief among these are that the company has little or no
control over the way their product is marketed in a foreign country, lack of
adequate sales support (among other support variables) can lead to poor sales, and
bad decisions made by an intermediary can damage the corporate image.
a. Licensing
d. Direct exporting
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Answer: e
Difficulty: Medium
Section: Exporting
29. _____ means that the firm enters into an agreement with another firm (local or
foreign) where the partner will use its distribution network to sell the exporter’s
goods.
a. Licensing
d. Venture exporting
Answer: c
Difficulty: Medium
Section: Exporting
30. _____ means that the company sets up its own export organization within the
company and relies on a middleman based in a foreign market (foreign
distributor).
a. Licensing
d. Direct exporting
Answer: d
Difficulty: Easy
Section: Exporting
31. One of the most popular forms of cooperative exporting is called:
a. specialist exporting.
b. lean exporting.
c. long-range exporting.
d. backward exporting.
e. piggyback exporting.
Answer: e
Difficulty: Easy
Section: Exporting
117
32. One of the most popular forms of cooperative exporting is _____. With this
method, the company uses the overseas distribution network of another company
(local or foreign) for selling its goods in the foreign market.
a. parallel exporting.
b. venture exporting.
c. piggyback exporting.
d. make-or-buy exporting.
e. foreign export management exporting.
Answer: c
Difficulty: Easy
Section: Exporting
33. One of the main advantages of direct exporting over indirect exporting is that the
exporter has more:
a. leverage.
b. risk.
c. control over its international operations.
d. control over its budget.
e. leadership.
Answer: c
Difficulty: Easy
Section: Exporting
34. Piggyback exporting is when two different transportation modes (such as truck
and rail) are combined.
Answer: False
Difficulty: Medium
Section: Exporting
35. _____ is a contractual strategy where the firm offers some proprietary assets to a
foreign company in exchange for royalty fees.
a. Licensing
d. Direct exporting
Answer: a
Difficulty: Medium
Section: Licensing
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36. The Oriental Land Company in Japan owns Tokyo Disneyland. This would be an
example of an international _____ agreement between the Oriental Land
Company (owner) and Disneyland (receives royalties).
a. licensing
b. parallel exporting
c. cooperative exporting
d. direct exporting
e. indirect exporting
Answer: a
Difficulty: Medium
Section: Licensing
37. Benefits of licensing include:
a. not very demanding on company resources.

b. always protected against copying or technical theft.
c. always a strong partner relationship.
d. low profits, therefore, low taxes.
e. licensee is always enthusiastic.
Answer: a
Difficulty: Medium
Section: Benefits
38. Nurturing a future competitor is the biggest danger in _____.
a. licensing
b. parallel exporting
c. cooperative exporting
d. direct exporting
e. indirect exporting
Answer: a
Difficulty: Medium
Section: Caveats
39. One of the most popular entry modes in the international marketplace for service
firms is:
a. licensing.
b. franchising.
c. cooperative exporting.
d. direct exporting.
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e. indirect exporting.
Answer: b
Difficulty: Medium
Section: Franchising
40. One of the most popular franchise plans used in international marketing is _____
where the franchiser gives the franchise to a local entrepreneur who in turn sells
local franchises within a territory.
a. sales franchise
b. master franchise
c. strategic franchise
d. cross-country franchise
e. border-territory franchise
Answer: b
Difficulty: Hard
41. According to the textbook, in franchising, companies can capitalize on a/n _____
expanding overseas with a minimum of investment.
a. cheap business formula.

b. expensive business formula.
c. winning business formula.
d. parallel business formula.
e. hybrid business formula.
Answer: c
Difficulty: Hard
Section: Benefits
42. With a(an) _____, the foreign company agrees to share equity and other resources
with other partners to establish a new entity in the target country.
a. contract manufacturing agreement

b. parallel exporting agreement
c. cooperative exporting agreement
d. export management company
e. equity joint venture
Answer: e
Difficulty: Easy
Section: Expanding Through Joint Ventures and Alliances
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43. A major advantage of joint ventures, as compared to lesser forms of resource
commitment such as licensing, is:
a. the return potential.

b. infrastructure enhancement.
c. expansion of stockholders.
d. division of leadership.
e. an increase in ethical standards.
Answer: a
Difficulty: Medium
Section: Benefits
44. All of the following are considered benefits of forming joint ventures except:
a. greater return potential.

b. shared profits instead of shared royalties.
c. more control over operations.
d. increased cost controls.
e. synergies.
Answer: d
Difficulty: Hard
Section: Benefits
45. With respect to joint ventures, the _____ argument is illustrated by not only
shared capital and risk but possible contributions brought in by the local partner in
land, raw materials, expertise on the local environment, and access to local
distribution networks.
a. demand
b. parallel management
c. consensus management
d. domestication
e. synergy
Answer: e
Difficulty: Medium
Section: Benefits
46. One of the problems with joint ventures is _____ between partners. An example
would be when one partner wants to stress reduction of political and economic
controls on decision-making and the other partner wants to accept technology and
capital but precludes foreign authority infringement on sovereignty and ideology.
a. conflicting purchasing objectives
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b. conflicting process objectives
c. control objectives
d. budget objectives
e. staffing objectives
Answer: c
Difficulty: Hard
Section: Caveats Exhibit 9-6
47. Lack of trust and mutual conflicts can often turn _____ into partnerships doomed
to failure.
a. contract manufacturing agreements

b. parallel exporting agreements
c. cooperative exporting agreements
d. export management companies
e. joint ventures
Answer: e
Difficulty: Medium
Section: Drivers behind Successful International Joint Ventures
48. There are no magic ingredients to foster the stability of joint ventures, however,
all of the following are good guidelines except:
a. pick a partner with which control can be maintained.

b. pick the right partner.
c. establish clear objectives from the beginning.
d. bridge cultural gaps.
e. get top management commitment and respect.
Answer: a
Difficulty: Medium
Pages: Drivers behind Successful International Joint Ventures
49. _____ are described as a coalition of two or more organizations to achieve

strategically significant goals that are mutually beneficial.
a. Joint ventures
b. Strategic alliances
c. Greenfield operations
d. Franchises
e. Piggyback arrangements
Answer: b
Difficulty: Medium
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50. The partnership established by Coca-Cola and Nestle to market ready-to-drink

coffees and teas under the Nescafe and Nestea brand names is an example of
which of the following:
a. strategic alliance.
b. contract manufacturing.
c. licensing.
d. wholly owned subsidiary.
e. exporting.
Answer: a
Difficulty: Medium
Pages: Expanding Through Joint Ventures and Alliances
51. A study by a team of McKinsey consultants advises parent companies to create a

launch team during the launch phase—beginning with the signing of a
memorandum of understanding and continuing through the first 100 days of
operation. The launch team should address the four key joint venture challenges.
Which is not one they name?
a. Build and maintain strategic alignment across the separate corporate

entities
b. Coordinate the travel between the parties, particularly its leadership
c. Create a governance system that promotes oversight
d. Manage the economic interdependencies between the corporate parents
and the joint venture
e. Build the organization for the joint venture (e.g., staffing positions and
assigning responsibilities)
Answer: b
Difficulty: Medium
Section: Drivers behind Successful International Joint Ventures
52. _____ come about when multinational companies prefer to enter new markets
with 100 percent ownership.
a. Contract manufacturing agreements

b. Parallel exporting agreements
c. Cooperative exporting agreements
d. Wholly owned subsidiaries
e. Joint ventures
Answer: d
Difficulty: Medium
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Section: Wholly Owned Subsidiaries
53. When a multinational company chooses to invest in foreign markets with wholly
owned subsidiaries, these subsidiaries may be acquisitions or _____ operations.
a. joint venture
b. strategic alliance
c. greenfield
d. franchise
e. piggyback
Answer: c
Difficulty: Medium
54. A _____ operation (with respect to wholly owned subsidiaries) is one which is
started from scratch.
a. joint venture
b. strategic alliance
c. greenfield
d. franchise
e. piggyback
Answer: c
Difficulty: Medium
55. Wholly owned subsidiaries give MNCs _____ of their operations.
a. almost no control
b. partial control
c. moderate control
d. full control
e. strategic control only
Answer: d
Difficulty: Easy
Section: Benefits
56. Advantages of wholly owned subsidiaries include all of the following except:
a. full control.
b. control of profits.
c. own processes.
d. control government relationships.
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e. can often be set quicker that other forms of investment.
Answer: d
Difficulty: Medium
Section: Benefits
57. One of the chief disadvantages of a wholly owned subsidiary is that:
a. complete ownership means that the parent company will have to carry the
full burden of potential losses
b. it is often perceived as generating low profits.
c. it is often perceived as having problems in supply lines.
d. it is often perceived as being more expensive
e. it is often perceived as a threat to the local media for promotion.
Answer: a
Difficulty: Hard
Section: Caveats
58. One way to address hostility to foreign acquisitions in the host country is by
_____ the firm’s presence in the foreign market by hiring local managers,
sourcing locally, and developing local brands.
a. regionalizing
b. localizing
c. socializing
d. acculturating
e. emphasizing the self-reference criterion (SRC)
Answer: b
Difficulty: Hard
Section: Caveats
59. Companies that enter via wholly owned subsidiaries are sometimes perceived as a
threat to the culture and/or economic sovereignty of the_____.
a. host country.
b. home country.
c. buffer country.
d. greenfield country.
e. high-tech country.
Answer: a
Difficulty: Easy
Section: Caveats
125
60. The chief reason that some firms choose acquisitions (or mergers) to enter a
foreign market is that they can:
a. receive greater tax relief.

b. receive greater profits.
c. reduce debt.
d. increase stock price.
e. enter the market more quickly.
Answer: e
Difficulty: Medium
Section: Acquisitions and Mergers
61. When contrasted with greenfield operations, _____ provide(s) a rapid means to
get access to the local market.
a. licensing
b. exporting
c. contract manufacturing
d. acquisitions
e. joint ventures
Answer: d
Difficulty: Easy
Section: Acquisitions and Mergers
62. Decisions to exit or divest a foreign market may have all the following reasons
except:
a. sustained losses.
b. volatility.
c. premature entry.
d. ethical reasons.
e. new market.
Answer: e
Difficulty: Hard
Pages: Reasons for Exit
63. Risks of exiting a foreign market may lead to all the following except:
a. fixed costs of exit.

b. disposition of assets.
c. short-term opportunities.
d. signal to other markets.
e. long-term opportunities.
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Answer: e
Difficulty: Hard
Page Risks of Exit
64. A _____ perspective argues that the desirable governance structure (high- versus
low-control mode) will depend on the comparative transaction costs, that is,the
costs of running an operation.
a. demand-delivery
b. just-in-time management
c. management-by-objectives
d. quantity-cost allocation
e. transaction-cost economics
Answer: e
Difficulty: Hard
Section: Appendix C: Mode of Entry Choice—Three Theoretical Perspectives
65. From a transaction-cost economics perspective, market failure typically happens

when transaction-specific assets become _____ and therefore more high-control
situations are needed.
a. optional
b. valuable
c. expendable
d. less-valuable
e. weaker
Answer: b
Difficulty: Hard
127
True/False
66. Preliminary screening is an accepted method of reducing the number of

candidates for market entry.
Answer: True
Difficulty: Easy
67. As an example of a preliminary screening process in assessing international

market opportunities, Colgate-Palmolive uses assessments of whether people
bathe regularly or not as a critical factor in deciding whether to enter a market or
not.
Answer: False
Difficulty: Medium
68. To identify market opportunities for a given product (or service), the international
marketer usually starts off with a large pool of candidate countries.
Answer: True
Difficulty: Easy
69. Colgate-Palmolive views per capita purchasing power as a major driver behind
market opportunities.
Answer: True
Difficulty: Medium
70. Entry scale is a very important element of a firm’s globalization strategy.
Answer: True
Difficulty: Easy
Section: Scale of Entry
71. In many instances, the key determinant of entry choice decisions is the income of
the population.
Answer: False
Difficulty: Easy
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72. Government regulations are a major consideration in entry-mode choices.
Answer: True
Difficulty: Easy
73. An example of a platform country is India.
Answer: False
Difficulty: Medium
Section: Decision Criteria for Mode of Entry, Exhibit 9-3
74. An example of a growth country is China.
Answer: True
Difficulty: Medium
75. An example of a growth market (with respect to market attractiveness) is the

Philippines.
Answer: True
Difficulty: Medium
76. Corporate objectives have no influence in choosing entry modes.
Answer: False
Difficulty: Easy
77. Most companies start their international expansion by exporting.
Answer: True
Difficulty: Easy
Section: Exporting
78. Indirect exporting means the firm enters into an agreement with another company
(local or foreign) where the partner will use its distribution network to sell the
exporter’s goods.
Answer: False
Difficulty: Easy
Section: Exporting
129
79. Direct exporting means that the company sets up its own export organization and
relies on a middleman based in a foreign market.
Answer: True
Difficulty: Easy
Section: Exporting
80. Indirect exporting happens when the firm decides to sell its products in the
foreign market through independent intermediaries.
Answer: True
Difficulty: Easy
Section: Exporting
81. Licensing is a contractual transaction.
Answer: True
Difficulty: Easy
Section: Licensing
82. In licensing, the licensee is the one offering proprietary assets.
Answer: False
Difficulty: Easy
Section: Licensing
83. In licensing, the licensor is the one paying royalty fees.
Answer: False
Difficulty: Easy
Section: Licensing
84. Under dual-licensing agreement, parties mutually share patents of comparable

value and without payment of licensing fees.
Answer: False
Difficulty: Easy
Section: Licensing
85. In a master franchise, the franchiser gives a master franchise to a local

entrepreneur, who will, in turn, sell local franchises within a territory.
Answer: True
Difficulty: Easy
130
86. Franchising is an arrangement whereby the franchisor gives the franchisor the
right to use the franchisee’s trade names, trademarks, business models, and/or
know-how in a given territory for a specific time period
Answer: False
Difficulty: Easy
87. Strategic alliances refer to a broader form of partnerships in which companies

agree to make equity investments in each other.
Answer: False
Difficulty: Medium
88. In a cooperative joint venture, the partners agree to raise capital in proportion to
the equity stakes agreed upon.
Answer: False (a cooperative joint venture does not involve any equity
investments)
Difficulty: Hard
89. Strategic alliances between strong and weak partners often work because of the
synergy and learning that can take place between mentor and subordinate.
Answer: False
Difficulty: Medium
90. Stable alliances have the commitment and support of the top of the parents’
organizations.
Answer: True
Difficulty: Easy
91. Exiting a country often involves substantial fixed cost.
Answer: True
Difficulty: Hard
Section: Risks of Exit
92. Most firms use a combination of entry modes.
Answer: True
131
Difficulty: Medium
Section: Summary
93. Each market entry mode alternative has its pros and cons.
Answer: True
Difficulty: Easy
Section: Dynamics of Entry Strategies; Exhibit 9-9
94. Companies often adopt a phased entry strategy: they start off with a minimal-risk
strategy; once the firm becomes more familiar with the market and the uncertainty
drops, it may switch to a higher commitment mode, such as a wholly owned
venture.
Answer: True
Difficulty: Easy
Section: Summary
95. From the transaction cost economics (TCE) perspective, market failure typically
happens when transaction-specific assets become valuable.
Answer: True
Difficulty: Hard
96. The resource-based view (RBV) starts with the premise that possessing resources
is sufficient for a company to create a competitive advantage
Answer: False
Difficulty: Medium
132
Fill in the Blank
97. To identify market opportunities for a given product a marketer typically starts off
with a large pool of candidate countries. To narrow down this pool of countries,
the company will typically do a preliminary screening. The goal of this exercise is
twofold: marketers want to minimize the mistakes of (1) _____ and (2) wasting
time on countries that offer no or little potential.
Answer: ignoring countries with market potential

Difficulty: Medium
98. In many instances, the key determinant of entry choice decisions is the size of the
market. Market potential can relate to the current size of the market. However,
_____ may also be considered.
Answer: future market potential

Difficulty: Medium
99. _____ countries (with respect to market attractiveness) can be used to gather
intelligence and establish a network.
Answer: Platform
Difficulty: Hard
100. When going abroad most companies start their international expansion
with _____.
Answer: exporting
Difficulty: Easy
Section: Exporting
101. Under _____ exporting, a firm sets up its own export department and sells
its products via a middleman located in the foreign market.
Answer: direct
Difficulty: Medium
Section: Exporting
133
102. A/an _____ is an independent firm that acts as the exclusive export sales
department for noncompeting manufacturers.
Answer: Export Management Company (EMC)

Difficulty: Medium
Section: Exporting
103. In high-tech industries, companies often enter _____ agreements. Under

such agreement, parties mutually share patents of comparable value and without
payment of licensing fees.
Answer: cross-licensing agreements

Difficulty: Hard
Section: Licensing
104. Ownership strategies in foreign markets can take two forms: acquisitions
and _____.
Answer: greenfield operations

Difficulty: Hard
105. _____ is defined as the knowledge (cultural, economic) generated in

similar markets in which the multinational already operates.
Answer: Near-market knowledge

Difficulty: Hard
Section: Timing of Entry
106. _____ argues that the desirable governance structure (high- versus low-
control mode) depends on the comparative transaction costs, that is, the costs of
running the operation.
Answer: Transaction-cost economics (TCE)

Difficulty: Medium
107. Three factors influence transaction costs: (1) the degree of specificity of
the assets involved in the transaction, (2) the uncertainty surrounding the
transaction, and (3) _____
Answer: the frequency of the transaction

Difficulty: Hard
134
135
Essay
108. List the steps in the initial global market entry decision process.
Answer:
Steps are: (1) decide on the target product/market; (2) decide on the goals of the
target markets; (3) decide on the mode of entry; (4) decide on the time of entry;
(5) decide on a marketing mix plan; and, (6) decide on a control system to
monitor the performance in the entered market.
Students should cover the material in the preliminary screening process to justify
their answer. If another answer is chosen, the instructor must judge the validity
and quality of the choice and the justification.
Difficulty: Medium
109. Briefly, explain the concept of licensing in a foreign market. In addition,

cite the benefits and drawbacks of licensing. Be specific in your responses.
Answer:
Licensing is a contractual transaction where the firm--the licensor--offers some

property assets to a foreign company--the licensee--in exchange for royalty fees.
Benefits.
a. Profitable.
b. Not demanding on company resources.
c. Gets around import barriers.
d. Gains access to markets.
e. Lowers exposure to political or economic instabilities.
f. Can rapidly amortize R&D expenditures.
Caveats.
a. Income can be small when compared to exporting.
b. The licensee may not be fully committed to the licensor’s technology or
product.
c. Sales and trademarks can be damaged.
d. A future competitor can be built.
e. Protection can be partially achieved by patenting and careful selection of
the licensee.
Difficulty: Hard
Section: Licensing
136
110. Briefly explain the concept of joint venture. Additionally, give the benefits
and drawbacks of entering into a joint venture.
Answer:
With a joint venture, the foreign company agrees to share equity and other
resources with other partners to establish a new entity in the target country.
Benefits.
a. The return potential can be substantial.
b. More control can be achieved.
c. Synergy.
Caveats.
a. Lack of full control may still be a problem.
b. Government restrictions.
c. Lack of trust.
d. Mutual conflicts.
Difficulty: Medium
137
111. Market entry timing for a firm is critical to its success. A study by
Debanjan Mitra and Peter Golder in 2002 looked at the entry-timing pattern for a
sample of 19 multinational firms developed the concept of near-market
knowledge. List and discuss some of its key findings.
Answer: Near-market knowledge is defined as the knowledge (cultural,

economic) generated in similar markets in which the MNC already operates. The
study’s key findings are fourfold, namely:
1. Near-market knowledge has an important impact on foreign market entry

timing. Near-market knowledge accumulated from successful foreign entries will
lead to earlier entry in similar markets.
2. Cultural similarity with the home market is not related to foreign market entry
timing. Although cultural similarity with the domestic market may matter for
initial foreign entry forays, it turns out not to be critical for later entries.
3. Several economic attractiveness variables matter a great deal. Specifically,

countries with wealthier consumers, larger economies, more developed
infrastructure, and more easily accessible consumers are likely to be entered
earlier.
4. Economic factors are more crucial than cultural factors in entry-timing

decisions.
Difficulty: Hard
Section: Timing of Entry
138
112. Decisions to exit or divest a foreign market are not taken lightly.
Companies may have multiple good reasons to pull out of their foreign markets.
Cite and discuss reasons companies exit.
Answer:
Sustained Losses. Companies usually enter key markets with a long-term

perspective. Most companies recognize that an immediate payback of their
investments is not realistic and are willing to absorb losses for many years. Still,
at some point, most companies have a limit on how long a period of losses they
are willing to sustain. A weak sales performance was the key reason why
supermarket groups Tesco and Carrefour pulled out of Japan.
Difficulty in Cracking the Market. A company may also decide to pull the plug
when it has difficulty to crack the market in the host country. This was the main
reason why Ford Motor decided to exit Japan and Indonesia in early 2016. In both
countries, the carmaker could not see a “reasonable path to profitability” having
struggled to gain market share. In Japan, where Ford started operating in 1974, it
merely sold around 5,000 cars in 2015 and held a share of 1.5 percent of the
imported new car market. In Indonesia, which Ford entered in 2002, it sold about
6,000 vehicles.
Volatility. Companies often underestimate the risks of the host country’s

economic and political environment. Many multinationals have rushed into
emerging markets lured by tempting prospects of huge populations with rising
incomes. As a result of tumbling oil prices and economic mismanagement,
Venezuela’s economy has taken a turn for the worse, contracting nearly by 4.5
percent for the first nine months of 2015 with one of the world’s highest inflation
rates (officially 141.5% in 2015). Given the country’s economic collapse and
government-imposed regulations (e.g., limited access to scarce dollars, price
freezes), several multinationals left Venezuela (e.g., Clorox) or are seriously
considering doing so (e.g., Mattel).
Premature Entry. As we discussed earlier, the entry-timing decision is a crucial

matter. Entering a market too early can be an expensive mistake. Entries can be
premature for reasons such as an underdeveloped marketing infrastructure (e.g., in
terms of distribution, supplies), low buying power, and lack of strong local
partners.
139
Ethical Reasons. Companies that operate in countries with a questionable human
rights record (e.g., Cuba, Sudan) often draw a lot of criticism in their home
country and/or other markets. The bad publicity engendered by human rights
campaigners can tarnish the company’s image. Rather than running the risk of
ruining its reputation, the company may decide to pull out of the country. Levi
Strauss, the San Francisco jeans maker, prides itself on being a company with a
conscience. In 1993, Levi Strauss stopped making jeans in China because of
human rights violations. It resumed manufacturing in China in 2000 after finding
plants that met its ethical standards.
Intense Competition. Intense rivalry is often another strong reason for exiting a
country. Markets that look appealing on paper usually attract lots of competitors.
The outcome is often overcapacity, triggering price wars, and loss–loss situations
for all players competing against one another. Rather than sustaining losses, the
sensible thing to do is to exit the market, especially when rival players have
competitive advantages that are hard to overcome.
Resource Reallocation. A key element of marketing strategy formulation is

resource allocation. A strategic review of foreign operations often leads to a
shake-up of the company’s country portfolio, spurring the MNC to reallocate its
resources across markets. Of all emerging markets, only China has outgrown the
United States in annual economic growth rate over the last three decades. This
explains why several European companies such as Unilever, Nestlé, and Reckitt-
Benckiser have shifted their focus to North America. Poor results from global
operations are often a symptom of overexpansion. For instance, in July 2008,
Starbucks decided to close 61 Australian outlets (out of a total of 85) as part of a
global overhaul.
Difficulty: Medium
Section: Reasons for Exit
140
113. Just as there are barriers to entry, there are exit barriers that may delay or
complicate an exit decision. Cite and discuss obstacles and risks that compound
companies’ divestment decisions.
Answer:
Fixed Costs of Exit. Exiting a country often involves substantial fixed costs. In
Europe, several countries have very strict labor laws that make exit very costly
(e.g., severance payment packages). It is not uncommon for European
governments to cry foul and sue an MNC when the firm decides to shut down its
operations. Long-term contracts that involve commitments such as sourcing raw
materials or distributing products often involve major termination penalties.
Damage to Corporate Image. A negative spillover of a divestment decision could

also include damage to the firm’s corporate image if plant closures lead to job
losses. Nokia’s decision to close down its manufacturing operations in Germany
and shift them to more cost-friendly sites in Eastern Europe led to calls for a
boycott of the firm’s phones in Germany. Kurt Beck, the head at the time of the
Social Democrats (SPD), told a local newspaper that “As far as I am concerned
there will be no Nokia mobile phone in my house.”
Disposition of Assets. Assets that are highly specialized to the particular business
or location for which they are being used also create an exit barrier. The number
of prospective buyers may be few and the price they are willing to pay for these
assets will most likely be minimal. Hence, the liquidation value of such assets will
be low. Sometimes, assets can be sold in markets where the industry is at an
earlier stage in the product life cycle.
Signal to Other Markets. Another concern is that exiting one country or region
may send strong negative signals to other countries where the company operates.
Exits may lead to job losses in the host country; customers risk losing after-sales
service support; distributors stand to lose company support and might witness a
significant drop in their business. Therefore, an exit in one country could create
negative spillovers in other markets by raising red flags about the company’s
commitment to its foreign markets.
141
Long-Term Opportunities. Although exit is sometimes the only sensible thing to
do, firms should avoid shortsightedness. Volatility is a way of life in many
emerging markets. Four years after the ruble devaluation in August 1998, the
Russian economy made a spectacular recovery. The country became one of the
fastest-growing markets worldwide for many multinationals, including Procter &
Gamble, L’Oréal, and IKEA. Rather than closing shop, it is often better to pay a
price in the short term and maintain a presence for the long haul. Exiting a
country and reentering it once the dust settles, comes at a price. Rival companies
that stayed in the country will have an edge. Distributors and other prospective
partners will be reluctant to enter into agreements. Consumers will be leery about
buying the firm’s products or services, especially when long-term relationships
are involved.
Difficulty: Hard
Section: Risks of Exit
Chapter 10
Multiple Choice
1. Ikea, the Swedish furniture chain, insists that all its stores carry the basic
product line with little room for adaptation to local tastes. If research of
the U.S. market showed that Americans preferred larger beds than their
Swedish counterparts, which of the following strategies would be
advisable to Ikea?
a. standardization.
b. new product development.
c. adaptation.
d. withdraw from market.
e. lower prices to encourage attitude change.
Answer: c
Difficulty: Easy
2. When Kellogg Co. first marketed its flagship Corn Flakes brand in South
Africa, the company encountered a major problem. Many South Africans,
accustomed to hot porridge for breakfast, had no idea how to prepare
corn flakes. What did Kellogg do?
a. Withdrew from the market

b. Ran ads on how to eat Corn Flakes
c. Reformulated Corn Flakes to hold up to milk longer
d. Rolled out Corn Flakes Instant Porridge
142
e. Purchased a local brand
Answer: d
Difficulty: Easy
143
3. In the Australian market, rather than manufacturing disposable diapers,
Procter & Gamble decided to import them since the size of the market did
not warrant local manufacturing according to P&G. Unfortunately, by
using packaging designed for the Asian region with non-English labeling,
P&G alienated its customers in Australia. This is an example of
improper:
a. global policy decisions.

b. pricing decisions.
c. brand policy decisions.
d. product policy decisions.
e. company policy decisions.
Answer: d
Difficulty: Hard
4. A uniform product policy capitalizes on the commonalities in customers’

needs across countries. The goal is to:
a. minimize costs
b. reduce confusion
c. maintain brand integrity
d. maintain organizational structure
Answer: a
Difficulty: Medium
Section: Drivers Toward Standardization
5. _____ means offering a uniform product on a regional or worldwide basis

(only minor alterations are made to meet local standards).
a. Customization
b. Standardization
c. Miniaturization
d. Assimilation
e. Marginalization
Answer: b
Difficulty: Easy
144
6. The primary advantage to using a standardization approach to marketing
a product in the international arena is:
a. minimization of costs (which can be passed on to customers).

b. more profit.
c. less service complaints.
d. less product returns.
e. standard budgets.
Answer: a
Difficulty: Medium
7. Standardization of product has a _____ orientation (lower costs via mass

production).
a. market-driven
b. service-driven
c. budget-driven
d. promotion-driven
e. product-driven
Answer: e
Difficulty: Medium
8. Although size often leads to lower unit costs, _____ should not be
overlooked. Bureaucratic bloat and employee dissatisfaction in large-
scale operations often create hidden costs.
a. disparate customer needs.

b. increased energy costs
c. diseconomies of scale
d. desire for growth for its own sake
Answer: c
Difficulty: Medium
145
9. The formation of regional market agreements such as the Single
European Market encourages companies to launch:
a. regional products
b. local products
c. global products
d. niche products
Answer: a
Difficulty: Easy
10. For many product categories, consumer needs are very similar across
countries. In some categories (e.g., luggage, courier services, and tablet
computers), consumers search for the same kind of functional benefits
around the world. Which of the following factors that favor globalization
of product, would most accurately be associated with this trend?
a. common customer needs.

b. global customers.
c. scale economies.
d. time-to-market.
e. Europe 1992 and other Regional Market Agreements.
Answer: a
Difficulty: Medium
11. _____ means shortening the time to bring new product projects to the
market.
a. Delivery-to-market
b. Orientation-to-market
c. Time-to-market
d. Extension-to-market
e. Perfection-to-market
Answer: c
Difficulty: Easy
146
12. One attempt to combine the strengths of standardization and
customization of products is to deal with both issues as functions of
product design. The _____ product design approach consists of
developing a range of product parts that can be used worldwide. The
parts can be assembled into numerous product configurations.
a. core-product
b. uniform commercial code
c. die-casting
d. modular
e. Nexus
Answer: d
Difficulty: Medium
Section: Modular Product Design Strategies
13. A _____ enables a company to reduce complexity and enjoy the benefits
of economies of scale while still meeting local market requirements.
a. convergence approach
b. divergence
c. linear approach
d. forecasting approach
e. modular strategy
Answer: e
Difficulty: Medium
14. One attempt to combine the strengths of standardization and

customization of products is to deal with both issues as functions of
product design. The _____ approach consists of developing a mostly
uniform core-product/platform and then adding attachments that match
local market needs.
a. core-product
b. uniform commercial code
c. die-casting
d. modular
e. PRIZM
Answer: a
Difficulty: Medium
147
15. One of the disadvantages that a global marketer may have is _____. This
would occur when too much standardization stifles initiative and
experimentation at the local level.
a. overcustomization
b. micro-managing
c. technocracy
d. group think
e. overstandardization
Answer: e
Difficulty: Medium
16. One of the pitfalls that a global marketer can run into is _____. This
would occur when too much adaptation to the local market occurs and the
brand becomes vulnerable to losing its unique foreigness.
a. overcustomization
b. micro-managing
c. technocracy
d. group think
e. overstandardization
Answer: a
Difficulty: Medium
17. In general, the rate of adoption of new products (in foreign markets) is
driven by individual differences, personal influences, and:
a. fashion.
b. trends.
c. cash on hand.
d. product characteristics.
e. promotion characteristics.
Answer: d
Difficulty: Medium
Section: Multinational Diffusion
148
18. The adoption of new products is driven by factors including:
a. individual differences.
b. personal influences.
c. product characteristics.
d. all of the above.
Answer: d
Difficulty: Hard
19. _____ are always eager to experiment with new ideas and products.
a. Early adopters.
b. Early majority.
c. Late majority.
d. Laggards.
e. Prior adopters.
Answer: a
Difficulty: Easy
20. Which of the following would not be one of the five key product
characteristics that contribute to its acceptance?
a. low service maintenance.

b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.
Answer: a
Difficulty: Hard
149
21. To what extent does the new product offer more perceived value to
potential adopters than exiting alternatives, would be a question that best
fits with which of the following key product characteristics acceptance
categories?
a. observability.
c. compatibility.
d. complexity.
e. trialability.
Answer: b
Difficulty: Medium
22. Is the product consistent with exiting values and attitudes of the
individuals in the social system, would be a question that best fits with
which of the following key product characteristics acceptance categories?
a. observability.
c. compatibility.
d. complexity.
e. trialability.
Answer: c
Difficulty: Medium
23. Adoption rates of new products are affected by:
a. population homogeneity
b. proportion of women in the labor force
c. cosmopolitanism
d. mobility
e. all of the above
Answer: e
Difficulty: Medium
150
24. Is the product easy to understand or use, would be a question that best fits
with which of the following key product characteristics acceptance
categories?
a. observability.
c. compatibility.
d. complexity.
e. trialability.
Answer: d
Difficulty: Hard
25. The adoption rate for new products in countries with a _____ population
is usually faster than in countries with a highly diverse culture.
a. heterogeneous
b. complex
c. diverse
d. homogeneous
e. polycentric
Answer: d
Difficulty: Medium
26. The adoption rate for a new product in countries with a homogeneous
population is usually faster than in countries with a highly diverse
culture. Which of the following countries would probably have the fastest
adoption based on the information provided above?
a. Ireland.
b. United States.
c. Japan.
d. United Kingdom.
e. France.
Answer: c
Difficulty: Hard
151
27. With respect to adoption rates in the international marketplace, it appears
to be generally true that adoption rates are higher in _____ countries than
in _____ countries.
a. lead/lag
b. lag/lead
c. lead/middle adopters
d. lag/middle adopters
e. lead/opinion-lead
Answer: b
Difficulty: Hard
28. A _____ country is where a product is first introduced.
a. lag
b. low-profile
c. lead
d. high-profile
e. fast
Answer: c
Difficulty: Easy
29. A _____ country is where a product is entered after initial introduction

has taken place.
a. lag
b. low-profile
c. lead
d. high-profile
e. fast
Answer: a
Difficulty: Easy
152
30. _____ are people who look beyond their immediate social surroundings
and are not local in their opinions.
a. Domestics
b. Introverts
c. Negotiators
d. Cosmopolitans
e. Regionalists
Answer: d
Difficulty: Medium
31. All of the following are factors that affect product penetration except:
a. cosmopolitanism.
b. number of locals in the market.
c. mobility.
d. seasonal weather patterns.
e. percentage of women in the labor force.
Answer: d
Difficulty: Medium
32. The Nielsen Global New Product Innovation Survey taps into the reasons
why consumers bought their last new product. Globally, on average, the
top drivers included all of these except for which one?
a. Affordability
b. Convenience and ease
c. Brand power
d. Novelty and visibility
e. Environmentally friendly
Answer: e
Difficulty: Medium
153
33. All of the following are steps in the new product development process
except:
a. identification of new product ideas.

b. budget development.
c. screening.
d. concept testing.
e. test marketing.
Answer: b
Difficulty: Medium
Pages: Developing New Products in the Global Marketplace
34. Which of the following are among the best sources for finding new
product ideas?
a. company, customers, competition, and collaborators.

b. trade magazines, television, and the internet.
c. government statistics, demographic charts, and psychological profiles.
d. reverse engineering, industrial spying, and out-of-date patents.
e. rumors, stories, and intuition.
Answer: a
Difficulty: Hard
Section: Identifying New Product Ideas
35. Once new product ideas have been identified, the next logical step is to
_____ the ideas.
a. budget
b. fund
c. screen
d. market
e. trademark
Answer: c
Difficulty: Medium
Section: Screening
154
36. A(n) _____ is essentially a field experiment where the new product is
marketed in a select set of cities to assess its sales potential and scores of
other performance measures.
a. attitude screen
b. product model
c. product concept
d. test market
e. focus concept
Answer: d
Difficulty: Medium
Section: Test Market
37. Testing objectives, testing marketing mixes, making projections of sales

volume, and analyzing potential competitive marketing mixes are all
reasons to conduct:
a. attitude screens.
b. product models.
c. product concepts.
d. test markets.
e. focus concepts.
Answer: d
Difficulty: Medium
38. One alternative to the test market is the _____.
a. thought panel
b. laboratory test market
c. internet exposure technique
d. preferred patron experiment
e. use of break-even analysis
Answer: b
Difficulty: Hard
155
39. If prospective customers are contacted and shown commercials for the
new product and existing brands (then asked to state attitudes and
preferences of what they have seen), then the marketing research entity
will probably have conducted a(n) _____ instead of a full test market.
a. thought panel
b. laboratory test market
c. internet exposure technique
d. preferred patron experiment
e. break-even analysis
Answer: b
Difficulty: Medium
40. A common technique to avoid a global test market is to make global sales
projections based on product performance in a _____ market.
a. lag
b. middle adopter
c. lead
d. opinionated
e. innovative
Answer: c
Difficulty: Easy
41. With the approach known as _____, there is a phased rollout.
a. sprinkler method
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method
Answer: e
Difficulty: Easy
Section: Timing of Entry: Waterfall versus Sprinkler Strategies
156
42. Timing is a very important element in any new product launch. One of
the strategies is described as being the _____. This method often involves
introducing the new product in the company’s home market and then
moving to other advanced markets. Finally, less advanced markets are
exposed to the product.
a. sprinkler method
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method
Answer: e
Difficulty: Medium
43. A prime motive for the waterfall model (in introducing new products on a
global scale) is that adaptation of the marketing strategy for the host
market is:
a. impractical.
b. very expensive.
c. time consuming.
d. promotionally limited.
e. not supported by top management.
Answer: c
Difficulty: Hard
44. Via the _____, there is a simultaneous introduction of products in other

markets of the world.
a. sprinkler strategy
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method
Answer: a
Difficulty: Easy
157
45. _____ are not always desirable; in many industries, consumers don’t
want to be left behind.
a. Sprinkler rollouts
b. Shotgun rollouts
c. Staggered rollouts
d. Dribble rollouts
e. Waterfall rollouts
Answer: c
Difficulty: Hard
46. If a company wishes to test market the product in a small, highly

innovative country, the best choices would not be:
a. Sweden
b. Switzerland
c. the Netherlands
d. South Korea
e. The U.S.
Answer: e
Difficulty: Medium
47. The chief reason for a company choosing the sprinkler method of new
product introduction is to off-set:
a. rising costs.
b. unstable labor.
c. competitive preemption.
d. government control.
e. shoddy promotions.
Answer: c
Difficulty: Medium
158
48. The waterfall strategy of sequential entry is preferable over the sprinkler
model when all of the following conditions exist except:
a. the lifecycle of the product is relatively long.

b. high costs of entry are present.
c. very weak local competitors.
d. anticipation of fast growth.
e. no real competitors.
Answer: d
Difficulty: Hard
49. The waterfall strategy of sequential entry is preferable over the sprinkler
model when:
a. the lifecycle of the product is relatively short.

b. there are low costs of entry into the market.
c. there are many competitors.
d. there are weak local competitors.
e. fast growth is anticipated.
Answer: d
Difficulty: Hard
50. The sprinkler strategy of one to two entries (globally) is preferable over
the waterfall model when all of the following conditions exist except:
a. the lifecycle of the product is relatively short.

b. there are low costs of entry into the market.
c. there are many competitors.
d. very weak local competitors.
e. anticipation of fast growth.
Answer: d
Difficulty: Hard
159
51. The sprinkler strategy of one to two entries (globally) is preferable over
the waterfall model when:
a. the lifecycle of the product is relatively long.

b. high costs of entry are present.
c. very weak local competitors exist.
d. fast growth is anticipated.
e. no real competitors exist.
Answer: d
Difficulty: Hard
52. Countries exhibiting a slow takeoff and limited influence on other

countries, but susceptible to foreign influences are ideal for later entry. In
Asia, a country that does not meet this profile is:
a. Singapore
b. India
c. Pakistan
d. Japan
e. China meet this profile.
Answer: d
Difficulty: Medium
53. Truly global innovators are called:
a. metanational innovators.
b. delta innovators.
c. beta innovators.
d. gamma innovators.
Answer: a
Difficulty: Medium
160
54. To harvest the benefits of metanational innovators, a company must
pursue three things:
a. Prospecting, assessing, and mobilizing.

b. Prospecting, assessing, and delivering.
c. Prospecting, assessing, and running.
d. Prospecting, assessing, and planning.
Answer: a
Difficulty: Medium
55. Conjoint analysis is also referred to as _____.
a. geometric analysis
b. trade-off analysis
c. meta analysis
d. longitudinal analysis
e. metric analysis
Answer: b
Difficulty: Medium
Section: Appendix A: Using Conjoint Analysis for Concept Testing in Global
New Product Development
56. A sophisticated method (sometimes called trade-off analysis) for

measuring consumer preferences for product concepts is called:
a. chi-square.
b. correlation analysis.
c. focus groups.
d. regression analysis.
e. conjoint analysis.
Answer: e
Difficulty: Hard
161
57. The starting premise of _____ is that people make trade-offs between the
different product attributes when they evaluate alternatives (or brands)
from which they pick a choice.
a. chi-square
b. correlation analysis
c. focus groups
d. regression analysis
e. conjoint analysis
Answer: e
Difficulty: Hard
58. If a consumer considered four attributes to be important in the purchase

of a TV, by using _____ the researcher might be able to determine the
trade-offs between the different product attributes (such as purchase price
or number of channels that could be received) when the consumer
evaluated the alternatives for eventual purchase.
a. chi-square
b. correlation analysis
c. focus groups
d. regression analysis
e. conjoint analysis
Answer: e
Difficulty: Hard
162
True/False
59. Historically, U.S. car sales in Japan have been fairly well.
Answer: False
Difficulty: Medium
60. Starbucks expects China to become its biggest market.
Answer: True
Difficulty: Easy
Section: Standardization Versus Customization
61. Local market circumstances do not favor the case of product adaptation.
Answer: False
Difficulty: Hard
62. Standardization means offering a uniform product on a regional or

worldwide basis.
Answer: True
Difficulty: Hard
63. The goal of standardization is to minimize competition.
Answer: False
Difficulty: Medium
64. The process of changing the product in those areas where the firm has no
discretion (the “musts”) is known as adapting.
Answer: False
Difficulty: Medium
65. For many product categories, consumer needs are very similar across
countries.
Answer: True
Difficulty: Medium
163
164
66. In some categories, consumers search for the same kind of functional
benefits around the world.
Answer: True
Difficulty: Medium
67. Lowering marketing and distribution costs are in many cases the key
drivers behind standardization moves.
Answer: False
Difficulty: Medium
68. In many industries, being innovative is not enough to be competitive.
Answer: True
Difficulty: Medium
69. It is relatively uncommon for consumer taste and preferences to vary

substantially across countries.
Answer: False
Difficulty: Medium
70. By sticking with its first-world version, a firm does a better job of
satisfying its local customers.
Answer: False
Difficulty: Medium
71. In markets with strong local players, the pressure to copy the local
players is usually intense.
Answer: False
Difficulty: Medium
165
72. Due to low wages from local businesses, it is usually fairly easy for
multinationals to keep highly talented local managers.
Answer: False
Difficulty: Medium
73. In some markets, to enable three or more people to ride on one bike,
Piaggio lengthened the seats of its scooters.
Answer: True
Difficulty: Medium
74. A modular product design strategy is a strategy that allows firms to

modify their product while keeping many of the benefits flowing from a
uniform product policy.
Answer: True
Difficulty: Medium
75. Overstandardization is a risk of the core-product approach to introducing

new products in the world market.
Answer: True
Difficulty: Easy
76. It is not uncommon for new products that were phenomenally successful
in one country or region turn out to be flops in other markets.
Answer: True
Difficulty: Easy
77. In general, the adoption of new products is driven by individual

differences, personal influences, and product characteristics.
Answer: True
Difficulty: Easy
166
78. Cosmopolitans are oriented more toward their immediate social system.
Answer: False
Difficulty: Easy
79. Mobility is the ease with which members of one class can move around
and interact with other classes.
Answer: False
Difficulty: Easy
80. The lead country is where the product is introduced first.
Answer: True
Difficulty: Easy
81. Time-to-takeoff is declining.
Answer: True
Difficulty: Easy
Section: Developing New Products in the Global Marketplace
82. In marketing, new product ideas do not come from the company,
customers, competition, and collaborators.
Answer: False
Difficulty: Easy
Pages: Identifying New Product Ideas
83. In these days, many MNCs create organizational structures to foster

global product development.
Answer: True
Difficulty: Hard
Pages: Identifying New Product Ideas
84. Not all new product ideas are winners.
Answer: True
Difficulty: Hard
Pages: Screaming
167
85. Consumer acceptance is greater when the product is introduced by a
brand with more market power.
Answer: True
Difficulty: Hard
Pages: Screaming
86. Products with incremental or major newness are more successful than
products of medium newness.
Answer: True
Difficulty: Hard
Pages: Screaming
87. The lead market is the one where sales are highest.
Answer: False
Difficulty: Easy
Pages: Test Marketing
88. The waterfall model is also called the global phased model.
Answer: True
Difficulty: Easy
89. Companies that have set up truly global processes for new product
development are called metanational innovators.
Answer: True
Difficulty: Hard
Section: Truly Global Product Development 25
90. Multinationals increasingly develop products in an emerging market and

introduce them into other countries, including Europe and North
America.
Answer: True
Difficulty: Medium
Section: Truly Global Product Development 25
168
91. Geographic proximity of the company’s knowledge center to other firms
or research institutions in the same industry should be the key driver.
Answer: False
Difficulty: Easy
Section: Truly Global Product Development
92. Conjoint analysis is also called tradeoff analysis.
Answer: True
Difficulty: Medium
169
Fill in the Blank
93. _____ means offering a uniform product on a regional or worldwide

basis.
Answer: Standardization
Difficulty: Medium
94. _____ seeks to meet cross-border differences in needs and wants of the
firm’s target customers.
Answer: Customization
Difficulty: Medium
95. Five forces favor a globalized product strategy. These include: common
customer needs, global customers, scale economies, time to market,
and_____.
Answer: regional market segments

Difficulty: Hard
96. With respect to categories of consumers that adopt new products, _____
are eager to experiment with new ideas or products.
Answer: early adopters

Difficulty: Medium
97. In the area of a global product launch strategy, two strategic options
available are: waterfall strategy and _____.
Answer: sprinkler model

Difficulty: Easy
Section: Pages: Timing of Entry: Waterfall versus Sprinkler Strategies
98. One study explored the dilemma of which country to select for initial
entry by developing a model that captures the effect of _____with new
product introductions: consumers in one country could be influenced by
consumers in other countries in their new product adoption decisions.
Answer: clout
Difficulty: Medium
170
99. _____time for a new product launched in a country is the time elapsed for
the transition from the introductory stage to the growth stage in the
product life cycle
Answer: Take-off time

Difficulty: Medium
100. The _____ stage is the one indicated by the first large jump in sales
of the new product innovation.
Answer: growth
Difficulty: Easy
171
Essay
101. List the forces that favor a standardized product design strategy.
Answer:
Forces that favor a globalized product strategy are common customer needs,
global customers, scale economies, time-to-market, and other regional market
agreements. Students may be asked by the instructor to elaborate and discuss
these forces in the classroom.
Difficulty: Medium
Pages: Drivers Toward Standardization
102. Explain the differences between the modular and core-product

approaches.
Answer:
Modular approach
1). Developing a range of product parts that can be used worldwide.

2). These parts can be assembled into numerous configurations.
Core-product (common platform) approach
1). The core-product approach starts with the design of a mostly uniform core-
product and then adds attachments that might fit local needs.
2). Savings comes from centralizing the production of the core.
3). Easy product modification is a secret of success.
Difficulty: Medium
172
103. Test marketing is considered a critical step in new product
development in most Western countries. Comment on test marketing.
Also, outline some of the shortcomings of test marketing?
Answer:
Test marketing (primarily a Western country concept) is essentially a field

experiment where the new product is marketed in a select set of cities to assess its
sales potential and scores of other performance measures.
Reasons to run a test market include:
1). It allows them to make fairly accurate projections of the market share, sales
volume and penetration of the new product.
2). The countries can contrast competing marketing mix strategies to decide
which one is most promising in achieving the firm’s objectives.
Shortcomings include:
1). Time-consuming and costly.

2). Results can be misleading.
3). The strategic concern--it may alert your competitors.
Difficulty: Medium
Pages: Test Marketing
173
104. In marketing, timing is crucial. In new product development it
might be even more crucial given the risk of the venture. Explain the
waterfall and sprinkler approaches to introducing a new product to the
market. When is the waterfall method preferred over the sprinkler
method? Be sure to be specific as to your comments on these two
strategic options.
Answer:
A key element of global product launch strategy is the entry timing decision. The
following options are available to international marketers:
Options include:
1). The waterfall method where new products trickle down in a cascade-like
manner.
a). The typical pattern here is to introduce the product in the home country first.
b). Next launch in advanced markets.
c). Lastly, launch in less advanced markets.
d). This method can be very time-consuming but is less risky.
2). The sprinkler strategy is a simultaneous worldwide entry.
a). Rollout occurs in one to two years.
b). The growing prominence of universal segments and concerns about
competitive preemption in the foreign markets are two major factors behind this
expansion approach.
The waterfall strategy is preferable over the sprinkler model when:
1). The lifecycle of the product is relatively long.

2). Nonfavorable conditions govern the foreign market.
3). Weak competitive climate in the foreign market exists.
Difficulty: Hard
Pages: Timing of Entry: Waterfall versus Sprinkler Strategies
174

Chap 6

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Chap 6

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Chapter 6

1. In international marketing, the global market research process includes:

a. Define the problem(s).

a. define the research problem(s).

a. develop the research design.

a. argument over budget expenditures between international markets.

6. Any research starts off with a precise definition of the _____.

a. a secondary research search.

8. In global marketing research, the marketing research problem formulation is often

a. foreign mass media

a. it is usually culturally biased.

15. The prime benefit of an omnibus survey is _____.

18. The OECD is an acronym _____.

a. Organization for Economic Cooperation & Deregulation

a. Britain; Britannia Net

a. government control of data for taxing purposes.

a. trade across national borders.

24. The comparison of money-based indicators (e.g., income figures, consumer

a. When were the data collected?

29. As a research technique, a _____ is a loosely structured free-flowing discussion

a. to generate information to guide the quantitative research projects.

a. time and cost evaluation.

a. polar and psychographic translation.

36. To make findings of cross-country market research projects meaningful, it is

38. Survey research in _____ is further hampered by low levels of education.

a. numbers (such as 1-10).

a. references to the government.

a. Who cannot be considered as a valid respondent?

a. Who cannot be considered as a valid respondent?

a. mail, telephone, and Internet.

a. the United States.

a. obtaining a representative sample

a. checkout scanner tapes

a. the shift from mass to micro marketing.

a. local agencies understand cultural nuance better

a. the local government

a. Emic and ethic.

76. Government data is a source of primary data.

77. Focus groups are a source of primary data.

78. Surveys are a source of primary data.

79. Observational research is a source of primary data.

80. Test markets are a source of primary data.

82. Focus groups normally include 30-40 people.

87. One of the procedures used in practice to avoid sloppy translation of

89. A sampling frame is a listing of the target population.

90. A telephone directory could be a sampling frame.

92. Most researchers prefer some form of convenience sampling, especially in

93. Back-translation requires that the survey be translated three times.

96. Probabilistic sampling is required to make statistical inferences about the

99. Probably the most severe problem in market research is nonresponse.

102. Focus groups can be conducted online.

105. Cross-sectional regression analysis do not produce market size estimates.

Answer: defining the decision problem

110. If a company were to go to JETRO (the Japanese External Trade

73. OECD stands for _____.

Answer: Organization for Economic Cooperation & Development

111. With respect to comparability of data, _____ equivalence refers to the

112. A _____ is a loosely structured free-flowing discussion among a small

Answer: focus group

114. In the area of multicountry research coordination, the _____ focuses on

Answer: emic school

115. In the area of multicountry research coordination, the _____ focuses on

Answer: etic school

a. Define the decision problem(s).

117. Discuss the function, purpose, limitations, and benefits of omnibus

Omnibus surveys are conducted by research agencies at regular intervals. The

a. Accuracy of data--the accuracy of secondary data is often questionable for

c. Reliability over time--historical trends are hard to accumulate in the

d. Comparability of data--comparison of cross-country indicators can be a very

Different sources on a given item often produce contradictory information.

e. Lumping of data--many times lumping compromises the accuracy of data.

a. analogy method--the method starts by picking a country that is at the same

d. cross-sectional regression analysis-- this method for determining market size

1. 1. Variation in customer needs is the primary reason for _____.

a. tailor its marketing mix to each individual segment.

3. Market segmentation is a logical outgrowth of: