Test bank for international marketing 3rd edition by lascu

Firms with an ethnocentric orientation are guided by a domestic market extension concept.. ANS: T Firms with an ethnocentric orientation are guided by a domestic market extension concept

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Chapter 1: Scope, Concepts, and Drivers of International Marketing

TRUE/FALSE

1 The U.S consumes more than 25% of worldwide products and services

ANS: F

The United States constitutes one of the most important world markets, providing and consuming a high percentage of worldwide products and services Over time, it has become evident, however, that this percentage is getting smaller: less than 25 percent This is found in “The Importance of

International Marketing” section (1-1)

2 International companies such as General Motors, Mitsubishi, Microsoft, and Exxon earn profits greater than the Gross Domestic Product of many developing countries

ANS: T

International companies such as GM do earn profits greater than the GDP of some developing

countries This is found in the "The Importance of International Marketing" section (1-1)

3 Companies from small countries have difficulty in succeeding internationally, as their income cannot

be supported by a large market at home

ANS: F

Companies have, in fact, achieved worldwide dominance in spite of the smaller size and limited market of their home country It should be noted, however, that an international presence was essential for their success Example of such successful companies are Philips Electronics, Royal Ahold (a large retailer, and ING, a global player in financial services They come from the Netherlands, a smaller country in Western Europe This is found in the "The Importance of International Marketing" section (1-1)

4 In the future, postal services might constitute the new competitive territory of international companies ANS: T

As countries move to deregulate postal service, opportunities will arise for private companies (e.g., FedEx, UPS, etc.) to expand internationally In the future, postal services might constitute the new competitive territory of international companies This is found in "The Importance of International Marketing" section (1-1)

5 A company engaging in domestic marketing has the least commitment to international marketing ANS: T

Domestic marketing is the least committed to international marketing The commitment increases through other phases of marketing, such as export marketing, international marketing, etc This is found in the "Levels of International Marketing Involvement" section (1-2)

6 A company engaging in export marketing has the least commitment to international marketing

ANS: F

Domestic marketing is the least committed to international marketing The commitment to

international marketing is much higher for export marketing, as companies actively seek international clients This is found in the "Levels of International Marketing Involvement" section (1-2)

7 Export marketing requires a substantial focus on consumers in the international target market

ANS: F

International marketing requires a substantial focus on international consumers in a particular country

or countries This is found in the "Levels of International Marketing Involvement" section (1-2)

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8 International marketing is defined as the processes involved in the creation, production, distribution, promotion and pricing products, services, ideas and experiences for international markets

ANS: T

International marketing activities require a substantial focus on international consumers in a particular country or countries International marketing is thus defined as the processes involved in the creation, production, distribution, promotion and pricing products, services, ideas and experiences for

international markets This is found in the "Levels of International Marketing Involvement" section (1-2)

9 Global marketing activities are not coordinated across different countries, nor across different regions ANS: F

Global marketing activities are coordinated across different countries International marketing

activities are not coordinated across different countries This is found in the "Levels of International Marketing Involvement" section (1-2)

10 Firms with an ethnocentric orientation are guided by a domestic market extension concept

ANS: T

Firms with an ethnocentric orientation are guided by a domestic market extension concept: In general,

top management of firms with an ethnocentric orientation consider that domestic strategies,

techniques, and personnel are superior to foreign ones This is found in “Ethnocentric Orientation” section (1-3a)

11 Firms with an ethnocentric orientation consider that the purpose of their international operations is to identify markets that could absorb surplus domestic production

ANS: T

Firms with an ethnocentric orientation may simply view international markets are markets where they could unload excess production This is found in “Ethnocentric Orientation” section (1-3a)

12 Disney has an ethnocentric philosophy that is manifest in its international operations

ANS: T

Disney has traditionally had an ethnocentric philosophy, selling U.S culture worldwide This is found

in “Ethnocentric Orientation” section (1-3a)

13 Polycentric firms are likely to be highly centralized

ANS: F

Ethnocentric firms are likely to be highly centralized Polycentric firms are likely to establish

individual businesses, typically wholly-owned subsidiaries in each of the countries where they operate This is found in the "Ethnocentric Orientation" section (1-3a)

14 Firms with a regiocentric orientation are guided by a multidomestic market concept

ANS: F

Polycentric firms are guided by the multidomestic market concept Firms with a regiocentric

orientation are guided by the global marketing concept

This is found in the "Regiocentric Orientation" section (1-3c)

15 Firms with a polycentric orientation are guided by a multidomestic market concept

ANS: T

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Polycentric firms are guided by the multidomestic market concept Managers of polycentric firms are very much aware of the importance of individual international markets to the success of their business and are likely to establish individual businesses in the countries where they operate This is found in the "Polycentric Orientation" section (1-3b)

16 Each subsidiary in an ethnocentric organization has its own marketing plans and objectives and operates autonomously as an independent profit center on an individual country basis

ANS: F

Each subsidiary in a polycentric organization has its own marketing plans and objectives and operates

autonomously as an independent profit center on an individual country basis Found in the "Polycentric Orientation" section (1-3b)

17 Firms with a regiocentric or a geocentric orientation are guided by a global marketing concept

ANS: T

Both regiocentric and geocentric firms are guided by the global marketing concept Companies adopting a regiocentric orientation view world regions as distinct markets that share economic,

political and/or cultural traits such that they would be viable candidates for a region-wide marketing approach This is found in the "Regiocentric Orientation" section (1-3c)

18 Firms with a regiocentric or a polycentric orientation are guided by a global marketing concept

ANS: F

Both regiocentric and geocentric firms are guided by the global marketing concept Polycentric firms are guided by the multidomestic marketing concept This is found in the "Regiocentric Orientation" section (1-3c) and "Geocentric Orientation" sections (1-3c, and 1-3d))

19 The objective of a geocentric company is most often to achieve a position as a low-cost manufacturer and marketer of its product line

ANS: T

Because geocentric firms concentrate on a uniform consumer segment, they are able to attain low costs through standardization This is found in the "Geocentric Orientation" section (1-3d)

20 McDonald's has been successful because of its ethnocentric philosophy

ANS: F

McDonald's has been successful as a result of its geocentric philosophy This is found in the

"Geocentric Orientation" section (1-3d)

21 IBM has always had a geocentric orientation

ANS: F

IBM has changed its orientation from polycentric to geocentric recently, when it went through a massive reorganization Under the old system, a corporate customer with operations in several

countries had to contract with small IBM offices in each country, and each IBM office had its own regulations; the reorganization placed IBM’s employees into 14 customer-focused groups, such as financial services, entertainment, and oil and gas, to be able to work with a central sales office This is found in the "Geocentric Orientation" section (1-3d)

22 Organizing the firm on the basis of function, rather than on the basis of country of operations,

demonstrates a geocentric internationalization philosophy

ANS: T

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Organizing the firm on the basis of function, rather than on the basis of country of operations,

demonstrates a geocentric internationalization philosophy McDonald's and IBM have geocentric internationalization philosophies and are organized based on function, rather than based country of operations This is found in the "Geocentric Orientation" section (1-3d)

23 Local firms targeting their products to local consumers are dependent on equipment, parts, and/or raw materials originating abroad

ANS: T

Few companies operate in an isolated, country-specific environment.Even local firms receive

international equipment, parts and raw materials from that originate in foreign countries/companies This is found in the "Drivers of International Expansion" section (1-4)

24 Competition, regional economic integration, and technology are examples of Business Environment Drivers

ANS: T

Business Environment Drivers include: Competition, regional economic and political integration, technology, improvements in the transportation and telecommunication infrastructure, economic growth, transition to a market economy, and converging consumer needs Found in the “Drivers in the Business Environment” section (1-4a)

25 Competitive pressure is frequently a driver of internationalization

ANS: T

Domestic competition may encourage local companies to seek international markets In this way competitive pressure is frequently a driver of internationalization This is found in the "Drivers in the Business Environment" section (1-4a)

26 Economic integration does not benefit companies from non-member states

ANS: F

Economic integration benefits companies from non-member states It allows subsidiaries incorporated

in the respective markets to benefit from free trade within the region, and allows firms outside the integrated regions to conduct business within the common market without the impediments typically posed by crossing national borders This is found in the "Drivers in the Business Environment" section (1-4a)

27 A subsidiary of a company from the United States incorporated in any country of the European Union

is a corporate citizen of the European Union

ANS: T

Subsidiaries in the EU enjoy EU corporate citizenship This minimizes the effects of tariffs and exchange rates This is found in the "Drivers in the Business Environment" section (1-4a)

28 Much of the outsourcing of customer service to developing countries is largely attributed to

improvements in telecommunication

ANS: T

Much of the outsourcing of customer service to developing countries, such as India and China, is

largely attributed to improvements in telecommunication This is found in the “Drivers in the Business Environment” section (1-4a)

29 Economic growth is not an important driver of internationalization

ANS: F

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Economic growth is an important driver The emergence of a strong middle class in large markets,

such as Brazil, hane created markets of high potential for international brands This is found in the

"Drivers in the Business Environment" section (1-4a)

30 Emerging economies in general are less open to foreign trade and severely limit international firms operating in these markets

ANS: F

Emerging economies in general are more open to foreign trade and no longer severely limit

international firms operating in these markets This is found in the "Drivers in the Business

Environment" section (1-4a)

31 An important outcome of the transition of the former Eastern Bloc countries to a market economy has been the deregulation and privatization of former government monopolies

ANS: T

An important outcome of the transition of the former Eastern Bloc countries to a market economy has been the deregulation and privatization of former government monopolies This allows companies like Unilever to purchase or partner with local companies This is found in the "Drivers in the Business Environment" section (1-4a)

32 Companies investing in large transition economies, such as China, reap the greatest return on their investment

ANS: T

Most rewards are reaped by those companies investing in large transition economies, such as China’s Yum! Brands has reaped immense returns from its operations in China This is found in the "Drivers in the Business Environment" section (1-4a)

33 Uniform consumer segments worldwide are every marketer’s hope However, it is impossible to have uniform segments as long as consumer preferences are so diverse

ANS: F

Exposure to global brands in one’s home country and, while traveling abroad, to media advertising

these brands has created demand for many global products Uniform consumer segments are emerging

worldwide This is found in the "Drivers in the Business Environment" section (1-4a)

34 Although the product life cycle is an important marketing consideration in domestic marketing, it has little affect on the international expansion of a firm

ANS: F

Products that are in maturity or decline can be invigorated by entering markets where the market is in a younger stage of the PLC This is found in the "Firm-Specific Drivers" section (1-4b)

35 A main driver of international expansion is a firm’s attempt to prolong the life cycle of its products ANS: T

A main driver of international expansion is a firm’s attempt to prolong the life cycle of its products

This is found in the "Firm-Specific Drivers" section (1-4b)

36 New Product Development costs are not at all related to the product life cycle

ANS: F

The concept of high new product development costs is related to the product life cycle Companies often spend long periods of time and significant amounts of money to develop new products This is found in the "Firm-Specific Drivers" section (1-4b)

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37 During the introduction stage of the product lifecycle, the core product is likely to achieve a standard

in a particular industry

ANS: F

The core product usually achieves standardization in the maturity stage This is found in the

"Firm-Specific Drivers" section (1-4b)

38 The U.S market is very large As a result, companies are likely to quickly recover their product development costs and make a profit as well, if its sales are limited to the U.S

ANS: F

Despite the size and purchase power of the U.S market, it is unlikely that companies would fully recover their product development costs and make a profit as well if they limited their sales to the U.S This is found in the "Firm-Specific Drivers" section (1-4b)

39 Firms in the introductory stage of the product life cycle are most likely to move manufacturing operations and facilities abroad, to developing countries, in an attempt to take advantage of

significantly lower labor costs

ANS: F

Firms are more likely to move their facilities abroad in the maturity stage of the product life cycle

This is found in the "Firm-Specific Drivers" section (1-4b)

40 Colgate-Palmolive developed its successful Axion paste for washing dishes by hand after observing the dish washing behavior of Latin American women

ANS: T

International firms benefit from lessons they learn in different parts of the world For example, Colgate-Palmolive developed its successful Axion paste for washing dishes by hand after observing the dish washing behavior of Latin American women This is found in the "Firm-Specific Drivers" section (1-4b)

41 Experience transfers are limited to product manufacturers

ANS: F

Experience transfers are also beneficial to service providers This is found in the "Firm-Specific

Drivers" section (1-4b)

42 It is important for the firm to adapt to the local business environment in order to serve the needs of local consumers

ANS: T

If the firm ignores the self-reference criterion and fails to adapt, then failure is likely to occur Thus, it

is important for the firm to adapt to the local business environment in order to serve the needs of local consumers This is found in the "Self-Reference Criterion" section (1-5a)

43 Companies attempting to establish and maintain an international presence are likely to encounter obstacles to internationalization both from within the company and from outside

ANS: T

Companies attempting to establish and maintain an international presence are likely to encounter

obstacles to internationalization both from within the company and from outside Such obstacles are generally either financial or psychological in nature This is found in the “Obstacles to

Internationalization” section (1-5)

44 The self-reference criterion helps the firm to adapt as it expands operations to international markets ANS: F

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The self-reference criterion is a hindrance to adaptation It occurs when the individual makes a

conscious or unconscious reference to her own culture instead of considering the culture of the host country This is found in the "Self-Reference Criterion" section (1-5a)

45 In Japan, similarly to the U.S., looking one's counterpart in the eyes conveys directness and honesty ANS: F

In Japan, this behavior is viewed as abrasive and challenging This is found in the "Self-Reference Criterion" section (1-5a)

46 The first step in minimizing the impact of the self-reference criterion is selecting appropriate personnel for international assignments

ANS: T

The first step in minimizing the impact of the self-reference criterion is selecting appropriate personnel for international assignments Such employees are sensitive to others and have experience working in different environments This is found in the "Self-Reference Criterion" section (1-5a)

47 Local content requirements are sometimes used by national governments to restrict or impede the entrance of international firms

ANS: T

Local content requirements are sometimes used by national governments to restrict or impede the entrance of international firms Other governmental barriers include: tariffs, import quotas, import license awards, and foreign exchange restrictions This is found in the "Government Barriers" section (1-5b)

48 Members of regional economic integration agreements such as NAFTA frequently use tariffs as a means of restricting international expansion of companies in the countries' territories

ANS: F

Economic integration agreements are designed to remove tariffs and other barriers to trade This is

found in the "Government Barriers" section (1-5b)

49 Competition can be both a driver of internationalization and a barrier to new entrants in a market ANS: T

Competition (as in the Coca-Cola/McCann case) can encourage international expansion but it can also hinder competition through raising entry barriers (e.g., cutting prices, controlling channels, etc.) This

is found in the "Competition" section (1-5c)

50 Marlboro’s primary defensive marketing strategy in foreign countries is to decrease prices by as much

as one-third

ANS: T

With heavy competition from new and lesser-known brands in Asia, Central and Eastern Europe, and North Africa and the Middle East, Marlboro created a strong defensive strategy for its cigarettes: It slashed prices by as much as a third and advertised heavily anywhere it was legal to do so, especially

on billboards in the center of different capital cities and towns in the provinces This is found in the

“International Competition” section (1-5c)

MULTIPLE CHOICE

1 The United States provides about of the worldwide products and services

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ANS: C

The U.S constitutes one of the most important world markets The U.S provides about 25% of worldwide products and services This is found in "The Importance of International Marketing" section (1-1)

2 Recently, privatization in countries where government monopolies have dominated for decades has made it possible for multinationals to compete in each of the following industries EXCEPT:

b postal services d telecommunications

ANS: B

Postal services may be a future competitive territory It is not a current competitive territory This is

found in "The Importance of International Marketing" section (1-1)

3 In which type of marketing does a firm have the least commitment to international marketing?

a Domestic marketing c International marketing

b Export marketing d Global marketing

ANS: A

Domestic marketing focuses solely on domestic consumers and on the home-country environment This is found in the "Levels of International Marketing Involvement" section (1-2)

4 The firm is most likely to have an ethnocentric orientation when it engages in

a Export marketing c Multinational marketing

b International marketing d Global marketing

ANS: A

International and multinational marketing activities require a substantial focus on international

consumers Global marketing seeks markets where a global consumer segment exists In export marketing, however, the firm views the international market as an extension of the domestic market This is found in the "Levels of International Marketing Involvement" section (1-2)

5 Which type of marketing best describes a company’s approach to international marketing if the company is present in different countries with sales offices, subsidiaries, or is an active partner in

strategic alliances with local companies and that does not coordinate activities across the different

countries or regions

ANS: C

In both domestic and export marketing, the firm's offices remain in the home country Global

marketing coordinates activities across countries and regions This is found in the "Levels of

International Marketing Involvement" section (1-2)

6 Which of the following approaches to international marketing involvement best describes a company that coordinates activities across different countries or regions?

ANS: D

Global marketing coordinates activities across countries and regions This is found in the "Levels of International Marketing Involvement" section (1-2)

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7 Which type of marketing involves marketing activities across different countries without focusing primarily on national or regional segmentation?

a Domestic marketing c Multinational marketing

ANS: D

In domestic or export marketing, product may flow to other countries, but no marketing activity occurs In international or multinational marketing, markets are segmented Only global marketing seeks a universal segment of consumers across markets This is found in the "Levels of International Marketing Involvement" section (1-2)

8 The EPRG Framework of international orientation stands for:

a economics, psychographics, regulations, & geographics

b enter, produce, react, & group

c ethnicity, polychronic, regulations, & global expansion

d ethnocentric, polycentric, regiocentric, & geocentric

ANS: D

Companies' philosophies on international involvement can be described, based on the EPRG

Framework as ethnocentric, polycentric, regiocentric, and geocentric This is found in "The EPRG Framework and International Marketing Concepts" section (1-3)

9 Eli Lilly is a(n):

a ethnocentric firm c polychronic firm

b polycentric firm d regiocentric firm

ANS: A

Eli Lilly, a pharmaceutical firm, focuses solely on its domestic market Top management at Eli Lilly places most of the emphasis on product research and development, in an effort to bring to the

marketplace high-performance pharmaceutical products This is found in the "Ethnocentric

Orientation" section (1-3a)

10 When a company believes that domestic strategies, techniques, and personnel are superior

to foreign ones it is using a(n):

a ethnocentric orientation c regiocentric orientation

b polycentric orientation d geocentric orientation

ANS: A

An ethnocentric firm focuses solely on the domestic market Thus, an ethnocentric firm believes that domestic strategies, techniques, and personnel are superior to foreign ones This is found in the

"Ethnocentric Orientation" section (1-3a)

11 Firms that view international markets solely as markets where they could unload excess production have a(n):

ANS: A

Firms with an ethnocentric orientation may simply view international markets are markets where they could unload excess production This is found in “Ethnocentric Orientation” section (1-3a)

12 Firms with a polycentric orientation are guided by a:

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a domestic market extension concept c global marketing concept

b multidomestic market concept d none of the above

ANS: B

Polycentric firms use a multidomestic concept They treat each country as a separate market This is found in the "Polycentric Orientation" section (1-3b)

13 Firms with a regiocentric orientation are guided by a:

a domestic market extension concept c global marketing concept

b multidomestic market concept d none of the above

ANS: C

Regiocentric (and geocentric) firms use a global marketing concept They target a uniform segment across markets This is found in the "Regiocentric Orientation" section (1-3c)

14 Companies view world regions as distinct markets that share economic, political, and/or cultural traits such that they would be viable candidates for a regionwide marketing approach

ANS: C

Companies adopting a regiocentric orientation view world regions as distinct markets that share economic, political, and/or cultural traits such that they would be viable candidates for a regionwide marketing approach A regiocentric orientation is now possible due to the success of regional economic and political integration that allows for implementing a uniform marketing strategy in the entire region This is found in the “Regiocentric Orientation” section (1-3c)

15 Firms where top management adopts a geocentric orientation perceive the world:

a to be similar to the home country

b to have regional segmentation possibilities

c to lack national and regional distinctions

d to have heterogeneous preferences

ANS: C

Firms with a geocentric orientation target a "universal segment" across regions The universal segment lacks national and regional distinctions This is found in the "Geocentric Orientation" section (1-3d)

16 Firms with a geocentric orientation:

a pursue a differentiation strategy

b position themselves as a low-cost manufacturer

c frequently need to engage in "guerilla" marketing

d none of the above

ANS: B

Firms using a regiocentric orientation are likely to pursue a differentiation strategy Firms with a

geocentric orientation deploy a standard product across regions A standard product allows for

economies of scale and economies of scale lead to low-cost manufacturing This is found in the

"Geocentric Orientation" section (1-3d)

17 When Ford stopped making the Escort look different in every market and moved to an identical look for all markets, it moved from a polycentric strategy to this kind of strategy

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