Global Marketing test 1- chapters 1-3

The market development strategy involves seeking new customers by introducing existing products or services to a new market segment.
TRUE
Starbucks is building on its loyalty card and rewards program in the United States with a smartphone app that enables customers to pay for purchases electronically. This is an example of Market Penetration.
TRUE
The perceived value equation can be represented as Value = Price/Benefits.
FALSE, Value=Benefits/Price
Companies can increase prices if costs are low because of process efficiencies in manufacturing.
False
If Nestlé decides not to market biscuits (cookies) in the United States due to competitive reasons, it is considered as a lack of strategic focus and missed opportunity.
False
The Yugo automobile achieved a modest level of U.S. sales in the 1980s despite a “don’t buy” rating from a consumer magazine.
True
Walmart’s recent exit from the German market was due, in part, to the fact that German shoppers could find lower prices at stores known as “hard discounters.”
True
Nike dropped their well-known tag line “Just do it” in advertising women’s clothing in Europe and replaced it by the slogan “Here I am” since college-age women in Europe are not as competitive about sports as men are.
True
From a global marketing perspective, the history of the Beatles’ records is an interesting case study in both product adaptation and product extension.
True
In an effort to “Americanize” the sound of the Beatles’ recordings, a studio effect known as reverb was added to some tracks.
true
McDonald’s global marketing strategy is based primarily on local marketing mix elements.
FALSE- it is based on a combo of global and local marketing mix elements
Starbucks opened an experimental store in Amsterdam that serves as a testing ground for new design concepts such as locally sourced and recycled building materials.
True
Tang drink powder became a $1 billion brand as regional managers in the Middle East added mango and pineapple flavors.
True
About 75 percent of the Coca-Cola Company’s operating income and two-thirds of its operating revenue are generated outside North America.
True
Ethnocentric companies that conduct business outside the home country adhere to the notion that the products that succeed in the home country will succeed anywhere.
True
The term “polycentric” describes management’s belief or assumption that each country in which a company does business is the same as the home country business.
False- polycentric means each country in which a company does business is UNIQUE
Unilever’s Rexona deodorant brand had 30 different package designs and 48 different formulations. This is an example of ethnocentrism.
False- Ethnocentrism is national superiority; Unilever exhibits polycentricism (unique)
A U.S. company that focuses on the countries included in the North American Free Trade Agreement (NAFTA) has a regiocentric orientation.
True
A European company that focuses its attention on Europe can be considered to have geocentric orientation.
False- Geocentric is worldwide; regiocentric is within the region
A company with a geocentric orientation views the world as a potential market and strives to develop integrated global strategies.
True
A true transnational company would be characterized as “stateless.”
True
One way to assess a company’s “degree of transnationality” is to compute the ratio between the sales outside the home country to total sales.
True
Economic growth has reduced resistance that might otherwise have developed in response to the entry of foreign firms into domestic economies.
True
In the context of global marketing, leverage means some type of advantage that a company enjoys by virtue of the fact that it has experience in its home country.
False
Evidence of the company’s ongoing commitment to innovation can be seen in continuous new product introduction.
true
Most global markets do not exist in nature.
true
A global company can leverage its experience in any market in the world.
true
Nontariff barriers (NTBs) are monetary restrictions on cross-border trade.
false- Nontariff barriers are embargoes, sanctions, levies, and quotas
Anheuser-Busch, the brewer of Budweiser beer, lost its independence after years of focusing primarily on the U.S. market.
true
The term globaphobia is used to describe an attitude of hostility towards trade agreements and global brands.
true
When you call United Airlines for a reservation on a toll-free number and get a response from an operator in Mumbai, this is an example of:
global marketplace
In global markets, Starbucks is a good example of simultaneously executing all of the growth strategies except:
A) Market penetration.
B) Market development.
C) Product development.
D) Market orientation.
E) Diversification.
D) Market orientation
Slumdog Millionaire, a movie which received several awards and an Oscar in 2009, was filmed on a location in and around:
A) London.
B) San Francisco.
C) Cancun.
D) Mumbai.
E) Moscow.
D) Mumbai
Starbucks has launched several new ventures in global markets, including music CDs and movie production. This is an example of:
A) Market Penetration.
B) Market Development.
C) Market Diversification.
D) Product Development.
E) Global Marketing.
C) Market Diversification
A fundamental difference between regular marketing and global marketing is:
A) the lack of marketing mix.
B) the scope of activities.
C) the lack of strategic planning.
D) the focus on resources.
E) the lack of communication
B) the scope of activities
Starbucks is building on its loyalty card and rewards program in the United States with a smartphone app that enables customers to pay for purchases electronically. The app displays a bar code that the barista can scan. This is an example of:
A) Market Penetration.
B) Market Development.
C) Market Diversification.
D) Product Development.
E) Global Marketing.
A) Market Penetration.
Starbucks is entering India via an alliance with the Tata Group. Phase 1 calls for sourcing coffee beans in India and marketing them at Starbucks stores throughout the world. This is an example of:
A) Market Penetration.
B) Market Development.
C) Market Diversification.
D) Product Development.
E) Regular Marketing.
B) Market Development
The essence of marketing worldwide is to surpass the competition in creating perceived value, which can be represented as:
A) Value = Price/Benefits.
B) Value = Benefits/Price.
C) Value = Benefits × Price.
D) Value = Benefits – Price.
E) Value = Benefits + Price.
B) Value = Benefits/Price.
Renault and its rivals are racing to offer middle-class consumers a new value proposition by selling cars for the equivalent of $10,000 or less. On the heels of Renault’s success with Dacia Logan came the $2,500 Nano from India’s Tata Motors. This illustrates that:
A) consumers are looking for low price irrespective of quality.
B) Renault is overcharging for their cars compared to their competitors.
C) higher product development costs are a driving force behind globalization.
D) market success depends on reaching a threshold of acceptable quality for consumers.
E) cars are not very popular in emerging markets like India.
D) market success depends on reaching a threshold of acceptable quality for consumers.
Walmart’s exit from the German market was due, in part, to the fact that German shoppers could find lower prices at stores known as:
A) All-in-one stores.
B) Dollar stores.
C) Discount sores.
D) Hard discounters.
E) Fresh & Easy stores.
D) Hard discounters
According to Michael Porter, a global industry is one in which ________ can be achieved by integrating and leveraging operations on a worldwide scale.
A) marketing mix
B) competitive advantage
C) cross border infiltration
D) ration analysis
E) production capability
B) competitive advantage
The former chairman of Nestlé recently told an interviewer: “We are food and beverages. We are not running bicycle shops. Even in food we are not in all fields. There are certain areas we do not touch. Also, we have no soft drinks because I have said we either buy Coca-Cola or we leave it alone.” What strategic marketing principle does the chairman’s comment emphasize most specifically?
A) customer value
B) competitive advantage
C) focus
D) myopia
E) policy of dealing only with Swiss businesses
C) focus
44) Nike recently adopted the slogan “Here I am” for its pan-European clothing advertising targeting women. The decision to drop the famous “Just do it” tag line was based on the research indicating that:
A) the famous slogan did not have accurate translation in European languages.
B) Europeans do not like tag lines that portray American thinking.
C) college-age women in Europe are not as competitive about sports as men are.
D) the old slogan conveys superiority of men over women.
E) European women want to differentiate themselves from men.
C) college-age women in Europe are not as competitive about sports as men are.
The decision to enter one or more particular markets outside the home country depends on all of the mentioned factors except:
A) company’s resources.
B) company’s age.
C) company’s managerial mind-set.
D) nature of opportunities.
E) threats.
B) company’s age.
From the global marketing perspective, the customization of the Beatles’ records is a good example of:
A) product adaptation.
B) market penetration.
C) diversification.
D) product development.
E) marketing mix.
A) product adaptation.
In an effort to “Americanize” the sound of the Beatles’ recordings, a studio effect known as reverb was added to some tracks. This is an example of:
A) product adaptation.
B) market penetration.
C) diversification.
D) product development.
E) marketing mix.
A) product adaptation
Two decades ago, professor Ted Levitt wrote a classic Harvard Business Review article titled “The Globalization of Markets.” Which of the following statements about the author and the article is accurate?
A) Levitt urged companies to adopt products on a country-by-country basis.
B) There was universal agreement about his thesis that the world is becoming homogeneous.
C) Levitt urged companies to develop standardized products that could be marketed worldwide with little adaptation.
D) Levitt warned of the coming backlash against globalization.
E) Levitt did not recommend developing standardized products.
Levitt urged companies to develop standardized products that could be marketed worldwide with little adaptation.
Coca-Cola achieved success in the Japanese market primarily by:
Global Localization
A company that succeeds in global marketing:
creates both standardized and localized products
An important managerial task in global marketing is learning to recognize the extent to which it is possible to extend marketing plans as well as the extent to which adaptation is desired. The way a company addresses this task is a reflection of the company’s:
Global Marketing Strategy
One of the dimensions of global marketing strategy which pertains to marketing management is:
integration of competitive moves
Statements that illustrate the success of global marketing include all of the following except:
A) the Coca-Cola Company supports its Coke brand by utilizing global and local marketing mix.
B) Apple is synonymous with cutting-edge innovation and high-tech design.
C) Italy’s Benetton utilizes marketing as a knee-jerk reaction to world marketing needs.
D) the backbone of Caterpillar’s global success is its network of dealers.
E) Germany’s reputation for engineering and manufacturing provides a competitive advantage.
Italy’s Benetton utilizes marketing as a knee-jerk reaction to world marketing needs
McDonald’s serves McAloo Tikki Burger in India, McRice Burger in Malaysia, McOZ Burger in Australia, Kiwi Burger in New Zealand, and McHuevo Burger in Uruguay and McSamurai Burger in Thailand. These menu variations are examples of:
a combination of global and local marketing mix elements.
All of the following correctly states McDonald’s approach to standardization and adaptation of the marketing mix except:
A) McDonald’s standardizes some product elements and adapts others.
B) McDonald’s standardizes some place elements and adapts others.
C) McDonald’s standardizes some promotion elements and adapts others.
D) McDonald’s standardizes some price elements and adapts others.
E) McDonald’s standardizes all product elements.
McDonald’s standardizes all product elements
Examples of effective global marketing by McDonald’s include both standardized and localized marketing mix elements. Which of the following does not represent a localized element?
A) It serves McAloo tikki potato burger in India.
B) It uses the advertising slogan “I’m lovin’ it.”
C) It operates themed dining cars on the Swiss national rail system.
D) It has home delivery service in India.
E) It has slang nicknames such as MakDo in Philippines and McDo in France.
It uses the advertising slogan “I’m lovin’ it.”
Uniqlo, a division of Japan’s Fast Retail, operates about 850 stores in Japan and currently has six stores in the United States. Their plans call for a total of 200 U.S. stores by 2020. The fulfillment of their plan will depend on:
A) industry conditions.
B) sources of competitive advantage.
C) the condition of the apparel market worldwide.
D) the demand in Japan for U.S. style garments.
E) all of the above
E) All of the above
Measured by national income, the United States represents the world’s largest single market for goods and services. Roughly what percentage of world income is found outside the United States?
75%
Even though Germany is the largest single-country market in Europe, what percent of the world market potential for German companies is outside Germany?
94%
According to the Fortune global 500 companies for 2012, the largest corporation based on revenue is:
Royal Dutch Shell
Based on 2012 rankings of Fortune Global 500 companies, the world’s most valuable car company is:
Toyota
Based on the size of the market in U.S. dollars, the leading consumer products are:
Cigarettes
Based on the size of the market in U.S. dollars, the second highest consumer products are:
Luxury goods
Based on the total annual units sold in the worldwide market, the leading product category is:
Cigarettes
A person who assumes that his or her home country is superior to the rest of the world is said to have:
Ethnocentric orientation
Nissan’s earlier vehicles were difficult to start in many parts of the United States during the cold
winter months. In northern Japan, it was customary for many car owners to put blankets over the hoods of their cars during winter months. Nissan’s assumption was that Americans would do the same thing. This is an example of:
ethnocentric orientation
The cell phone divisions of Toshiba, Sharp, and other Japanese companies prospered by focusing on the domestic market. When handset sales in Japan slowed a few years ago, the Japanese companies realized that Nokia, Motorola, and Samsung already dominated key world markets. Atsutoshi Nishida, president of Toshiba, noted, “We were thinking only about Japan. We really missed our chance.” This example illustrates:
Ethnocentric orientation
Unilever, the Anglo-Dutch consumer products company, at one time had 30 different package designs and 48 different formulations for its Rexona deodorant brand. This is an example of:
Polycentric orientation
Transnational companies, such as Toyota and Honda, have characteristic features that include:
A) being in both global markets and utilizing global supply chains.
B) characterized by a mind-set of being “stateless.”
C) using both localized and standardized elements in marketing programs.
D) decisions made on the basis of ongoing research.
E) all of the above
All of the above
Nestlé, Unilever, GlaxoSmithKline, and Royal Philips Electronics can be considered transnational companies on the basis of:
A) sales outside the home country to total sales.
B) assets outside the home country to total assets.
C) employees outside the home country to total employees.
D) headquartered in a relatively small home-country market.
E) all of the above
All of the above
A type of advantage that a global company possesses by virtue of the fact that it has experience in more than one country is referred to as:
Leverage
A number of multilateral trade agreements have accelerated the pace of global integration which include:
A) NAFTA.
B) GATT.
C) WTO.
D) EU.
E) all of the above
all of the above
Pfizer, Merck, Novartis, and other pharmaceutical companies have little choice but to engage in global marketing since:
no single market is large enough to recover costs incurred in research
In their book, Daniel Yergin and Joseph Stanislaw wrote “It is the greatest sale in the history of the world. Governments are getting out of businesses by disposing of what amounts to trillions of dollars of assets. Everything is going—from steel plants and phone companies . . . to hotels, restaurants, and nightclubs.” This is an indication of:
privatization is becoming a driving force for global marketing
When a country like China is experiencing rapid economic growth, policymakers are likely to:
look more favorably on outsiders
H.F. Iskander, general manager of Chevron’s Kuwait office, stated “Chevron is pumping oil in different locations all over the world . . . there isn’t a rock we haven’t drilled through. We centralize all that knowledge at our headquarters, analyze it, sort it out, and that enables us to solve any oil-drilling problem anywhere.” From the global marketing point of view this is an example of a global company:
D) that gains leverage through experience transfers.
Japan’s giant Matsushita Electric Company achieved scale economies by exporting VCRs, televisions, and other consumer electronics products throughout the world from world-scale factories in Japan. This is an example of the fact that:
A) scale economies were a cornerstone of Japanese success in the 1970s and 1980s.
B) leverage from scale economies is not limited to manufacturing.
C) a global company can achieve the same economies on a global scale.
D) the larger scale of the global company also creates opportunities to improve corporate staff competence and quality.
E) all of the above
all of the above
Anheuser-Busch, the brewer of Budweiser beer, lost its independence after years of focusing primarily on the domestic U.S. market. This is most likely a result of:
management myopia
In the United States, some people believe that globalization has depressed the wages of American workers and resulted in the loss of both blue-collar and white-collar jobs. This is an example of:
globaphobia
McDonald’s restaurants are found in more than 118 countries. To ensure high levels of consistency and quality, the company’s far-flung restaurant system incorporates many standardized elements (e.g. restaurant design, burgers/fries/soft drinks as basic menu offerings). However, McDonald’s also prides itself on sourcing many of its food inputs (e.g. potatoes and dairy products) in individual host countries. McDonald’s strives to be locally responsive—it creates new menu items specifically designed with local eating customs and preferences in mind. Typically, McDonald’s forms joint ventures with local partners, a tactic that ensures that a local “face” is associated with the company. Finally, McDonald’s has been in many country markets long enough that a new generation of consumers has grown up with McDonald’s and are not aware of the company’s U.S. origins. On the basis of this summary, what is the highest stage of corporate development that McDonald’s arguably has achieved?
transnational
What is “global marketing” and how does it differ from “regular marketing”?
Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers. An organization that engages in global marketing focuses its resources and competencies on global market opportunities and threats. A fundamental difference between “regular marketing” and “global marketing” is the scope of activities. A company that engages in global marketing conducts important business activities outside the home-country market. For example, as Walmart expands into Guatemala and other Central America countries, it is implementing a market development strategy.
President Franklin Roosevelt launched the Works Progress Administration (WPA) which put millions of Americans back to work.
true
The Cold War decades that followed World War II saw the East and the West jockeying for geopolitical advantage.
true
People or organizations with needs and wants and the willingness and ability to buy or sell represent the definition of a market.
true
The BRICS nations and other emerging markets are also home to companies that are challenging established global giants at home and abroad.
true
The lack of employment as seen in the recent times is indicative of the fact that manufacturing is in decline.
false
Today, market capitalism is widely practiced around the world, most notably in North America and the European Union.
true
In centrally planned socialism economic systems, the state allocates resources, whereas production resources are privately owned.
false
In Sweden, where the government controls two-thirds of all expenditures, resource allocation is more “market” oriented than “command” oriented
false
According to the 2013 Index of Economic Freedom compiled by the Heritage Foundation, Hong Kong is ranked as having the highest degree of economic freedom.
true
As per the listings of the 2013 Index of Economic Freedom by the Heritage Foundation, there is a high correlation between the degree of economic freedom and the extent to which a nation’s mixed economy is market-oriented.
true
Cuba and North Korea are the only two countries where Coca-Cola is not available through authorized channels
true
The death of Venezuelan President Hugo Chavez in March 2013 marked the end of an era, where he toyed with the idea of pursuing a “third way” to economic growth.
true
The World Bank has developed a four-category classification system for stages of marketing development which uses per capita gross national income (GNI) as a base.
true
About 25% of the world population is included into the low-income economic countries category as per the World Bank classification system.
false- 13% of the world’s population is in the low income category
Although Bangladesh is categorized in the low-income countries, they have genuine market opportunities, particularly in the garment industry.
true
Myanmar, a low-income country in Southeast Asia with a population of 65 million people, can be considered as one of the emerging markets.
true
According to the Asian Development Bank, only about one-quarter of Myanmar’s population has access to reliable electricity, and power shortages and outages are not unusual.
true
During the past two decades, the world economic environment has become increasingly dynamic. To achieve success, executives and marketers must take into account all of the following realities except:
A) capital movements have replaced trade as the driving force of the world economy.
B) production has become “uncoupled” from employment.
C) the world economy dominates the scene.
D) the struggle between capitalism and socialism continues.
E) the growth of e-commerce diminishes the importance of national barriers.
the struggle between capitalism and socialism continues.
The Gross Domestic Product (GDP), a measure of a nation’s economic activity, is calculated by all of the following factors except:
A) consumer spending.
B) investment spending.
C) government purchases
D) industry purchases.
E) net exports.
industry purchases
The demise of communism as an economic and political system can be explained by all of the following facts except:
A) communism is not an effective economic system.
B) relatively superior performance of the world’s market economies.
C) communism works when the currency exchange rate is weak.
D) difficult to manage national economies with a single central plan.
E) increased public participation in matters of state.
communism works when the currency exchange rate is weak.
Traditionally economists identified main types of economic systems, which include all of the following except:
A) market capitalism.
B) market socialism.
C) centrally planned socialism.
D) centrally planned capitalism.
E) centrally planned nationalism.
centrally planned nationalism
Market capitalism is an economic system in which:
individuals and firms allocate resources and production resources that are privately owned
One of the distinguishing features of a Centrally Planned Capitalism economic system is:
command resource allocation is utilized extensively in a private resource ownership environment.
For decades, the economies of China, the former Soviet Union, and India functioned according to the tenets of:
centrally planned socialism
The Swedish government has significant holdings in key business sectors and has a hybrid economic system that incorporates:
centrally planned socialism and capitalism
The Washington, D.C.-based Heritage Foundation survey consists of over 175 countries ranked by degree of economic freedom. The key economic variables considered for this ranking includes all of the following except:
A) taxation policy.
B) government consumption of economic output.
C) percent foreign ownership.
D) banking policy.
E) wage and price control.
percent foreign ownership
The only two countries where Coca-Cola is not available through authorized channels are:
Cuba and North Korea
Singapore banned the import, manufacture, and sales of chewing gum in the country since wads of gum were making a mess on sidewalks, buses, and subway trains. Violators are subject to severe penalties, and before buying a pack consumers must register their names and addresses. This, according to author William Greider, demonstrates that Singapore’s government:
A) is harshly autocratic.
B) administers a paranoid control over Singaporeans.
C) administers a paranoid control over press and politics.
D) runs an effective welfare state.
E) all of the above
all of the above
Venezuelan President Hugo Chavez believed in all of the following aspects except:
A) nationalization of international companies.
B) imposition of currency controls.
C) free-market economic policies.
D) capitalism is a structural crisis.
E) energy pact known as Petrocribe.
energy pact known as Petrocribe
Low-income countries have a GNI per capita of $1,025 or less. The general characteristics shared by countries at this income level include all of the following except:
A) high literacy rates.
B) high birth rates.
C) heavy reliance on foreign aid.
D) political unrest.
E) high agricultural population.
High literacy rates
Myanmar is considered as one of the emerging markets open for business. All of the following facts pertain to Myanmar except:
A) Myanmar is a low-income country in Southeast Asia.
B) Myanmar has a population of 65 million people.
C) Myanmar is one of the countries considered as “Stans.”
D) Myanmar’s citizens elected a president.
E) Only one quarter of Myanmar’s population has access to electricity.
Myanmar is one of the countries considered as “Stans.”
The majority of the world’s population is included in the following economic category:
lower-middle-income countries.
With a 2011 GNI per capital of $1,410, India has transitioned out from the former category and now is classified as a(n):
lower-middle-income country.
Upper-middle-income countries, also known as industrializing or developing countries are those with GNI per capita ranging from:
$4,036 to $12,475.
Among the upper-middle-income countries, also known as industrializing or developing countries, the following aspects are observed except:
A) the CNI per capita ranges from $4,036 to $12,475.
B) the percentage of the population engaged in agriculture drops sharply.
C) people move to the industrial sector.
D) the degree of urbanization increases.
E) None of the above
None of the above
The general characteristics shared by low-income countries do not include:
lack of genuine market opportunities
All of the following facts pertain to Brazil except:
A) Brazil is the largest country in Latin America.
B) Brazil boasts the richest reserves of natural resources in the hemisphere.
C) Brazil’s top trading partner is China.
D) Brazil’s GNI has grown at an average annual rate of 4 percent over the past 8 years.
E) Brazil lacks logistics software, horse-drawn carts are still a common sight on many roads.
Brazil lacks logistics software, horse-drawn carts are still a common sight on many roads
All of the following facts pertain to China except:
A) China is in the upper-middle-income category.
B) China is the largest single destination for foreign investment in the developing world.
C) China is a member of the World Trade Organization.
D) China has sprawling bureaucracy.
E) China lacks infrastructure.
China has sprawling bureaucracy
Prahalad and Hammond have identified several assumptions and misconceptions about the “bottom of the pyramid” (BOP) that need to be corrected. All of the following mistaken assumptions are correct except:
A) The poor are too concerned with fulfilling basic needs to “waste” money on nonessential goods.
B) The goods sold in developing markets are so expensive that there is no room for a new market entrant to make a profit.
C) The poor have no money.
D) People in BOP markets cannot use advanced technology.
E) Global companies that target BOP markets will be criticized for exploiting the poor.
The goods sold in developing markets are so expensive that there is no room for a new market entrant to make a profit.
Global marketers should take note of the fact that almost half of the world’s population is located in:
lower-middle-income countries
The United Nations designates 50 countries in the bottom ranks of the low-income category named as:
LDCs (least-developed countries).
Upper-middle-income countries are also known as:
Industrializing countries
Upper-middle-income countries that achieve the highest rates of economic growth are sometimes referred to collectively as:
NIEs (Newly Industrialized Economies)
Which of the following nations fall in the lower-middle-income category?
Egypt
Nike produces only a small portion of its output in China, but when the firm refers to China as a “two-billion-foot market,” it is referring to the fact that:
China is a potential future market
According to the authors of the Harvard Business Review article, “Serving the World’s Poor, Profitably”, which of the following is a mistaken assumption that global companies might have about the BOP (bottom of the pyramid)?
A) The poor have no money.
B) The poor are too concerned with fulfilling basic needs to “waste” money on nonessential goods.
C) People in BOP markets will be criticized for exploiting the poor.
D) People in BOP markets cannot use advanced technology.
E) All of the above are mistaken assumptions discussed by the authors.
All of the above are mistaken assumptions discussed by the authors.
Pursuing alternative sources of energy, such as wind and solar power, is important due to the fact that:
heavy reliance on fossil fuels contributes to global warming
Which two companies are sourcing product components from small-scale enterprises, which in turn are helping preserve old-growth forests as well as economic opportunities in Brazil?
Daimler AG and Hermes
Product and market opportunities in a postindustrial society are more heavily dependent upon new products and innovations than in industrial societies. An example of this would be:
New e-commerce markets for interactive forms of electronic communication
Which country was upgraded from “emerging” to “developed” status by the Financial Times Stock Exchange (FTSE) in 2009?
South Korea
The Organization for Economic Cooperation and Development (OECD) is comprised of:
A) the 34 high-income countries.
B) countries that believe in market-allocation economic systems.
C) pluralistic democracies.
D) countries that demonstrate progress toward economic reform.
E) All of the above statements are applicable.
All of the above
The term “Expanded Triad” includes all of the following countries or regions except:
A) Japan.
B) United States.
C) Canada.
D) Mexico.
E) Russia.
Russia
Recently, the Organization for Economic Cooperation and Development (OECD) has become more focused on global issues, social policy, and labor market regulations as seen by:
A) addressing the vexing problem of bribery.
B) requiring members to cooperate when pursuing bribery allegations.
C) helping members candidly assess their own economic policies.
D) member nations working together in committees to review social policies.
E) all of the above
all of the above
Which of the following is true about the Triad?
Triad countries account for approximately 75% of world income as measured by GNP.
Which of the following statements is not accurate?
A) India’s teledensity—a measure of ownership of private telephones—is only 20% of population.
B) In China, saturation levels of private motor vehicles and personal computers (PCs) are quite low.
C) In 2001, EU had 49 cars per 100 people.
D) In Russia, 200 people out of 1,000 own cars.
E) In India, 150 people out of 1,000 own cars.
In India, 150 people out of 1,000 own cars
The “balance of payments” is a record of all economic transactions between the residents of a country and the rest of the world. It is divided into the current and capital accounts. Current accounts include all of the following except:
A) balance on goods.
B) portfolio investments.
C) balance on services.
D) goods imports.
E) goods exports.
portfolio investments
Measuring elevator populations in countries measured as units installed per thousand people gives an estimate of the market for elevators. That China has about one half an elevator per thousand people is indicative of:
low product saturation level
The United States’ growing trade deficit reflects a number of factors which exclude:
the services trade surplus
The fastest-growing sector of world trade includes:
A) travel and entertainment.
B) accounting and legal services.
C) royalties and license fees.
D) engineering services.
E) all of the above
all of the above
Devaluation can result from government action or an economic crisis. In August 1998, the Russian economy imploded. As a result, all of the following listed events happened except:
A) the ruble plunged in value.
B) the government defaulted on its foreign debt obligation.
C) many Russians faced wage cuts and layoffs.
D) Russia’s economy did not recover from the impact.
E) savings were wiped out as banks collapsed.
Russia’s economy did not recover from the impact
To the extent that a country sells more goods and services abroad than it buys, there will be:
a greater demand for its currency.
The top global merchandise exporter is:
china
The Big Mac Index shows that the price of the Big Mac in China converted from the local currency, yuan, to be $2.18, whereas its price in the United States is $3.73. This shows that:
the Chinese yuan is undervalued against the US $.
One Friday a few years ago, the Big Mac Index suggested that the yen was overvalued relative to the dollar by 70%. When currency markets opened on the following Monday, anyone using the Big Mac Index would conclude that the yen was only 20% overvalued relative to the dollar. What is the most likely explanation for this?
McDonald’s Japan reduced the yen price of a Big Mac.
If an American tourist in Tokyo pays more in dollars for the same amount of yen that she bought last week, then:
the dollar has depreciated relative to the yen
Porsche relies on currency hedging rather than price increases in order to:
A) boost pretax profits on sales of its automobiles.
B) balance the relative value of the dollar compared to the euro.
C) protect all earnings from foreign-exchange movements.
D) generate about 45% of its sales in the United States.
E) A, B, and C
A, B, and C:
A) boost pretax profits on sales of its automobiles.
B) balance the relative value of the dollar compared to the euro.
C) protect all earnings from foreign-exchange movements.
When countries or regions experience currency and/or economic stress, all of the following events can take place except:
A) increased exposure to certain risks.
B) new profit opportunities.
C) lower local currency financing costs.
D) bad debts occur.
E) cancellation of aircraft equipment sales.
lower local currency financing costs
Traditionally economists identified four main types of economic systems. However, due to globalization it is harder to categorize the systems narrowly. What will be more robust descriptive criteria that can be used for classification?
a) type of economy; (b) type of government; (c) trade and capital flows; (d) the commanding heights; (e) services provided by the state and funded through taxes; (f) institutions; and (g) markets.
The United States and the EU have the world’s largest trading relationship.
true
GATT (General Agreement on Tariffs and Trade) itself had no enforcement power, and the losing party in a dispute was entitled to ignore the ruling.
true
The WTO’s neutral trade experts also serve as mediators in global trade disputes
true
It is mandatory for countries to notify the WTO when they enter into preferential trade agreements.
false
A preferential trade agreement is a mechanism that confirms special treatment on select trading partners, thereby at times discriminating against other trading partners
true
The ultimate goal of a free trade agreement is to have standardized duties on goods that cross borders between the partners.
false- the goal is to have zero duties
A free trade area represents the most fully developed form of preferential trade agreement among nations.
false
In October 2011, the United States Congress finally ratified the long-delayed free trade areas with South Korea, Panama, and Colombia.
true
A Customs Union represents the most fully developed form of preferential trade agreement among nations.
false
In addition to eliminating internal barriers to trade, members of a customs union agree to the establishment of common external tariffs.
true
In a Common Market there are no internal barriers to trade, and it allows for free movement of factors of production such as labor and capital.
true
Under Economic Union, a doctor or lawyer qualified in one country can practice in another member country.
true
In spite of NAFTA creating a free trade area, Mexican avocado growers can ship their fruit to the United States only during the winter months, and only to states in the northeast subject to a quota of $30 million worth of avocados per year.
true
The five original members of the Central American Common Market (CACM) are El Salvador, Honduras, Guatemala, Panama, and Costa Rica.
false- its El Salvador, Honduras, Guatemala, Costa Rica, & Nicaragua
Before an agreement can be reached between the United States and European Union, major differences will have to be worked out. These differences include aspects related to all of the following except:
A) agriculture.
B) genetically modified crops.
C) tariff reduction.
D) cross-border investment.
E) job creation.
job creation
The World Trade Organization, which came into existence on January 1, 1995, is the successor of another organization with the abbreviation:
GATT-General Agreement on Tariffs and Trade
Which form of regional cooperation agreement, when fully implemented, entails creation of a unified central bank, the use of a single currency, and common policies on agriculture, social services and welfare?
Economic union
Trade ministers representing the WTO member nations meet ________ to work on improving world trade.
annually
The form of economic cooperation that calls for 1) eliminating internal barriers to trade and 2) establishing common external barriers is known as a(n):
Customs union.
________ builds upon the elimination of internal tariff barriers, the establishment of common external barriers, and the free flow of factors.
Customs union
Arrange the following in order from lowest to highest level of economic integration.
free trade area→customs union→common market→economic union
A true economic union requires:
political unity
As a result of CFTA, the U.S. automakers participate in the Canadian auto market, thereby benefiting due to:
greater economies of scale.
Custom unions or a common market does not create a free trade area as compared to NAFTA due to:
no common external tariffs
The form of economic cooperation that calls for countries to eliminate all internal barriers to trade among themselves even while maintaining independent trade policies vis-à-vis third countries is known as a(n):
Free trade area
NAFTA creates a free trade area in North America. However, Mexican avocado growers:
can only ship avocados to the United States in winter months
NAFTA creates a free trade area, as opposed to a customs union or a common market, due to the fact that:
the governments of all three nations decided to eliminate tariffs
The allure of the Latin American market has been its:
considerable size
The most important preferential trading arrangements in Latin America do not include:
BRIC
The five original members of the Central American Integration System did not include:
Venezuela
Which member of the Central American Integration System has both the largest economy and the largest population?
Guatemala
Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA that includes all SICA members except:
A) Honduras.
B) Guatemala.
C) Nicaragua.
D) Panama.
E) Costa Rica.
Panama
The Secretariat for Central American Integration is headquartered in:
Guatemala City
Considering the progress, attempts to achieve integration in Central America has been described as:
uncoordinated
The country that withdrew from the original members of the Andean Community is:
Chile
About 70% of Ecuador’s flower harvest is exported to:
the US
The “Common Market of the South” in Latin America is used to describe:
Mercosur
Argentina provides a good example of how a country can emerge from an economic crisis as a stronger global competitor as per the following statement:
Argentina devalued its currency for exports and capital transactions.
The English-speaking CARICOM members in the eastern Caribbean are concerned with defending their privileged trading position with:
the U.S.
The original six members of the ASEAN (Association of Southeast Asian Nations) included all of the following countries except:
A) Singapore.
B) Thailand.
C) India.
D) Philippines.
E) Brunei.
India
Which one of the ASEAN members has the World’s second-largest container port?
Singapore
There are barriers in Japan for global marketers in terms of attitudes as well as laws. Barriers include all of the following except:
A) any organization wishing to compete in Japan must be committed to providing top-quality products and services.
B) repeat visits and extended socialization with distributors.
C) goods marketed should have a semblance of western products and services.
D) marketers must master the keiretsu system of tightly knit corporate alliances.
E) trust has to be built before conducting successful business.
goods marketed should have a semblance of western products and services.
For the past 40 years Bhutan, a kingdom of 700,000 people in the Himalaya mountains, has relied on the following measure:
GNH-Gross National Happiness
Which of the following ASEAN countries ranks number one in terms of two-way trade with the United States?
Singapore
The Maastricht Treaty called for:
the creation of an economic and monetary union in Europe
The introduction of the euro by EU resulted in multifaceted advantages which include:
elimination of costs associated with currency conversion
The non-EU member which uses the euro as its currency is:
Vatican City
The new country joining the EU at the beginning of 2014 is:
Estonia
Markets of Central and Eastern Europe present interesting opportunities and challenges. Companies such as 3M International, McDonald’s, Philips Electronics, and Henkel are moving into the region for all of the following reasons except:
A) the region is an important new source of growth.
B) that the first company to penetrate a country market often emerges as leader.
C) wage rates are much lower than those in Spain, Portugal, and Greece.
D) the region offers attractive locations for low-cost manufacturing.
E) core products and Western brand names need changes to meet consumer demands.
E) core products and Western brand names need changes to meet consumer demands.
Management strategic options pertaining to products that are facilitated by a single European market include:
A) standardized packaging and labeling.
B) consolidated production.
C) shift from brand to benefit segmentation.
D) seeking marketing economies.
E) all of the above
all of the above
Because they are in transition, the markets of Central and Eastern Europe present interesting opportunities and challenges which include:
A) new source of growth.
B) first mover advantage.
C) exporting as an entry mode.
D) lower wage rate.
E) all of the above
all of the above
The enlargement of the EU has impacted marketing strategies in the Eurozone countries by:
shifting products from one market to another in the event of shortages
The markets of Central and Eastern Europe present interesting opportunities and offer attractive locations for low-cost manufacturing due to:
wage rates being lower than in Spain, Portugal and Greece.
With the global economic crisis as a backdrop, the first-ever Happiness Congress was held in:
Spain
Political and social instability in the Middle Eastern region can primarily be attributed to:
a wide gap between rich and poor nations due to oil revenues.
The Gulf Cooperation Council (GCC) includes all of the following countries except:
A) Kuwait.
B) Saudi Arabia.
C) Iraq.
D) Bahrain.
E) Oman.
Iraq
A key word(s) in conducting business in the Middle East is:
Connection
In spite of having about 45% of the world’s known oil reserves, Saudi Arabia and other Middle Eastern countries post current-account deficits, largely because:
they must import most of the goods and services.
The Middle East and North Africa are sometimes viewed as a regional entity referred to as:
MENA
In recent years, the economy of selected countries in ECOWAS (Economic Community of West Africa States) has improved except in:
A) Ivory Coast.
B) Ghana.
C) Benin.
D) Sierra Leone.
E) Nigeria.
Sierra Leone
In order to form a free trade area, South Africa has signed a Trade, Development, and Cooperation Agreement (TDCA) with:
EU- European Union
African companies will find it easier to gain access to financing from the U.S. Export-Import Bank due to:
AGOA- African Growth and Community Act
Other than tariffs, there are certain problems that restrict free trade between the European Union and the United States which includes all of the following except:
A) use of genetically modified agricultural products.
B) product labeling.
C) Hollywood movie domination.
D) Internet usage.
E) cultural diversity.
Internet usage.
The reason why Greece, Ireland, Portugal, and Spain sometimes are referred to as the eurozone’s “peripheral countries” is:
that they all rank lower than their EU neighbors in terms of infrastructure.