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Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan Global Marketing Management Chapter 8 Global Entry and Expansion Strategies 1) Before doing any business internationally, a company must look at the conditions in a potential country to analyze what the advantages, disadvantages, and costs will be and whether it is worth the risk. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 2) Political risk is directly proportional to a country's stage of economic development. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 3) Labor costs include the cost of workers at every level. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 4) In capital-intensive industries, wage levels are often a large percentage of costs associated with a product. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 5) Advanced global companies generally pursue cheap labor for manufacturing locations. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 6) The use of computer controls and technology has increased the cost of labor. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 7) The greater the distance between the product source and the target market, the lower the transportation costs. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 8) Exchange-rate fluctuations have little effect on the attractiveness of a potential target market. Answer: FALSE AACSB: Analytical thinking full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan Difficulty: Easy 9) When a country's currency fluctuates drastically, a company with productive capacity in other locations can maintain its competitive advantage by shifting production. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 10) If a company's export products are similar to products manufactured inside the target market, the exported target gains competitive advantage. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 11) Global marketers typically take domestic products as they are and sell it to international customers. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 12) A domestic company can go global simply by responding to an unsolicited order. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 13) Export selling involves extensive tailoring of various elements of the marketing mix to global market requirements. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 14) Export marketing involves tailoring various elements of the marketing mix to global marketing requirements. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 15) A company that engages in export marketing uses an extension approach to pricing, ensuring that product prices in export markets are the same as prices in the home-country market. Answer: FALSE AACSB: Analytical thinking Difficulty: Moderate 16) Most companies handle export operations in-house. Answer: TRUE full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan AACSB: Analytical thinking Difficulty: Easy full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan 17) The extent of a company's in-country presence in a target market has no impact on perceived customer value. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 18) The costs of maintaining a global staff in an overseas market is cheaper compared to domestic sales. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 19) Licensing is a contractual arrangement whereby one company makes an asset available to another company in exchange for some form of compensation. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 20) Licensees can become direct competitors to licensors. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 21) Franchising is a contractual agreement where one company sells the rights to its brand, logo, and business model to another company. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 22) Licensing is a more extensive form of participation in foreign markets than joint ventures. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 23) One advantage of a joint venture is that it may be the only way to enter a country if local laws prohibit foreign ownership. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 24) With foreign direct investment, the owner has a passive role without significant influence or management control. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan 25) The most extensive form of participation in global markets is 100 percent ownership of a foreign subsidiary. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 26) Companies can expand seeking new country markets for already identified market segments. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 27) The stages of development for a transnational company are: domestic, international, multinational, global, and transnational. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 28) One of the strengths of the transnational company is that it combines the strengths of each of the preceding stages in an integrated network which leverages worldwide learning and experience. Answer: TRUE AACSB: Analytical thinking Difficulty: Easy 29) Research and development becomes centralized when a company becomes transnational. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 30) A multinational company would be self-sufficient, decentralized, and have its key assets dispersed. Answer: FALSE AACSB: Analytical thinking Difficulty: Easy 31) How do organizations assess the political risks of an international investment? A) The higher a country's income, the higher the political risks. B) The more a country is transparent, the more it is risk-free. C) The lower the income of per capita, the lower the risks. D) The more a country allows imports, the higher the risks. Answer: B AACSB: Analytical thinking Difficulty: Easy full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan 32) How can an organization gain market access in a new country that limits imports? A) by establishing a production facility within the country B) by locating a production source outside the market C) by forming a partnership with a local distribution company D) by establishing a local supply chain system in the neighboring country Answer: A AACSB: Analytical thinking Difficulty: Moderate 33) While deciding a location for a manufacturing base, which of the following can be directly determined by organizations based on the foreign exchange rate of a country's currency? A) potential competition B) product fit C) demands for a product D) costs of production Answer: D Difficulty: Moderate 34) Agents differ from distributors in that agents ________. A) do not assist in invoice collection B) do not take title to the goods C) add channel value where thousands of customers are involved D) pay directly to exporters Answer: B AACSB: Analytical thinking Difficulty: Moderate 35) Which of the following is true of distributors? A) They take title to the goods. B) They cannot add their margins to the sales. C) They cannot resell to the trade. D) They allow direct representation to the exporter. Answer: A Difficulty: Easy 36) Mckelvey Inc., a U.S. - based cosmetics manufacturer, promotes its products using the same price value, composition, and advertisements irrespective of the target market location. In this case, the company is utilizing ________. A) contract manufacturing B) export marketing C) intermediary selling D) export selling Answer: D AACSB: Analytical thinking Difficulty: Hard full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan 37) Which of the following is the typical first step for a company that is going global? A) licensing B) direct exporting C) inshoring D) outsourcing Answer: B Difficulty: Easy 38) Which of the following is true of licensing as a form of global market entry? A) A company can expand its market reach with almost no capital or marketing costs. B) It allows a licensor to directly involve in the overseas market and user's needs. C) It can restrict the growth of domestic competitors in an overseas market. D) A company's resources cannot be exploited by another company. Answer: A AACSB: Analytical thinking Difficulty: Moderate 39) ________ refers to a marketing strategy where companies do not manufacture any of their product's components. A) Product sourcing B) Product differentiation C) Joint venture D) Export marketing Answer: A AACSB: Analytical thinking Difficulty: Moderate 40) Escobar, a global enterprise selling athletic shoes, procures its shoes through contract manufacturing agreements with producers in developing nations. It uses its expertise in distribution and sales to promote these products. In this case, the marketing strategy used by the company is referred to as ________. A) franchising B) direct investment C) product sourcing D) joint venture Answer: C AACSB: Analytical thinking Difficulty: Hard 41) A ________ is referred as the collaboration between two or more firms on a specific project to serve one or more markets. A) franchise B) direct investment C) portfolio D) joint venture full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan Answer: D Difficulty: Easy 42) Which of the following market entry strategies allows an organization 100 percent ownership of its foreign subsidiaries? A) franchising B) direct investment C) product sourcing D) joint venture Answer: B Difficulty: Easy 43) Which of the following is the first stage of development of a transnational corporation? A) global B) international C) domestic D) multinational Answer: C Difficulty: Easy 44) Which of the following kinds of marketing orientation is a domestic company most likely to have? A) polycentric B) ethnocentric C) regiocentric D) geocentric Answer: B AACSB: Analytical thinking Difficulty: Easy 45) How is the location of a manufacturing base dependent on foreign exchange rate of a country's currency? Answer: In deciding where to locate a manufacturing base, costs of production will be determined in part by the prevailing foreign exchange rate for the country's currency. Exchange rates can be volatile and many companies pursue global sourcing strategies from a "portfolio" of countries and in a range of currencies as a way of limiting exchange-related risk. At any point in time, what had been an attractive location for sales or production may become much less attractive due to exchange-rate fluctuations. The prudent company will incorporate exchange volatility into its planning assumptions and be prepared to prosper under a variety of exchange-rate relationships. Dramatic shifts in price levels of commodities and currencies are a characteristic of the world economy today. Such volatility argues for a sourcing strategy that provides alternative country options for supplying markets. With alternative production locations, if any location is in a country with a seriously overvalued currency, a company with productive capacity in other locations can maintain its competitive advantage by shifting production to competitively valued full file at http://testbankeasy.com Full file at http://testbankeasy.eu/Test-bank-for-Global-Marketing-Management,-8th-E dition---Keegan country locations. AACSB: Analytical thinking Difficulty: Moderate 46) Explain the criteria to be assessed when selecting a potential target market for export? Answer: There are six criteria that should be assessed: 1. Market Potential. What is the basic market potential for the product? To answer this question, secondary information (that which is already assembled and available) is a good place to start. 2. Market Access. This aspect of market selection concerns the entire set of national controls that apply to imported merchandise and any restrictions the host-country government might impose. These can include such items as import/ export licenses, import duties, nontariff barriers, foreign exchange regulations, and preference arrangements. 3. Shipping Costs and Time. Product modification, export packing, and shipping costs can affect the market potential for a product. If a company's export product is similar to what is already being manufactured inside the target market, shipping costs, duties, and "time on the water" may render the exported product uncompetitive. It is important to investigate alternative modes of shipping as well as finding ways to further differentiate the product–the exporter may need to offset a price or delivery disadvantage. 4. Potential Competition. A country's overseas-based commercial attachés or representatives can be a valuable resource. When contacting a commercial attaché in a prospective country market, it is important to provide as much specific information as possible. Many home-country governments offer a broad range of services, including assistance in finding potential local agents and distributors. 5. Service Requirements. If service, regular technical support, or warranty offerings are required for a product, it must be delivered at a cost consistent with the size and profitability of the market. The growing universality of the Internet makes it possible to offer cost-efficient web-based global service support in addition to or in some cases as an alternative to in-country support. 6. Product Fit. With information on market potential, cost of access to the market, and local competition, a final step is to decide how well a company's product fits the market in question. In general, a product fits a market if it satisfies the criteria discussed previously in the chapter and is profitable. AACSB: Analytical thinking Difficulty: Moderate full file at http://testbankeasy.com