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Chapter 1 – Introduction to Global Marketing True/False 1. Skillfully implemented strategies that are implemented in conjunction with universal marketing fundamentals increase the likelihood of market success. 2. As Wal-Mart expands into Central American countries, it is implementing a market development strategy. 3. A fundamental difference between “regular” marketing and “global” marketing is the scope of activities. 4. The perceived value equation can be represented as Value = Price/Benefits. 5. If Nestle 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. 6. Value, competitive advantage, and the focus required to achieve them are universal in their relevance and should guide global marketing efforts in any part of the world. 7. The discipline of marketing is universal and such marketing practices do not vary from country to country. 8. Global market participation is the extent to which a company has operations in major world markets. 9. Globalization presents companies with limited opportunities to configure themselves since it allows producers to find the best partners. 10. According to Professor Levitt, organizations should develop standardized, highquality world products and market them around the globe by using standardized advertising. 11. Global localization means that a successful global marketer must have the ability to think locally and act globally. 12. The Coca-Cola Company supports its Coke, Fanta, and PowerAde brands with marketing mix elements that are both global and local. 13. In order to be successful, global marketing should not impose a totally standardized approach. 14. McDonald’s global marketing strategy is based primarily on local marketing mix elements. 15. The Coca-Cola Company has achieved great success in global marketing by pursuing a policy of strict standardization of all marketing mix elements. 16. McDonald’s home delivery of burgers in India is an example of unusual standardized global marketing practice. 1 17. Global marketing that a company adopts will depend on industry conditions and its source of competitive advantage. 18. By definition, a company engaging in global marketing must standardize all elements of the marketing mix everywhere in the world. 19. A cornerstone of Harley-Davidson's global marketing strategy is manufacturing in Mexico and other low-wage countries. 20. According to William Greider, the globalization of industries and markets will have some unintended, possibly dire, consequences in the coming years. 21. ExxonMobil and Wal-Mart Stores are world’s largest corporations by revenues according to “the Fortune Global 500” companies in 2006. 22. The form and substance of a company’s response to global market opportunities depend greatly on management’s assumptions or beliefs about the nature of the world. 23. Bangladesh is a leading country in Textiles and clothing market based on the overall Market Size. 24. The highest-ranking American company in the annual Fortune 500 survey of global companies is General Motors (GM). 25. When comparing the size of global markets in terms of dollar sales, the market for cigarettes is bigger than the market for cell phones. 26. A manager who assumes that his or her home country is superior to the rest of the world is said to have an ethnocentric orientation. 27. Ethnocentric companies that do business outside the home country can be described as domestic companies. 28. Nissan’s assumption that car owners in the United States will cover their cars with blanket in winters as they do in Japan is an example of ethnocentric orientation. 29. In this day and age, ethnocentrism is one of the major internal weaknesses of a business enterprise that must be overcome to sustain global competition. 30. A U.S. company that focuses on the countries included in the NAFTA has a regiocentric orientation. 31. Geocentric orientation represents true global marketing since it views the entire world as a potential market and develops global strategy. 32. An ethnocentric management orientation is preferable to a geocentric orientation. 33. One strength of a polycentric management orientation is the ability to tailor marketing strategies to the needs of each local market. 34. Toyota Company can be described as a transnational company. 2 35. Nestle being with a small home country market is compelled to adopt regiocentric or geocentric orientations in order to grow profitably. 36. The ethnocentric company is decentralized in its marketing management whereas the polycentric company is centralized. 37. A number of multilateral trade Agreements such as NAFTA has accelerated the pace of global integration. 38. When a company establishes a site on the Internet, it automatically becomes global. 39. Economic growth has reduced resistance that might otherwise have developed in response to the entry of foreign firms into domestic economies. 40. Management myopia may become a driving force that may advance a company’s effort to engage in global marketing. 3 Multiple Choice 41. When you call United Airlines for reservation on a toll free number and get response from an operator in Mumbai, this is an example of: a. b. c. d. e. 42. Which of the following is not one of the 4 Ps in the marketing mix: a. b. c. d. e. 43. b. c. d. e. the smaller the denominator in the value equation, the higher the overall value created Japanese companies exploited economies of scale to become world-class competitors the world is becoming more homogeneous higher product development costs are a driving force behind globalization luxury goods are taxed at a higher rate When a company succeeds in creating more value for customers than its competition, that company is said to enjoy _____________ in an industry. a. b. c. d. e. 46. Value = Price/Benefits Value = Benefits/Price Value = Benefits x Price Value = Benefits – Price Value = Benefits + Price A German-made Montblanc fountain pen retailing for $250 in the U.S. is a luxury good that represents an exception to which general principle: a. 45. Product Place Price Period Promotion The essence of marketing worldwide is to surpass the competition in creating perceived value which can be represented as: a. b. c. d. e. 44. Anti-globalization Global marketplace Multilingual expression Discrimination E-ticketing competitive advantage value leverage focus scale economies According to Michael Porter, a global industry is one in which _________ can be achieved by integrating and leveraging operations on a worldwide scale. 4 a. b. c. d. e. 47. 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. b. c. d. e. 48. standardization versus adaptation of the marketing mix global market participation coordination of marketing activities integration of competitive moves all of the above An example of the benefit of globalization is that Apple can market iPod models worldwide without extensive: a. b. c. d. e. 51. leverage standardized global marketing ethnocentric orientation focus myopia A firm’s global marketing strategy addresses which of the following issues: a. b. c. d. e. 50. customer value competitive advantage focus on specific food and beverages myopia policy of dealing only with Swiss businesses PepsiCo divested its restaurant divisions. A new company, YUM! Brands, is comprised of Taco Bell, Pizza Hut, and KFC. By spinning off the restaurants, PepsiCo management will be able to concentrate its attention on the beverage and snack foods industries. PepsiCo's actions illustrate the concept of: a. b. c. d. e. 49. marketing mix competitive advantage cross border infiltration ration analysis production capability standardization modification integration concentration market participation Writing in the Harvard Business Review about "The Globalization of Markets," Theodore Levitt observed that: a. the world is becoming more heterogeneous 5 b. c. d. e. 52. 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. b. c. d. e. 53. "Think globally, act globally" "Think globally, act locally" "Think locally, act locally" "Think locally, act globally" None of the above A company that engages in global marketing: a. b. c. d. e. 56. standardization global localization vending machine operations selecting market mix options homogenization Global localization means that a successful global marketer must have the ability to: a. b. c. d. e. 55. Levitt urged companies to adopt products on a country-by-country basis. There was universal agreement about his thesis that the world is becoming homogeneous. Levitt urged companies to develop standardized products that could be marketed worldwide with little adaptation. Levitt warned of the coming backlash against globalization Levitt did not recommend developing standardized products Coca-Cola achieved success in Japanese market primarily by: a. b. c. d. e. 54. the world is becoming more homogeneous the 4Ps do not apply to global marketing products should be adapted to needs and wants on a market-by-market basis the world is becoming more political pursues a "one size fits all" strategy by creating identical products for homogeneous markets customizes special products for each world country or region creates both standardized and localized products nurtures an ethnocentric management orientation uses localized products only Examples of companies that have successfully pursued global marketing by creating strong global brands include: a. b. c. d. e. Italy’s Benetton using a sophisticated distribution system. Marlboro identifying the brand name with a cowboy Gillette using the same packaging for Mach3 razor worldwide A and C all of the above 6 57. 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 is an example of: a. b. c. d. e. 58. Which of the following correctly states McDonald’s approach to standardization and adaptation of the marketing mix: a. b. c. d. e. 59. McDonald’s standardizes some product elements and adapts others McDonald’s standardizes some place elements and adapts others McDonald’s standardizes some promotion elements and adapts others McDonald’s standardizes some price elements and adapts others all of the above Gap operated 2,692 stores in the United States and more than 450 stores internationally. The company sources most of its clothing from apparel factories in Honduras, the Philippines, India, and other low-wage countries. If Gap would like to open more stores in Japan, primary consideration should include: a. b. c. d. e. 60. a combination of global and local marketing mix elements a reflection of failure of US menu items in those countries a deviation from successful marketing practices a replacement of standard menu names with fancy names a selection of menu items that can be sold eventually in US markets industry conditions sources of competitive advantage the condition of apparel market worldwide demand in Japan for US style garments 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 U.S.: a. b. c. d. e. 25% 50% 75% 95% 35% 7 61. Measured by national income, Japan represents the world's second largest single market for goods and services. What percentage of world income is found outside Japan: a. b. c. d. e. 62. Based on rankings of Fortune Global 500 companies, the world’s most valuable car company today is: a. b. c. d. e. 63. GM Daimler AG Toyota Ford Chrysler The home country of the largest company in the Fortune Global 500 revenue ranking is: a. b. c. d. e. 64. 40% 55% 70% 85% 75% Germany Great Britain United States Japan France The highest-ranked German company in the 2006 Fortune Global 500 survey was: a. b. c. d. e. DaimlerAG Allianz Volkswagen Siemens None of the above 8 65. Based on the size of the market leading players in the Textiles and clothing market include: a. b. c. d. e. 66. Based on the size of the market leading players in the bottled water market include: a. b. c. d. e. 67. Pakistan Switzerland Bangladesh Japan South Korea As discussed in Chapter 1, what do Nissan, Eli Lilly & Company, and Robert Mondavi Winery have in common: a. b. c. d. e. 68. USA Italy Bangladesh France South Korea at one time, they exhibited characteristics of ethnocentric international companies at one time, they exhibited characteristics of polycentric, multinational companies at one time, they shifted from a geocentric to an ethnocentric orientation at one time, they exhibited characteristics of ethnocentric transnational companies at one time, they exhibited characteristics of regiocentric orientation GM executives in Asia-Pacific and Europe were given considerable autonomy when designing cars to meet the needs of their respective regions. This resulted in a total of 270 different types of radios installed in GM vehicles around the world. This is an example of: a. b. c. d. e. geocentric Orientation regiocentric Orientation polycentric Orientation ethnocentric Orientation poor globalization Orientation 9 69. Until the mid-1990s, America Online accepted only English-language messages in many of its discussion areas. Supervisors deleted messages posted in Spanish and Portuguese. As described here, what management orientation was in evidence at America Online: a. b. c. d. e. 70. Transnational companies such as Toyota have characteristic features including: a b. c. d. e. 71. being in both global markets and utilizes global supply chains characterized by a mind-set of being “stateless” using both localized and standardized elements in marketing program decisions made on the basis of ongoing research all of the above Nestle’, Unilever, GlaxoSmithKline, and Royal Philips Electronics can be considered transnational companies on the basis of: a. b. c. d. e. 72. ethnocentric polycentric regiocentric geocentric transnational sales outside the home country to total sales assets outside the home country to total assets employees outside the home country to total employees a and b all of the above There is a considerable and growing overlap of advertising across national boundaries in Europe and Asia. This can be attributed to: a. b. c. d. e. wide use of Internet the information revolution increased use of satellite dishes popularity of CNN advertising worldwide all of the above 10 73. In the mid-1990s, Gruner + Juhr, one of Europe's top magazine publishers, acquired McCall's and several other American titles. After top executives from Gruner + Juhr pushed American editors for changes such as more European visual and editorial styles at McCall's, advertising revenues dropped. A former editor said, "I don't know how you can come to America and do the magazine the German or European way." What management orientation were executives from Gruner + Juhr exhibiting: a. b. c. d. e. 74. Cap Gemini Sogeti SA is the largest computer-services company in Europe and, along with IBM and EDS, among the top five worldwide. Until recently, the company's worldwide structure consisted of autonomous national "fiefdoms": Although its European offices developed expertise with large-scale, complex projects, that expertise was not shared with the American unit. What type of management orientation is evident at Cap Gemini: a. b. c. d. e. 75. ethnocentric polycentric myopic geocentric regiocentric ethnocentric polycentric regiocentric geocentric transnational When Whirlpool acquired Philips Electronics' appliance unit, managers at the American company discovered that Philips washing machines manufactured in Germany and Italy did not have a single component or part in common. This evidence suggests that a(n) _____________ management orientation prevailed at Philips: a. b. c. d. e. ethnocentric polycentric regiocentric geocentric transnational 11 76. Renault established a joint venture auto plant in Portugal in the late 1970s. Today, despite the high quality of the Portuguese-built cars, Renault may move production to a lower-wage Central European country such as Slovenia. A Renault spokesperson explains that the company originally invested in the Portuguese plant because Southern Europe had great strategic importance. “Now,” the spokesperson continues, “Having consolidated a position in Europe, Renault is starting a new phase, looking at the world." The spokesperson's comment reflects what change in management orientation at Renault: a. b. c. d. e. 77. Which of the following is not included in the EPRG framework: a. b. c. d. e. 78. From geocentric to regiocentric From ethnocentric to polycentric From polycentric to regiocentric From regiocentric to geocentric From regiocentric to polycentric Eurocentric Polycentric Regiocentric Geocentric Ethnocentric DaimlerChrysler’s truck unit has operations throughout world. As of 2000, however, there was little sharing of parts between brands and regions, little sharing of R&D teams, and little coordination. Today, the unit is characterized by centralized control over R&D and a single line of heavy truck engines that can be used in all parts of the world. A plan on the drawing board calls for sharing significant proportions of chassis and cab components between operations in Europe, the United States and Asia. As described here, DaimlerChrysler’s truck unit is making the transition from a(n) ______________ organization to a(n) ______________ organization. a. b. c. d. e. multinational; global ethnocentric; polycentric global; transnational transnational; regiocentric polycentric to regiocentric 12 79. Comparing and contrasting the worldwide marketing activities of Toyota (Japan) and Harley-Davidson (USA) using terminology and concepts introduced in Chapter 1, one can say that: a. b. c. d. e. 80. Harley and Toyota are both global companies Harley and Toyota are both transnational companies Harley is a global company, Toyota is a transnational company Toyota is a global company, Harley is a transnational company Toyota and Harley both have ethnocentric orientation McDonald's restaurants are found in more than 118countries. 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: a. b. c. d. e. international multinational global transnational myopic 13