Chapter 1: Scope, Concepts, and Drivers of International Marketing
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).
PTS:1DIF:Hard
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Hard
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Medium
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 extensionconcept: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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
15.Firms with a polycentric orientation are guided by a multidomestic market concept.
ANS:T
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Hard
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).
PTS:1DIF:Medium
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)).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Hard
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).
PTS:1DIF:Hard
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
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).
PTS:1DIF:Hard
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).
PTS:1DIF:Hard
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Easy
29.Economic growth is not an important driver of internationalization.
ANS:F
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Hard
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Easy
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).
PTS:1DIF:Medium
44.The self-reference criterion helps the firm to adapt as it expands operations to international markets.
ANS:F
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Medium
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).
PTS:1DIF:Hard
49.Competition can be both a driver of internationalization and a barrier to new entrants in a market.