Test Bank For Business Marketing Management B2B, 11th Edition Michael D. Hutt 

SAMPLE

Chapter 6—Business Marketing Strategies for Global Markets

MULTIPLE CHOICE

1. An industrial firm’s first encounter with an overseas market usually involves _____ because it involves the least commitment and risk.

a.contractingb.licensingc.exportingd.franchisinge.a turnkey operation

ANS:  C                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Exporting is a viable international entry strategy when the firm:

a.wishes to maintain direct control of the marketing program.b.lacks the resources to make a significant commitment to the market.c.wants to form long-term relationships with international customers.d.all of the abovee.none of the above

ANS:  B                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Included among the contractual modes of international market participation are:

a.licensing.b.management contracts.c.exporting.d.all of the abovee.both (a) and (b)

ANS:  E                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. As a mode of international market entry, licensing agreements pose the following limitation(s):

a.a firm has less control over a license than over its own exporting or manufacturing abroad.b.licensing agreements include a time limit and additional extensions (beyond the first) that may not be readily permitted by a number of foreign governments.c.the licensee may become an important competitor in the future.d.all of the abovee.(b) and (c) only

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. _____ involves sourcing a product from a producer located in a foreign country for sale there or in other countries.

a.Contract manufacturingb.Exportingc.Franchisingd.A joint venturee.A turnkey operation

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. This mode of international market participation permits a client to require a complete operational system, together with skills sufficient to allow the unassisted maintenance and operation of the system. Once the package agreement is on line, the system is owned, controlled, and operated by the client. This provides an apt description of:

a.licensing.b.a turnkey operation.c.a joint venture.d.contract manufacturing.e.importing.

ANS:  B                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. In pursuing international entry options, joint ventures often constitute a feasible option because:

a.they provide the only path of entry into many foreign markets.b.they may provide for better relationships with local organizations (for example, local authorities) and with customers.c.they may open up market opportunities that neither party to the venture could pursue alone.d.all of the abovee.(a) and (b) only

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Consider this position: If you run a pharmaceutical company with a good product to distribute in Japan but have no sales force to do it, find someone in Japan who also has a good product but no sales force in your country. Why not join forces to maximize contribution to each other’s fixed costs? This describes the logic of:

a.a joint venture.b.exporting.c.franchising.d.importing.e.global marketing.

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Multinational firms have traditionally managed operations outside their home country with an approach that permits individual subsidiaries to compete independently in different country-markets. Here each subsidiary resembles a strategic business unit that is expected to contribute earnings and growth to the organization. This describes:

a.a multidomestic strategy.b.a differentiated strategy.c.a global strategy.d.an export-based strategy.e.a coordinated strategy.

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. When a firm seeks competitive advantage with strategic choices that are highly integrated across countries (for example, a standardized core product that requires minimal local adaptation across country-markets), this describes:

a.a multidomestic strategy.b.a differentiated strategy.c.a global strategy.d.an export-based strategy.e.a coordinated strategy.

ANS:  C                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. _____ is one in which a firm’s competitive position in one country is significantly influenced by its position in other countries.

a.A multidomestic industryb.A differentiated industryc.A global industryd.An export-based industrye.A coordinated industry

ANS:  C                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. In _____, firms pursue separate strategies in each of their foreign markets-competition in each country is essentially independent of competition in other countries.

a.a multidomestic industryb.a differentiated industryc.a global industryd.an export-based industrye.a coordinated industry

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The type of international strategy that concentrates as many activities as possible in one country, serves the world market from the home base, and closely coordinates those activities that must be performed near the buyer (for example, service) is referred to as:

a.a country-centered strategy.b.an export-based strategy.c.a purest global strategy.d.a segmented international strategy.e.a coordinated international strategy.

ANS:  C                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Concerning international strategy, a firm that concentrates manufacturing and support activities in one country but gives local marketing subsidiaries significant latitude in each region of the world is following which type of international strategy?

a.a country-centered strategyb.an export-based strategyc.a purest global strategyd.a segmented international strategye.a coordinated international strategy

ANS:  B                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The choice of a particular international market entry mode depends on a range of factors including the size of the market and its growth potential. Markets of limited size surrounded by trade barriers may be supplied most cost effectively via:

a.licensing or contract manufacturing.b.a local production and marketing subsidiary.c.exporting.d.selective distribution.e.none of the above

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. In entering high-risk country-markets, firms can reduce their risk exposure by adopting low-commitment modes of entry such as:

a.licensing.b.wholly-owned subsidiaries.c.contract manufacturing.d.all of the abovee.(a) and (c) only

ANS:  E                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Which of the following modes of international market entry provides for greater potential returns and a greater degree of control over operations?

a.licensingb.wholly-owned subsidiariesc.contract manufacturingd.exportinge.franchising

ANS:  B                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. As an entry strategy, licensing requires:

a.capital investment.b.marketing strength in foreign markets.c.a company to have less control over a licensee than over its own exporting or manufacturing abroad.d.all of the above.e.(b) and (c) only.

ANS:  C                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Potential partners for a global alliance are evaluated based on:

a.resources.b.relationships.c.culture.d.all of the above.e.(a) and (b) only.

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. An advantages of joint ventures is:

a.they include the only path of entry into many foreign markets.b.they open up market opportunities that neither partner to the venture could purse alone.c.they transfer knowledge to the partner.d.all of the above.e.(a) and (b) only.

ANS:  E                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The home base for a business is the location where:

a.strategy is set.b.core product and process technology is created and maintained.c.a critical mass of sophisticated production and service activities reside.d.all of the above.e.(a) and (c) only.

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Successful global companies achieve unified action by:

a.establishing a strategies that are independent across countries.b.developing accounting systems that are country specific.c.encouraging personal relationships and the transfer of learning among subsidiary managers across locations.d.all of the above.

ANS:  C                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Research suggest that over _____ % of joint ventures are disbanded or fall short of expectations.

a.10b.20c.30d.40e.50

ANS:  E                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. In high-risk markets, firms can reduce their equity exposure by adopting low commitment modes such as:

a.licensing.b.contract manufacturing.c.joint ventures with a majority share.d.all of the above.e.(a) and (b) only.

ANS:  E                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Rather than modifying the firm’s product offerings from country to country, ____ strategy requires a patient, long-term campaign to enter every significant foreign market while maintaining and leveraging the company’s unique strategic position.

a.a globalb.an exportingc.a joint ventured.a licensing

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Firms that quickly and intelligently seize global opportunities can secure which of the following forms of competitive advantage?

a.Cost advantage.b.Market access advantage.c.Capabilities advantage.d.All of the above.e.(a) and (b) only.

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. A firm that includes rapidly developing economies (RDEs) in their global cost structures can realize savings of _____ in the landed costs of their products.

a.0 to 20 percentb.20 to 40 percentc.40 to 60 percentd.60 to 80 percent

ANS:  B                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The hidden costs in operating in rapidly developing economies include which of the following?

a.One-time setup costs.b.Risk management costs.c.Exit costs.d.All of the above.e.(a) and (b) only.

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Companies can use capabilities advantages to:

a.improve research and development.b.address unmet customer needs.c.further standardize products in the home country.d.All of the above.e.(a) and (b) only.

ANS:  E                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The decision to outsource business operations to rapidly developing economies is affected by which of the following sets of factors?

a.Economic.b.Competitive.c.Environmental.d.All of the above.e.(a) and (b) only.

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Factors that favor relocation of products or services to rapidly developing economies include:

a.High labor content.b.Low growth potentialc.Standardized manufacturing or service-delivery processes.d.All of the above.e.(a) and (c) only.

ANS:  E                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Factors that favor keeping products or services at home instead of relocating to rapidly developing economies include:

a.Protection of intellectual property is critical.b.High sensitivity to production location.c.Very high technology content.d.All of the above.e.(a) and (c) only.

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Which of the following issues pose challenges to business marketers considering strategic alliance as a market entry mode?

a.Problems with maintaining alliances over time.b.Difficult to implement alliances on a global scale.c.Problems establishing coordination and trust.d.All of the above.e.(a) and (c) only.

ANS:  D                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Which of the following issues pose problems to firms trying to manage joint venture relationships?

a.Disagreements over profit-sharing.b.Opening up of new market opportunities.c.Problems responding to changing market needs.d.All of the above.e.(b) and (c) only.

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The choice of a foreign market entry mode depends upon:

a.the size of the market.b.the market’s growth potential.c.Both (a) and (b).d.Neither (a) or (b).

ANS:  C                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. _____ refers to how similar activities performed in various countries are couple with each other.

a.Coordinationb.Configurationc.The home based.The value network

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The BCG Global AdvantageDiamond portrays the key elements that must be developed and integrated tosecure a strong position in global markets. This framework includes
2. A market access element
3. A market relevancy element
4. A resource accuracy element
5. All of the above
6. None of the above

ANS:  A                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. When moving to a RDE, suppliers must adjust their operating models to:
2. Maintain quality levels
3. Counter local suppliers offerings
4. To fullycapture the cost advantages.
5. Consider the increased transportation costs involved
6. Consider market research data on procurement preferences

ANS:  C                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

TRUE/FALSE

1. Some research suggests that, compared to consumer goods, industrial and high-technology products may be more appropriate for global brand strategies.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. An industrial firm’s first encounter with an overseas market usually involves the formation of a wholly-owned subsidiary in another country.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Exporting involves giving up direct control of the marketing program, which often makes it difficult to coordinate activities.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. As an entry strategy, licensing requires a major capital investment in a foreign market.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Problems often plague joint ventures and, as a result, many of them fall short of expectations or are disbanded.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. A multidomestic strategy seeks competitive advantage with strategic choices that are highly integrated across countries.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Upstream activities in the value chain involve those primary activities that are closely tied to where the buyer is located.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. In multidomestic industries, a firm’s competitive position in one country is significantly influenced by its position in other countries.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The purest global strategy concentrates as many activities as possible in one country, serves the world market from this home base, and closely coordinates those activities that must be performed near the buyer.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. In high-risk foreign markets, firms can reduce their equity exposure by adopting low-commitment modes of entry such as licensing or contract manufacturing.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Markets of limited size surrounded by trade barriers may be supplied most cost effectively by using the exporting mode of entry.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The home base for a business is the location where strategy is set and a critical mass of sophisticated production and service activities reside.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. A single-country may not be large enough for a firm to realize economies of scale.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The choice of a particular entry mode will also depend on the size of the market and its growth potential.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Coordination centers on where each activity is performed, including the number of locations.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The need for a global strategy is determined by the nature of international competition in a particular industry.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. For truly global industries, a firm’s position in one country significantly affects its position elsewhere, so a multi-domestic strategy is required.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The two primary sources of cost advantages driving firm to implement operations in rapidly developing economies are lower operating costs and lower capital investment requirements.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. A factory in a rapidly developing economy can be built with 70% of the investment level needed in a highly developed economy.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. A firm whose products are technically complex and are protected by U.S. patents is a good candidate for relocating to a rapidly developing economy.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Arguments over profit-sharing and management styles are common problems experienced in exporting.

ANS:  F                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Configuration centers on where each activity is performed, including the number of locations.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Multidomestic industries do not need a global strategy because the focus should be on developing a series of distinct domestic strategies.

ANS:  T                    PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

COMPLETION

1. The primary reason that companies are moving to sourcing from Rapidly Developing Economies is due to very large and sustainable ____________________ from lower operating costs and lower capital investment requirements.

ANS:  cost advantages

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. The realized net savings after logistics costs, other management costs, and import duties involved in moving the product from the RDE to the market destination is referred to as ____________________costs.

ANS:  landed

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. In China’s steel industry, their main source of competitive advantage is due not to cheap labor, but rather massive government energy ____________________.

ANS:  subsidies

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. An industrial firm’s first foray into an overseas market usually involves____________________because it requires the least commitment and risk.

ANS:  exporting

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. ____________________involves sourcing a product from a producer located in a foreign country for sale there or in other countries.

ANS:  Contract manufacturing

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. ____________________offer a number of benefits, such as access to markets or technology, economies of scale in manufacturing and marketing, and the sharing of risk among partners.

ANS:  Strategic alliances

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Multinational firms have traditionally managed operations outside their home country with ____________________ that permit individual subsidiaries to compete independently in their home country markets.

ANS:  Multidomestic strategies

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. A global industry is one in which a firm’s ____________________ in one country is significantly influenced by its position in other countries.

ANS:  competitive position

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

1. Additional insights into international strategy can be gained by examining two dimensions of competition in the global market:____________________and____________________.

ANS:

configuration, coordination

coordination, configuration

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Managing strategy & innovation

ESSAY

1. Some experts emphasize that since customer needs are becoming increasingly homogeneous worldwide, the opportunity exists to sell the same type of product across countries and to use essentially the same marketing strategy around the globe.  If customers respond favorably to a strategy in St. Louis, will the same strategy work in London or Tokyo?  While a standardized approach might work for Coke or Levi’s, will it work for business marketers like Dow Chemical or Hewlett-Packard?  Explain.

ANS:

n/a

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

1. To diagnose the sources of competitive advantage, domestic or international, Michael Porter divides the chain of activities performed by a firm into distinct groups.  Describe Porter’s value chain concept and explore its relevance to international strategy.

ANS:

n/a

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

1. Joint ventures assume a very prominent role in the global strategy of many business marketing firms like Dow Chemical and Xerox.  While offering significant benefits, joint ventures often fall short of expectations or dissolve.  Why?

ANS:

n/a

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

1. Rather than modifying the firm’s product and service offerings from country to country, a global strategy requires a patient, long-term campaign to enter every significant foreign market while maintaining and leveraging the company’s unique strategic positioning. Agree or disagree? Support your position.

ANS:

n/a

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

1. While the location of the corporate headquarters is less important and may reflect historical factors, a firm must develop a clear home base for competing in each of its strategically distinct businesses. What role does a home base assume in forming a global strategy and what factors should be considered in choosing a location? Under what conditions might a firm create a home base for a different product line in another country?

ANS:

n/a

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

1. Rapidly developing economies (RDEs) are having a significant impact on the global economy, both as attractive new markets but also as new competitors for firms in highly developed economies.  Explain the three forms of competitive advantage that firms can achieve by moving operations to and marketing in RDEs.  What products or services make the most sense to relocate to RDEs?

ANS:

n/a

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills

1. Options for entry into foreign markets range from exporting to global strategies.  Explain how commitment, complexity, risk, and control changes as firms move across the spectrum of involvement in international marketing.  What factors should firms consider when choosing entry modes?

ANS:

n/a

PTS:   1

NAT:  AACSB Reflective Thinking | CB&E Model International perspective | R&D Strategic & systems skills