International Marketing
Pre-Test Questions
Course Introduction
International Marketing explores the strategies and challenges involved in marketing products and services across national boundaries. The course examines the impact of cultural, economic, legal, and political environments on international marketing decisions, including market selection, entry modes, and positioning. Students will analyze global marketing research, product adaptation, branding, pricing strategies, distribution channels, and promotional tactics tailored for diverse international markets. Through case studies and practical projects, students develop the skills necessary to create and implement effective marketing plans in an increasingly interconnected world.
Recommended Textbook
International Business Competing in the Global Marketplace 8th Edition by Charles W. L. Hill
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Page 2
Chapter 1: Globalization
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Sample Questions
Q1) Which of the following statements pertaining to the changing demographics of world GDP and trade from 1963 to 2006 is not true?
A)As emerging economies continue to grow,a relative decline in the share of world output and world exports accounted for by the U.S.seems unlikely.
B)Forecasts predict a rapid rise in the share of world output accounted for by some developing nations.
C)A decline in the share enjoyed by rich industrialized countries such as Great Britain,Germany,Japan,and the U.S.is likely.
D)If current trends continue,the Chinese economy could be larger than that of the U.S.on a purchasing power parity basis.
Answer: A
Q2) An international business is any firm that engages in international trade or investment.
A)True
B)False
Answer: True
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Chapter 2: National Differences in Political Economy
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Q1) Discuss individualism.Explain the key positions of the philosophy,it roots,and its role in the modern economy.
Answer: Individualism refers to a philosophy that an individual should have freedom in his/her economic and political pursuits.Accordingly,the philosophy stresses that the interests of the individual should take precedence over the interests of the state.Individualism can be traced to the ancient Greek philosopher Aristotle who argued that individual diversity and private ownership are desirable.Aristotle's philosophy was refined by David Hume,Adam Smith,and John Stuart Mill in the 1700s and 1800s,and more recently by Milton Friedman,Friedrich von Hayek,and James Buchanan.Today,individualism translates into an advocacy for democratic political systems and free market economies.
Q2) How are the long-run benefits of doing business in a country measured?
Answer: The long-run monetary benefits of doing business in a country are a function of the size of the market,the present wealth of consumers in that market,and the likely future wealth of consumers.
Q3) A civil law system tends to be more adversarial than a common law system.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Differences in Culture
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Sample Questions
Q1) Religion may be defined as:
A)routine conventions of everyday life.
B)social rules that govern peoples' actions toward each other.
C)shared beliefs and rituals that are concerned with the realm of the sacred.
D)a set of moral principles,or values,that are used to guide and shape behavior.
Answer: C
Q2) The most rigid system of stratification is a class system.
A)True
B)False
Answer: False
Q3) Mores have much greater significance than folkways.
A)True
B)False
Answer: True
Q4) The emphasis on individualism in the United States may raise the costs of doing business due to its adverse impact on managerial stability and cooperation.
A)True
B)False
Answer: True
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Chapter 4: Ethics in International Business
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Sample Questions
Q1) Child labor is permitted and widely employed in Country X.A multinational company entering Country X decides to employ minors in its subsidiary,even though it is against the multinational's home-country ethics.Which of the following approaches to business ethics would justify the actions of the multinational company?
A)Righteous moralist
B)Cultural relativism
C)The justice theory
D)The rights theory
Q2) The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government officials to gain business.
A)True
B)False
Q3) A just distribution is one that is considered fair and equitable.
A)True
B)False
Q4) What are business ethics? What is the relationship between business ethics and an ethical strategy?
Q5) Explain the Friedman doctrine.Who developed the philosophy? How well does this approach hold up ethically?
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Chapter 5: International Trade Theory
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Q1) The theory of comparative advantage suggests that trade is a zero-sum game in which all countries that participate realize economic gains.
A)True
B)False
Q2) How did David Ricardo extend Adam Smith's work? Explain the theory of comparative advantage.
Q3) According to the new trade theory,firms that establish a first-mover advantage with regard to the production of a particular new product may subsequently dominate global trade in that product.
A)True
B)False
Q4) From a profit perspective,it makes sense for a firm to disperse its productive activities to those countries where,according to the theory of international trade,they can be performed most efficiently.
A)True
B)False
Q5) Discuss the implications of the new trade theory.
Q6) Does new trade theory support government intervention and strategic trade policy? Explain.
Page 7
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Chapter 6: The Political Economy of International Trade
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Q1) The TRIPS regulations established at the 1995 Uruguay Round:
A)established regulations on patents and copyrights.
B)set a new level of agriculture subsidies.
C)organized OECD countries to eliminate tariffs on textiles.
D)established new tariff levels on technology.
Q2) The infant industry argument is the latest argument for government intervention in trade.
A)True
B)False
Q3) Strategic trade policy suggests that a government should use subsidies to support promising firms that are active in newly emerging industries.
A)True
B)False
Q4) During the 1980s and early 1990s,the world trading system erected by the GATT gained momentum as protectionist demands generally decreased across the world.
A)True
B)False
Q5) What is a quota rent? Provide an example of how an import quota affects price.
Q6) What is dumping? How do governments respond to charges of dumping?
8
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Chapter 7: Foreign Direct Investment
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Q1) FDI does not benefit the host country's balance of payments if the foreign subsidiary creates demand for home-country exports of capital equipment,intermediate goods,or complementary products.
A)True
B)False
Q2) The largest source country for FDI has been China.
A)True
B)False
Q3) One of the problems of licensing is that it may result in a firm's giving away valuable technological know-how to a potential foreign competitor.
A)True
B)False
Q4) FDI occurs when a:
A)domestic firm imports products and services from another country.
B)firm ships its product from one country to another.
C)firm invests in the stock of another company.
D)firm invests directly in facilities to produce or market a product in a foreign country.
Q5) Explain John Dunning's position on FDI.What is the eclectic paradigm?
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Chapter 8: Regional Economic Integration
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Q1) In theory,WTO rules should ensure that a free trade agreement results in trade diversion.
A)True
B)False
Q2) Until recently,only 5 percent of intra-ASEAN trade consisted of goods whose tariffs had been reduced through an ASEAN preferential trade arrangement.
A)True
B)False
Q3) Proponents of NAFTA have argued that the free trade area should be viewed as an opportunity to create an enlarged and more efficient productive base for the entire region.
A)True
B)False
Q4) In 1991,Argentina,Brazil,Paraguay,and Uruguay implemented an agreement known as:
A)NAFTA.
B)MERCOSUR.
C)APEC.
D)FTAA.
Q5) Discuss the trend toward increased regional economic integration.
Page 10
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Chapter 9: The Foreign Exchange Market
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Q1) Compare and contrast the Fisher Effect and the International Fisher Effect.
Q2) The value of a currency is determined by the interaction between the demand and the supply of that currency relative to the demand and supply of other currencies.
A)True
B)False
Q3) Technical analysis draws on economic theory to construct sophisticated econometric models for predicting exchange rate movements.
A)True
B)False
Q4) If a country has an externally convertible currency,neither residents nor nonresidents are allowed to convert it into a foreign currency.
A)True
B)False
Q5) The risk that arises from volatile changes in exchange rates is known as foreign exchange risk.
A)True
B)False
Q6) What are the main uses of foreign exchange markets for international business?
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Chapter 10: The International Monetary System
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Sample Questions
Q1) A foreign debt crisis:
A)is a situation in which consumer spending patterns significantly affect a country's balance of payments,thereby affecting its currency.
B)is a situation in which a country cannot service its debt obligations.
C)refers to a loss of confidence in the banking system that leads to a run on banks,as individuals withdraw their deposits.
D)occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency.
Q2) The exchange rates of all currencies are determined by the free play of market forces.
A)True
B)False
Q3) Under a strict currency board system,interest rates rise until investors eventually find holding the local currency attractive again.
A)True
B)False
Q4) What was the gold standard? Who participated in the system? What was the major advantage of the system?
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Page 12
Chapter 11: The Global Capital Market
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Sample Questions
Q1) According to Harvard economist Martin Feldstein,"patient money"
A)is relatively abundant.
B)implies short-term capital.
C)is another term for "hot money."
D)is still relatively rare.
Q2) By using the global capital market,firms can often borrow funds at a lower cost than is possible in a purely domestic capital market.
A)True
B)False
Q3) What factors allowed the international capital market to bloom in the 1980s,1990s and 2000s?
Q4) These are international bonds,normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated.
A)Eurobonds
B)Convertible bonds
C)Foreign bonds
D)Regulatory bonds
Q5) Write a brief note on foreign exchange risks and the cost of capital.
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Chapter 12: The Strategy of International Business
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Sample Questions
Q1) The basic strategy paradigm suggests that to maximize its profitability,a firm should do all of the following,except:
A)choose,according to strategy,any position on the efficiency frontier as all positions are viable.
B)pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice.
C)configure its internal operations so that they support the position on the efficiency frontier.
D)make sure that the right organization structure is in place to execute the strategy.
Q2) Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as:
A)factor economies.
B)production economies.
C)location economies.
D)value creation economies.
Q3) Discuss strategic positioning.How does strategic positioning relate to the efficiency frontier?
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Chapter 13: The Organization of International Business
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Q1) In a worldwide area structure,each area tends to be a self-contained,largely autonomous entity with its own set of value creation activities.
A)True
B)False
Q2) The need for coordination between subunits is lowest in firms pursuing a(n):
A)localization strategy.
B)international strategy.
C)global strategy.
D)transnational strategy.
Q3) Regardless of a firm's domestic structure,its international division tends to be organized on economy.
A)True
B)False
Q4) In a domestic firm with a product divisional structure,each division is responsible for a distinct:
A)product line.
B)individual product.
C)product assortment.
D)product design.
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Chapter 14: Entry Strategy and Strategic Alliances
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Sample Questions
Q1) The main advantage of greenfield investment is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants.
A)True
B)False
Q2) Which of the following is a disadvantage of licensing?
A)It does not help firms that lack capital to develop operations overseas.
B)It does not give a firm the tight control over strategy that is required for realizing experience curve and location economies.
C)It cannot be used when a firm possesses some intangible property that might have business applications.
D)The firm has to bear the development costs and risks associated with opening a foreign market.
Q3) In which of the following industries are turnkey projects the most common?
A)Fresh fruit,grain,and meat products.
B)Chemical,pharmaceutical,and metal refining.
C)Consumer durables,computer peripherals,and automotive parts.
D)Apparel,shoes,and leather products.
Q4) Compare and contrast licensing agreements and franchising agreements.
Q5) What are first-mover advantages? Discuss the advantages associated with them.
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Chapter 15: Exporting,Importing,and Countertrade
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Sample Questions
Q1) Which of the following statements about the SBA is false?
A) It is the most comprehensive source of export opportunities information.
B) It employs 10 regional international trade officers throughout the United States.
C) It employs a 10-person international trade staff in Washington, D.C.
D) It oversees some 850 volunteers to provide one-on-one counseling to active and new-to-export businesses.
Q2) Explain what is meant by countertrade.What is the purpose of countertrade?
Q3) In a letter of credit transaction,the exporter ships the product
A)after the letter of credit is issued.
B)before the letter of credit is issued.
C)upon receipt of payment.
D)with the bill of lading.
Q4) EMCs are experienced specialists who can help the neophyte exporter avoid common pitfalls.
A)True
B)False
Q5) What is the Foreign Credit Insurance Association?
Q6) What is the main attraction of countertrade?
Q7) Compare and contrast time drafts and sight drafts.
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Chapter 16: Global Production, Outsourcing, and Logistics
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Sample Questions
Q1) The modern successor to TQM is:
A)Corporate Quality Commitment.
B)ISO 9000.
C)Quality Process Realized.
D)Six Sigma.
Q2) When a company's product has a low value-to-weight ratio,the company should:
A)have a centralized manufacturing location.
B)produce the product in multiple locations close to major markets.
C)ignore transportation costs.
D)produce the product in one optimal location and serve the world from there.
Q3) As a plant output expands,unit costs decrease.
A)True
B)False
Q4) Which of the following statements about products with high value-to-weight ratios is true?
A)They are relatively inexpensive and weigh a lot.
B)They are expensive and do not weigh very much.
C)Transportation costs usually account for a large percentage of their total costs.
D)They must be produced in multiple locations close to major markets.
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Chapter 17: Global Marketing and RD
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Sample Questions
Q1) The rate of new-product development seems to be lesser in countries where more money is spent on basic and applied research and development.
A)True
B)False
Q2) Describe an exclusive distribution channel.Consider the implications of channel exclusivity for outside firms.
Q3) Which of the following statements about fragmented retail systems is true?
A)Countries with fragmented retail systems tend to have short channels of distribution.
B)The more fragmented the retail system,the less expensive it is for a firm to make contact with each individual retailer.
C)Fragmented retail systems tend to promote the growth of wholesalers to serve retailers.
D)When the retail sector is very fragmented,it makes sense for the firm to deal directly with retailers.
Q4) Compare and contrast push strategies and pull strategies.
Q5) Define market segmentation.What is its goal?
Q6) What is predatory pricing? Describe how a firm might use predatory pricing.
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Page 19
Chapter 18: Global Human Resource Management
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Q1) What are the three types of staffing policies in international business? Briefly describe each one.Which is the most attractive approach and why?
Q2) The most attractive staffing policy is the ethnocentric approach.
A)True
B)False
Q3) An ethnocentric approach to staffing is appropriate for firms that are pursuing a(n):
A)international strategy.
B)localization strategy.
C)global standardization strategy.
D)transnational strategy.
Q4) Which of the following is a drawback of the polycentric approach to staffing?
A)Firms are likely to suffer from cultural myopia.
B)Host-country nationals are vulnerable to cultural misunderstandings.
C)This approach increases the cost of value creation.
D)Host-country nationals have limited opportunities for advancement beyond senior positions in their subsidiary.
Q5) What are the four strategies pursued by international companies,and what is the role of HRM in these?
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Chapter 19: Accounting in the International Business
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Sample Questions
Q1) What is the historic cost principle?
Q2) Which of the following statements is true regarding the European Union (EU)and its influence on accounting standards?
A)Adoption of the directives issued by the EU is voluntary and member states are not obligated to incorporate them into their own national laws.
B)The EU may have a better chance of achieving harmonization than the IASB.
C)The EU requires that the financial accounts issued by publicly listed companies in the EU are to be in accordance with European standards.
D)The objective of the requirements of the EU is to ensure the financial positions of companies from different member states are represented according to their national laws.
Q3) Historically,financial reports prepared by firms in Germany:
A)tended to contain less information than those of British or U.S.firms.
B)tended to contain all information required by individual investors.
C)did not make any public disclosure of a firm's financial position.
D)overvalued assets and undervalued liabilities.
Q4) How do political and economic ties with other countries influence the development of a country's accounting system?
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Page 21
Chapter 20: Financial Management in the International Business
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Q1) U.S.regulations tax U.S.shareholders on the firm's overseas income when it is earned,regardless of when the parent company in the United States receives it.
A)True
B)False
Q2) Adjusting discount rates to reflect a location's riskiness:
A)is not widely practiced by firms.
B)treats all risk as a single problem.
C)penalizes distant cash flows too heavily.
D)does not penalize early cash flows enough.
Q3) Should a foreign project be analyzed from the perspective of the parent company?
Q4) Multilateral netting is an extension of bilateral netting.
A)True
B)False
Q5) Political risk assessment:
A)is without value.
B)is more science than art.
C)tries to predict a future that can only be guessed.
D)usually makes correct future predictions.
Q6) What is capital budgeting?
Q7) What are fronting loans? Why are they used by multinationals? Page 22
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Page 23