Deck 2: An Overview of the International Marketing Environment

Question 1

Countries in the "traditional society" stage of economic development are characterized by an economic structure that is dominated by technology.

Answer 1

False
Countries in the "traditional society" stage of economic development are characterized by an economic structure that is dominated by agriculture.

Question 2

Under communism, all means of production and private property are under state ownership and/or cooperative ownership.

Answer 2

True
Under communism, all means of production and private property are under state ownership and/or cooperative ownership. The state is in charge of allocation of resources to sectors as needed and to individuals (goods and services) according to their needs. This is stated in the "Alternative Models of Economic Development: The Marxist-Leninist (Maoist) Model" section (2-2b).

Question 3

The Marxist-Leninist (Maoist) model competes with market-oriented capitalist philosophies.

Answer 3

True
The Marxist-Leninist (Maoist) model competes with market-oriented capitalist philosophies. It fuels anticolonial and anti-imperialist sentiments This is stated in the "Alternative Models of Economic Development: The Marxist-Leninist (Maoist) Model" section (2-2b).

Question 4

Historically, the informal and frequently used classification in the West has referred to highly industrialized, high-income countries as the First World, to Islamic countries as the Second World, and to developing countries as the Third World.

Question 5

China is currently in the communist stage of development.

Question 6

In contrast to high-income countries, low-income countries do not present opportunities for firms operating in the areas of infrastructure development.

Question 7

The top 100 companies in the world control about 20 percent of foreign assets.

Question 8

A weak dollar makes American goods and services more competitive in foreign markets.

Question 9

Firms from industrialized countries and their representative governments dominate the world economy by allocating resources worldwide based on local population needs.

Question 10

More than half of the 100 biggest economies in the world are now corporations, not nations.

Question 11

High-income countries are highly industrialized counties which have well developed industrial and service sectors.

Question 12

High-income countries present challenges to international firms because their markets are the most competitive.

Question 13

According to the Rostow model, each stage of economic development is a function of productivity, economic exchange, technological improvements, and income.

Question 14

Under older Western classification, socialist countries used to be referred to as Second World.

Question 15

The Rostow model is a competing alternative for developing nations seeking to avoid domination by advanced market capitalist economies.

Question 16

Modern technology is fully adopted in all economic activity and new leading sectors emerge in the "drive to maturity" stage of the Rostow Modernization model.

Question 17

The Marxist-Leninist (Maoist) model endorses a collective orientation, one adopted by the more traditional developing countries.

Question 18

Upper middle income countries have rapidly developing economies, and especially in urban areas, they have an infrastructure that is on par with that of developed countries.

Question 19

The Marxist-Leninist model of economic development still constitutes a dominant development philosophy in some developing countries.

Question 20

During "drive-to-maturity" stage of the Rostow Modernization model, growth becomes the norm and improvements in production lead to the emergence of leading sectors.

Question 21

Domestication occurs when the local government requires a gradual transfer of ownership and management to locals.

Question 22

In more developed countries, substantial ethnic conflict still exists, not just between the established ethnicities but also between the new immigrants and long-established nationals.

Question 23

During downturns in the local economy, governments are unlikely to control foreign investment through taxation.

Question 24

The expression of nationalist sentiment in a country where the company is operating could constitute a cause for concern to the international company.

Question 25

Expropriation refers to the seizing of company assets and/or investors's assets without any compensation.

Question 26

U. S. companies must abide by international trade laws and host country laws when operating in foreign countries, but do not need to consider home-country laws.

Question 27

According to the World Bank, countries considered upper middle income have a GNI per capita of US$3,466 to US$10,725.

Question 28

Lower middle income countries comprise the transition economies of Central and Eastern Europe: Estonia, Hungary, Latvia, Lithuania, Poland, and the Russian Federation, among others..

Question 29

Italy has had the same government since World War II resulting in political stability and lowered risk for international firms.

Question 30

Political instability can lead to protectionist measures on the part of the host-country government, whereas nationalism and claims to national sovereignty can lead to the failure of the economy.

Question 31

Countries with emerging markets present great potential to international firms due to their technological growth.

Question 32

The U.S. government, through the Overseas Private Investment Corporation (OPIC) offers insurance policies that protect companies against expropriation, nationalization, or confiscation by foreign governments.

Question 33

Consumer ethnocentrism is the belief that buying foreign goods will put local companies out of business.

Question 34

Internal diversity and incongruent interests are elements of political risk within a country.

Question 35

International law regards nationalization as an illegal activity taken by some governments that force domestication.

Question 36

Ethnic diversity creates an opportunity for international marketers through the promotion of trust and cooperation.

Question 37

Losses attributed to the violation of intellectual property rights are estimated to be $60 million a year.

Question 38

It is unnecessary to include a jurisdictional clause in international contracts since jurisdiction is always established in the country of operation.

Question 39

Common law refers to comprehensive written laws that specify what constitutes legal behavior.

Question 40

Countries, by permitting international trade and by entering into international agreements, limit their sovereignty.

Question 41

Under communism

A)All means and production are under state ownership
B)All property is under state ownership
C)The state allocates resources to sectors as needed and to individuals according to their needs.
D)All of the above

Question 42

____ are highly industrialized countries which have strong industrial and service sectors.

A)High-income countries
B)Emerging countries
C)Low-income countries
D)Second world countries

Question 43

Multinationals seeking TRIPS' (Trade-Related Aspects of Intellectual-Property Rights) protection around the world still depend on each country's patent office to grant those rights and their judicial, customs and police services to enforce them.

Question 44

During the "take-off" stage of the Rostow Modernization model,

A)Growth becomes the norm
B)Improvements in production lead to emergence of leading sectors
C)Income rises across the board
D)All of the above

Question 45

Multinational companies

A)Account for two thirds of the world trade
B)Have great economic weight: half of the 100 biggest economies are corporations, not nations
C)Control about 20 percent of foreign assets
D)All of the above

Question 46

Which of the following is not a trait of a high-income country?

A)Consumers with the highest per capita income
B)Markets are in the maturity stage
C)Competition is intense
D)Consumers have not established their preferences

Question 47

Trade secrets are not protected by law.

Question 48

Countries that join the World Trade Organization must also sign on to the TRIPS agreement (Trade-Related Aspects of Intellectual-Property Rights).

Question 49

High population growth in spite of limited natural resources has led to famine and precipitated conflict.

Question 50

The Marxist-Leninist (Maoist) model

A)Is a competing alternative for developing nations seeking to avoid domination by advanced economies.
B)Endorses a collective orientation
C)Competes with market-oriented capitalism
D)All of the above

Question 51

Design copying, which is illegal, involves using a popular design without the trademark.

Question 52

In the Rostow Modernization Model, which stage is characterized by an economic structure that is dominated by agriculture?

A)Primitive society
B)Traditional society
C)Take-off
D)Capitalist society

Question 53

During which stage of the Rostow Modernization model does growth become the norm and improvements in production lead to the emergence of leading sectors?

A)Traditional society
B)Transitional Society
C)Take-off
D)Drive to maturity

Question 54

Communism

A)Develops the "new man"
B)Is characterized by a non-materialistic society
C)Creates a society where there is no need for private property
D)All of the above

Question 55

Antitrust laws of home and host countries are designed to prevent international anti-competitive activities, such as the creation of monopolies and cartels.

Question 56

Which stage of the Rostow Modernization model is characterized by increased productivity in agriculture, and modern manufacturing emergence?

A)Primitive society
B)Traditional society
C)Transitional society
D)High mass consumption

Question 57

A weak dollar ....

A)Makes American goods and services more competitive in foreign markets
B)Keeps jobs at home in the U.S.
C)Decreases the trade deficit
D)All of the above

Question 58

The U.S. Foreign Corrupt Practices Act makes it illegal for companies and their representatives to bribe government officials and other politicians or candidate to political office.

Question 59

During which stage of the Rostow Modernization model is modern technology fully adopted in all economic activity?

A)Traditional society
B)Take-off
C)Drive to maturity
D)Socialist society

Question 60

The Rostow model is

A)A competing alternative for developing nations seeking to avoid domination by advanced market capitalist economies
B)Endorses a collective orientation
C)Fuels anticolonial and anti-imperialist sentiments
D)Addresses the technology adoption rate in its analysis

Question 61

Which of the following is not a way to minimize the risk of domestication?

A)Partnering with local companies
B)Creating local expertise in product manufacturing
C)Using local suppliers
D)All of the above are ways to minimize risks.

Question 62

____ involves some reimbursement for company assets, usually not at their market value.

A)Confiscation
B)Expropriation
C)Domestication
D)None of the above

Question 63

Which of the following is not a form of nationalization?

A)Confiscation
B)Expropriation
C)Consumer ethnocentrism
D)Domestication

Question 64

____ are countries with rapid development and present the greatest potential for international trade and expansion.

A)High-income countries
B)Middle-income
C)Low-income countries
D)Expanding countries

Question 65

____ is the belief that buying foreign goods will put local companies out of business.

A)Creeping consumerism
B)Nationalization
C)Consumer ethnocentrism
D)None of the above

Question 66

Which of the following sources provides a country risk rating on a scale from 1 to 10, and risk perception and collection experience for the previous four months?

A)The Economist
B)The Wall Street Journal
C)the Economist Intelligence Unit
D)RUNDT's World Business Intelligence

Question 67

Which of the following refers to "the seizing of company assets and/or investors' assets without any compensation."

A)Confiscation
B)Expropriation
C)Nationalization
D)Domestication

Question 68

Which of the following countries has not been identified as an emerging market by The Economist?

A)China
B)Poland
C)Mexico
D)Japan

Question 69

Which of the following is a risk related to government trade policy?

A)Confiscation
B)Expropriation
C)Domestication
D)None of the above

Question 70

Low income countries

A)Have rapidly developing economies
B)Are primarily agrarian
C)Have an infrastructure that is on par with that of developed countries
D)Have a GNI per capita of US$3,466 to US$10,725.

Question 71

Highly industrialized countries account for close to ____ of the world's gross national product.

A)80%
B)60%
C)40%
D)20%

Question 72

____ refers to a condition characterized as "difficult bureaucracies unreliable judicial systems, shifting regulations, and corrupt operating environments."

A)Confiscation
B)Creeping Expropriation
C)Domestication
D)Nationalization

Question 73

Which of the following offers a policy that insures companies against expropriation, nationalization, or confiscation by foreign governments?

A)The Federal Reserve Bank
B)Overseas Private Investment Corporation
C)OPEC
D)The Department of Commerce

Question 74

Emerging markets are attractive to international firms due to their:

A)Rapid rate of technological growth
B)Rapid rate of economic growth
C)Slow rate of inflation
D)Rapid population growth

Question 75

Which of the following is not a political risk signal?

A)Congruent interests
B)Economic performance
C)Political repression
D)Nationalism

Question 76

Which of the following is not a trait of an emerging market?

A)High political stability
B)A low level of inflation
C)A high savings rate
D)All of the above are traits of an emerging market.

Question 77

Which type of country is an important opportunity for firms operating in the areas of infrastructure development?

A)High-income countries
B)Low-income countries
C)Upper middle-income countries
D)Lower middle-income countries

Question 78

Which type of country is characterized as primarily agrarian, with low per capita income levels?

A)High-income countries
B)Emerging countries
C)Low-income countries
D)First world countries

Question 79

This government agency is used to evaluate a country's political risk:

A)State Department
B)Department of Commerce
C)All of the above
D)None of the above

Question 80

These countries have a GNI per capita of US$3,466 to US$10,725.

A)High-income countries
B)Low-income countries
C)Upper middle-income countries
D)Lower middle-income countries