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Question No : 17 Michael E Porter developed what is popularly known as the diamond model for determining national advantages in the global business environment. According to this model.
A. Factor conditions are production advantages that are nature-made or inherited.
B. Foreign markets exert less influence than home markets on a firm’s ability to detect demand trends.
C. Reliance on related and supporting industries in the home country weakens a firm’s international competitiveness.
D. Cooperation with domestic competitors clearly aids international competitiveness.
300-175 exam Answer: B
Home demand conditions determine the inherent demand for goods or services that originate within the home country. Porter believes that home markets exert a much higher influence on a firm’s ability to recognize consumer trends than those in a foreign market. Moreover, home demand offsets innovation and product development. Home demand is a function of
(1) the mixture of customer needs and wants,
(2) their scope and growth rate,
(3) the means by which domestic preferences are communicated to international markets. Moreover, a national advantage is achieved when home demand provides more timely and clear trend indicators to domestic firms than to foreign firms.
Question No : 18 A. U.S firm most likely may decide to enter the Australian market because of
C. The unmet needs of an undeveloped country.
D. Psychic proximity.
Attractiveness of a foreign market is a function of such factors as geography, income, climate, population, and the product. Another major factor is the unmet needs of a developing nation, for example, China or India. Entry into a market abroad may be based on many factors, for example, psychic proximity. Thus, a first-time venture abroad might be in a market with a related culture, language, or laws.
Question No : 19
Firms that sell products worldwide are most likely to have the lowest costs with a marketing mix that is
A. Adapted to each market.
B. Standardized for all markets.
C. A combination of new and adapted products in each market.
D. A combination of standardized products and adapted promotions.
300-175 dumps Answer: B
Firms that operate globally must choose a marketing program after considering the need for adaptation to local circumstances. The possibilities lie on a continuum from a purely standardized marketing mix to a purely adapted marketing mix. The former chooses to standardize products, promotion, and distribution. The latter adapts the elements of the mix to each local market. Worldwide standardization of all elements should be the lowest cost marketing strategy. However, even well established global brands ordinarily undergo some adaptation to local markets.
Question No : 20 A firm sells the same product in different countries and uses the same promotion methods. According to keegan’s model of adaptation strategies, this firm has adopted a strategy of
A. Straight extension.
B. Product adaptation.
C. Product invention.
D. Dual adaptation.
Using a straight extension strategy, a higher profit potential exists because virtually no changes are made in the products or its promotion. There is a downside potential if foreign consumers are not familiar with this type of product or do not readily accept it.
Question No : 21
A firm wishing to sell its well-known brand of men’s clothing in a certain foreign country redesigned the products because of the greater average size of consumers in that country. However, the firm retained the same basic advertising campaign. According to Keegan’s model of adaptation strategies, this firm has adopted a strategy of
A. Straight extension.
B. Product adaptation.
C. Forward invention.
D. Backward invention.
300-175 pdf Answer: B
Using a product adaptation strategy, a firm makes changes to the product for each market but not its promotion. This can reduce profit potential but may also provide a marketing advantage by taking into account local wants and needs.
Question No : 22 A firm that manufactures refrigerators sold ice boxes in urban areas of less developed countries. Many residents lacked electricity to power refrigerators but could purchase blocks of ice from local vendors for use in ice boxes. According to Keegan’s model of adaptation strategies, this firm adopted a strategy of
A. Product adaptation.
B. Dual adaptation.
C. Backward invention.
D. Forward invention.
Using a product invention strategy, a new product is created specifically for a certain country or regional market. A product may either include advancements for developed countries or have certain elements removed in places where a lower cost is a key selling point. Thus, an ice box, a precursor of the modern refrigerator, is a backward invention.
Question No : 23 Gray market activity is in essence a form of arbitrage. To prevent this activity by their distributors, multinational firms:
I. Raise prices charged to lower-cost distributors.
II. Police the firms’ distributors.
III. Change the product.
A. I only.
B. I and II only.
C. II and Ill only.
D. I, II, and Ill.
300-175 vce Answer: D
In a gray market, products imported from one country to another are sold by persons trying to make a profit from the difference in retail prices between the two countries. These activitiesclearly lower the profits in some markets of the multinational firm that was the initial seller. One response is to monitor the practices of distributors and retaliate if necessary. A second response is to charge higher prices to the low-cost distributors to reduce their incentives to participate in a gray market. A third response is to differentiate products sold in different countries, e.g., by adapting the product or offering distinct service features.
Question No : 24 A firm buys new computer equipment from bankrupt companies and resells it in foreign markets at prices significantly below those charged by competitors. The firm is
A. Engaged in dumping.
B. Engaged in price discrimination.
C. Operating in a gray market.
D. Operating in a black market.
Question No : 25
In a gray market, products imported from one country to another are sold by persons trying to make a profit from the difference in retail prices between the two countries. In essence, the seller firm in this case was exploiting a price difference between markets. A firm ships its product to a foreign subsidiary and charges a price that may increase import duties but lower the income taxes paid by the subsidiary. The most likely reason for these effects is that the:
A. Price is an arm’s-length price.
B. Price is a cost-plus price.
C. Transfer price is too low.
D. Transfer price is too high.
300-175 exam Answer: D
A transfer price is the price charged by one subunit of a firm to another. When the subsidiarybuyer is in a foreign country, the higher the transfer, the higher the potential tariffs.However, the tax levied on a subsequent sale by the subsidiary will be lower because of its higher acquisition cost.
Question No : 26 A global firm establishes a cost-based price for the firm’s product in each country. The most likely negative outcome is that this pricing strategy will
A. Set too high a price in countries where the firm’s costs are high.
B. Overprice the product in some markets and underprice the product in others.
C. Create a gray market.
D. Result in dumping.
A firm may set a cost-based price in each market with a standard markup. In a region or country where costs are high, this strategy may result in prices that are too high to be competitive within the local market.
Question No : 27 A firm sells its product in a foreign market for a much higher price than in the firm’s home market. The reason is most likely:
A. Price elasticity of demand.
C. Gray market activity.
D. Price escalation.
300-175 dumps Answer: D
Price escalation is caused by an accumulation of additional costs, e.g., currency fluctuations; transportation expenses; profits earned by importers, wholesalers, and retailers; and import duties.
Question No : 28 A firm sold the same product in many foreign countries but changed the ad copy to allow for language and cultural differences. According to teegan’s model of adaptation strategies, the firm adopted a strategy of:
A. Product adaptation.
B. Communication adaptation.
C. Dual adaptation.
D. Straight extension.
Communication adaptation is a strategy that does not change the products, but advertising and marketing campaigns are changed to reflect the local culture and beliefs. For example, a firm may use one message but with changes in language, name, and colors. It may use a consistent theme but change the ad copy in each market. Another option is for a firm to devise a group of ads from which each market may choose the most effective. Still another option is to develop promotion campaigns locally.
Question No : 29 A firm that sells in foreign markets should consider all aspects of how products move from the firm to ultimate users. Where in the whole channel are marketing mix decisions most likely made?
A. Export department of the seller firm.
B. Import department of the buyer firm.
C. Channels within nations.
D. Channels between nations.
300-175 pdf Answer: A
Distribution channels are a necessity to ensure that goods are successfully transferred from the production facility to end users. These channels include three distinct links that must work smoothly together.
1. The international marketing headquarters (export department of international division) is where decisions are made with regard to the subsequent channels and other aspects of the marketing mix.
2. Channels between nations carry goods to foreign borders. They include air, land, sea, or rail transportation channels. At this stage, in addition to transportation methods, intermediaries are selected (e.g., agents or trading companies) and financing and risk management decisions are reached.
3. Channels within nations take the goods from the border or entry point to the ultimate users of the products. Among nations, the number of levels of distribution, the types of channels, and the size of retailers vary substantially.
Question No : 30
The inherent attractiveness of a national market is most likely increased by which factor?
A. The firm’s strategic position.
B. The market’s exclusion from a regional free trade zone.
C. Unmet needs of a developing nation.
D. Product adaptation is costly.
Question No : 31 Attractiveness is a function of such factors as geography, income, climate, population, and the product. Another major factor is the unmet needs of a developing nation, for example, China or India. A firm considering entry into a market abroad may make the selection based on many criteria. For example, a Portuguese firm applying a psychic proximity criterion will most likely choose to enter which market?
300-175 vce Answer: D
Psychic proximity means the nearness of the market’s culture, language, and laws to those of the firm’s home country. For example, Portuguese is spoken in Brazil.
Question No : 32 Developing brand equity in a foreign market may be desirable but is subject to considerable risk. A global firm launching a new product in a new market most likely should
A. Initially place most of the firm’s emphasis on advertising geared to the local culture.
B. Fully decentralize control of the marketing process.
C. Avoid creating partnerships with local distribution channels to avoid dilution of the brand.
D. Balance standardization and customization of the product.
The firm should determine the ratio of standardization and customization. Products that can be sold virtually unchanged throughout several markets provide a greater profit opportunity for a global firm. However, cultural differences may require extensive customization to appeal to markets in different countries.
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