GMS522 MIDTERM EXAM QUESTIONS
WITH CORRECT ANSWERS
two forms of globalization - Answer-1. globalization of markets - convergence of buyer
preferences in markets around the world
2. globalization of production - dispersal of production activities to locations around the
world that are low cost or high-quality producers (usually shift production in an effort to
reduce costs)
e.g. in 2010 Vietnam replaced China as Nike's largest production base worldwide
e.g. b/c trump has imposed tariffs on manufactured products in the US, Harley davidson
wants to relocate their production to Europe
the five key drivers of globalization - Answer-1. market - differences in brands
2. cost - cost savings
3. environmental - reduction of tariff and non-tariff barriers, reduction of direct foreign
investment barriers
4. competitive - expansion to defend brand from competitors
5. technological - the internet - builds increased awareness of market conditions, etc.
axel dreher's three dimensions of globalization - Answer-1. economic integration -
examines trade and investment flows between countries and the extent to which the
country uses policy measures to restrict these flows, constructed from variables such as
fdi, imports and exports, portfolio investment, average tariff rates and income payments
to foreign nationals
2. social integration - reflects the flow and movement of ideas, people and info.,
captures data on variables such as tourism flows between countries, telecom traffic, the
number of international letters sent, the number of Internet users, etc.
3. political integration - captures the diffusion of government policies around the world,
incorporates data on the number of embassies in a country, the number of international
organizations to which the country belongs and the number of UN peacekeeping
missions the country participates in
dreher's globalization index - Answer-dreher's globalization index and sub-indexes
range from 1 to 100 with increasing values denoting greater globalization
liability of foreigness - Answer-the inherent disadvantages that multinational firms face
when operating in a new host country. this includes all additional costs multinational
firms must bear in order to compete with local firms. foreign firms are put at a
competitive disadvantage b/c they are not always aware of all political, economic and
social conditions of a country
,economies of scale - Answer-refers to the decrease in per unit cost of production as the
firm increases its level of output (the more available, the less costly)
economies of scope - Answer-refers to the reduced cost per unit as the firm spreads its
total costs (production, marketing, R & D) over a large number of brands, product lines
or target markets
ted levitt's homogeneous markets - Answer-ted levitt argued in 1983 that markets are
becoming more homogeneous and could be targeted with standardized products,
people want the same things globally; convergence of tastes and preferences,
technology and communications were the drivers, ted's work gave rise to the idea of
"global marketing"
the anti-globalization movement - Answer-many people are angered by globalization
due to the impact of the trend on the poor (low wages), the environment, women and
the ability of sovereign states to make independent decisions. this anger led to protests
such as the wto meeting in Seattle on December 1999 that resulted in violent behaviour
culture - Answer-defined as an integrated system of learned behavior patterns that are
distinguishing characteristics of the members of any given society
cultural adaptation - Answer-everyone is encultured into a particular culture. however,
problems may arise when a person encultured in one culture has to adjust to a different
culture, also known as becoming "acculturated"
cultural universals - Answer-common traits that cut across all cultures such as
mourning, body adornment, decorative art, music, religious rituals and courtship
(common across cultures, but practiced differently)
ethnocentricity - Answer-the belief that one's own ethnic group or culture is superior to
that of others. this causes people to view other culture in terms of their own, causing
them to overlook import human and environmental differences among cultures
consumer ethnocentricity - Answer-you think your culture is superior and therefore, feel
that purchasing foreign products is immoral
e.g. " it is not right to purchase foreign products, because it puts Americans out of jobs"
CETSCALE ethnocentricity - Answer-shimp and Sharma (1987): measures the
tendency towards being consumer ethnocentric, useful in understanding negative
consumer reactions towards foreign products
consists of 17 items which consumers rank on a scale of 1 (=strongly agree) to 7
(=strongly disagree)
polycentric - Answer-highly flexible in making decisions with respect to marketing,
production and technology choices in serving their local customers
, Regiocentric - Answer-firms with a regiocentric attitude view the world as a set of
distinct regional markets, they attempt to coordinate their business activities and
strategies within these regions and not across them
geocentric - Answer-standardize products and adapt to the number of markets they
serve
cultural literacy - Answer-detailed knowledge of a country that helps the manager to
function effectively within it such as understanding the pace at which business
transactions can be completed
e.g. in Mexico business transactions tend to proceed slowly in order to allow time for the
parties to get to know each other more on a personal level, whereas in north America
such personal relationships are not as important and transactions proceed at a much
faster pace
the elements of culture - Answer-- language
- religion
- values and attitudes
- manners and customs
- material elements
- aesthetics
- education
- social institutions
in global marketing language is important in: - Answer-- collecting information
- providing access to the local society
- communicating with channel members
- providing a means of interpreting context
aspects of non-verbal language - Answer-- time: flexible in many cultures
- space: Arabs and Latinos may get a little too close
- material possessions: type of suit, watch, car and phone
- friendship patterns: who you know
- business agreements: formal or informal
importance of religion - Answer-- defines the ideals of life
- existence of a higher power
- reflected in values and attitudes and eventually behavior
- importance for international marketers to understand religious differences such as 1)
religious holidays and exchange of gifts 2) role of women in business (e.g. middle east)
3) products and services that can be marketed (beef, alcohol, etc.) 4) attitudes towards
money: Catholics discourage the accumulation of wealth, protestants encourage the
accumulation of wealth and the importance of hard work
values and attitudes - Answer-- values: shared beliefs which have been internalized
- attitudes: evaluation of alternatives based on internalized values
WITH CORRECT ANSWERS
two forms of globalization - Answer-1. globalization of markets - convergence of buyer
preferences in markets around the world
2. globalization of production - dispersal of production activities to locations around the
world that are low cost or high-quality producers (usually shift production in an effort to
reduce costs)
e.g. in 2010 Vietnam replaced China as Nike's largest production base worldwide
e.g. b/c trump has imposed tariffs on manufactured products in the US, Harley davidson
wants to relocate their production to Europe
the five key drivers of globalization - Answer-1. market - differences in brands
2. cost - cost savings
3. environmental - reduction of tariff and non-tariff barriers, reduction of direct foreign
investment barriers
4. competitive - expansion to defend brand from competitors
5. technological - the internet - builds increased awareness of market conditions, etc.
axel dreher's three dimensions of globalization - Answer-1. economic integration -
examines trade and investment flows between countries and the extent to which the
country uses policy measures to restrict these flows, constructed from variables such as
fdi, imports and exports, portfolio investment, average tariff rates and income payments
to foreign nationals
2. social integration - reflects the flow and movement of ideas, people and info.,
captures data on variables such as tourism flows between countries, telecom traffic, the
number of international letters sent, the number of Internet users, etc.
3. political integration - captures the diffusion of government policies around the world,
incorporates data on the number of embassies in a country, the number of international
organizations to which the country belongs and the number of UN peacekeeping
missions the country participates in
dreher's globalization index - Answer-dreher's globalization index and sub-indexes
range from 1 to 100 with increasing values denoting greater globalization
liability of foreigness - Answer-the inherent disadvantages that multinational firms face
when operating in a new host country. this includes all additional costs multinational
firms must bear in order to compete with local firms. foreign firms are put at a
competitive disadvantage b/c they are not always aware of all political, economic and
social conditions of a country
,economies of scale - Answer-refers to the decrease in per unit cost of production as the
firm increases its level of output (the more available, the less costly)
economies of scope - Answer-refers to the reduced cost per unit as the firm spreads its
total costs (production, marketing, R & D) over a large number of brands, product lines
or target markets
ted levitt's homogeneous markets - Answer-ted levitt argued in 1983 that markets are
becoming more homogeneous and could be targeted with standardized products,
people want the same things globally; convergence of tastes and preferences,
technology and communications were the drivers, ted's work gave rise to the idea of
"global marketing"
the anti-globalization movement - Answer-many people are angered by globalization
due to the impact of the trend on the poor (low wages), the environment, women and
the ability of sovereign states to make independent decisions. this anger led to protests
such as the wto meeting in Seattle on December 1999 that resulted in violent behaviour
culture - Answer-defined as an integrated system of learned behavior patterns that are
distinguishing characteristics of the members of any given society
cultural adaptation - Answer-everyone is encultured into a particular culture. however,
problems may arise when a person encultured in one culture has to adjust to a different
culture, also known as becoming "acculturated"
cultural universals - Answer-common traits that cut across all cultures such as
mourning, body adornment, decorative art, music, religious rituals and courtship
(common across cultures, but practiced differently)
ethnocentricity - Answer-the belief that one's own ethnic group or culture is superior to
that of others. this causes people to view other culture in terms of their own, causing
them to overlook import human and environmental differences among cultures
consumer ethnocentricity - Answer-you think your culture is superior and therefore, feel
that purchasing foreign products is immoral
e.g. " it is not right to purchase foreign products, because it puts Americans out of jobs"
CETSCALE ethnocentricity - Answer-shimp and Sharma (1987): measures the
tendency towards being consumer ethnocentric, useful in understanding negative
consumer reactions towards foreign products
consists of 17 items which consumers rank on a scale of 1 (=strongly agree) to 7
(=strongly disagree)
polycentric - Answer-highly flexible in making decisions with respect to marketing,
production and technology choices in serving their local customers
, Regiocentric - Answer-firms with a regiocentric attitude view the world as a set of
distinct regional markets, they attempt to coordinate their business activities and
strategies within these regions and not across them
geocentric - Answer-standardize products and adapt to the number of markets they
serve
cultural literacy - Answer-detailed knowledge of a country that helps the manager to
function effectively within it such as understanding the pace at which business
transactions can be completed
e.g. in Mexico business transactions tend to proceed slowly in order to allow time for the
parties to get to know each other more on a personal level, whereas in north America
such personal relationships are not as important and transactions proceed at a much
faster pace
the elements of culture - Answer-- language
- religion
- values and attitudes
- manners and customs
- material elements
- aesthetics
- education
- social institutions
in global marketing language is important in: - Answer-- collecting information
- providing access to the local society
- communicating with channel members
- providing a means of interpreting context
aspects of non-verbal language - Answer-- time: flexible in many cultures
- space: Arabs and Latinos may get a little too close
- material possessions: type of suit, watch, car and phone
- friendship patterns: who you know
- business agreements: formal or informal
importance of religion - Answer-- defines the ideals of life
- existence of a higher power
- reflected in values and attitudes and eventually behavior
- importance for international marketers to understand religious differences such as 1)
religious holidays and exchange of gifts 2) role of women in business (e.g. middle east)
3) products and services that can be marketed (beef, alcohol, etc.) 4) attitudes towards
money: Catholics discourage the accumulation of wealth, protestants encourage the
accumulation of wealth and the importance of hard work
values and attitudes - Answer-- values: shared beliefs which have been internalized
- attitudes: evaluation of alternatives based on internalized values
