Chapter 3
____ advantage exists when a country has a monopoly on producing something and _____ advantage theory states a country should produce what it can produce most effectively and efficiently
Absolute; comparative
What are the two indicators nations rely on to measure global trade?
Balance of trade and balance of payments
Which of the following skills are important for a global business person?
Bilingual/multilingual; An ability to understand cultural differences; An ability to understand legal and regulatory differences
Among the benefits of exporting are:
Boost to the US economy
Which country is the US top trading partner?
Canada
the countries that participate in the North American Free Trade Agreement are
Canada, US and Mexico
Which country does the US have the highest trade deficit with?
China
Which of the following is an advantage of offshore outsourcing?
Companies can create efficiencies by paying low-wages to employees.
Although bananas are grown in almost one hundred countries worldwide, Ecuador and Costa Rica are among the world's largest banana growers due to their climate. These countries have a _____ in the production of bananas.
Comparative advantage
The US is efficient at producing software and engineering services; however, it cannot produce textiles as efficiently as other nations. Therefore, the US sells software and engineering services and buys clothes. US specialization in software and engineering services is an example of what?
Comparative advantage
The WTO is responsible for:
Creating trade agreements and settle trade disputes
Exporting assistance centers work with small- and medium- sized businesses who are hesitant to do:
Direct exporting
______ describes the attitude held by some individuals that his/her culture is superior to all others.
Ethnocentricity
Which of the following economic forces represents the value of one nation's currency relative to the currencies of another country?
Exchange rate
Last year, the country of Valahia reported that it had a favorable balance of trade while importing $21 billion worth of goods. this suggests that Valahia
Exported more than $21 billion worth of goods
An export trading company assists businesses in creating relationships with foreign customers and suppliers to assist in selling goods in overseas markets. This global strategy is known as _____.
Exporting
the prime minister of Zamunda has promised that your firm will receive preferential treatment in future government contracts in you pay him $500,000. Although such practices are common Zamunda, you refuse the request because the _____ Act of the US prohibits such behavior.
Foreign Corrupt Practices
What global strategy is Walt Disney Company using when it builds theme parks in other countries?
Foreign direct investment
Which of the following are important reasons to do business globally?
Foreign markets offer different resources and talents, increasing competition within the US and there are many potential customers
____ trade is the movement of goods and services among nations without political or economic barriers.
Free
What takes place when goods and services can be traded freely across borders without political and/or economic barriers?
Free trade
why do organizations like Walt Disney Company benefit from free trade in the global market?
Global competition and less-costly imports keep prices down, so inflation does not curtail economic growth.
While there may be 300 million people in the US, there are over 6.7 billion people in the global market. Therefore, global businesses value employees who:
Have experience in other countries and are extremely familiar with the US business culture
Which of the following is true regarding free trade?
It has become a hotly debated concept.
There are 6.9 billion potential customers in 194 countries around the globe. Each country possesses unique materials and skills, and as technology advances, communication barriers are being brought down. Therefore:
It is important to conduct business globally
_____ is a partnership in which two or more companies (often from different countries) join to undertake a major project.
Joint venture
_____ forces that impact global business can include such things as taxes, trade restrictions, and labor laws.
Legal/Regulatory
What are the three strategies that require the least amount of commitment, control, risk, and profit potential?
Licensing, exporting, franchising
Which of the following are primary reasons that countries use the tactic of dumping?
Lower their surplus inventory and to gain a foothold in a new market
______ is the process whereby a firm contracts with contracts with other companies, often in other countries, to do some or all of its functions.
Outsourcing
Your company identifies an untapped need for its products in a foreign country. However, limited transportation to this country makes exporting difficult and the lack of an adequate water and sewer system makes manufacturing impossible. this is an example of how a US firm attempting to enter global markets encounters _____ challenges
Physical and environmental
_____ tariffs are designed to raise money for the government.
Revenue
Russia is producing more natural gas than it needs. Japan lacks natural gas resources, but it produces more care and computers than its residents need. Therefore:
Russia and Japan can mutually benefit from trading with each other
A _____ represents a long-term partnership between two or more companies established to help each firm build competitive market advantages.
Strategic alliance
Pharmaceutical giant Eli Lilly partnered with the Belgium-based company Galapagos to develop treatments for osteoporosis. This is an example of a
Strategic alliance
The outcome of foreign direct investment is a foreign _____, a company situated in a foreign country owned by a company located in a different country, called the parent company.
Subsidiary
The US is the largest importing nation in the world.
T
How is it possible for the US to exhibit a trade deficit, while being one of the largest exporting nations in the world?
The value of the goods the US imports is higher than the value of the goods it exports.
Which of the following is true regarding effective global business leaders?
They acknowledge the practices of other cultures
Current trade data indicates that China exports more to other nations than it imports. this suggests that China is experiencing a ____
Trade surplus
The international organization that deals with the rules of trade between nations is the
WTO
Which of the following statements is a good prediction of future occurrences in global markets?
With the strong growth in technical talent globally, offshore outsourcing will likely continue to increase
When the value of its imports is less than the value of its exports, a country experiences
a favorable balance of trade
Tanzania is the only country in the world where a rare gem called Tanzania can be found. Tanzania has a _____ in the production of tanzanite gems.
absolute advantage
The advantage that exists when a country has a monopoly on producing a specific product is called:
absolute advantage
Economic/financial forces that impact the Walt Disney Company's global business can include such things as ____.
all
Nations trade with other nations because ___
all
One of the primary concerns over offshore outsourcing is
all
The disney theme park in Hong kong brings a lot of tourism dollars to the coutnry. Besides tourism, what other funds determine the balance of payments?
all
Which of the following is an advantage of offshore outsourcing?
companies can focus on areas in whcih they can excel and grow
Dell computer has an arrangement with Quanta Computer in Taiwan to makes it notebook PCs, on which it puts the Dell name. This is an example of
contract manufacturing
When a company plans to expand its operations globally, it should be concerned with economic and financial forces. Which of the following is NOT an economic or financial force?
cultural differences
The practice of selling a product in foreign countries for a lower prices than the good is sold for in the producing country is called
dumping
Walmart has retail stores in China, and Staples has retail stores in Australia. These are examples of US companies:
engaged in the global market
All of the following economic/financial forces can have a significant impact on business operations Except:
ethnocentricity
In addition to goods and services, countries also _____ art, cultural events, medical advances, space exploration, and labor.
exchange
The most likely path that US companies will have to consider in the future is to
expand to new markets outside of the US
Selling products to another country is called
exporting
_____ is selling products to another country.
exporting
When Walt Disney Company builds theme parks in Europe and Asia, it is engaging in ___.
foreign direct investment
If a Chinese firm purchases an American company, the American company becomes a
foreign subsidiary
A small business owner wants to increase sales and cut production costs, and decides that importing materials and exporting his product are two ways to accomplish this. This small business owner is engaging in:
global trade
As a technical talent ____ around the globe, offshore outsourcing will ____
grows; increase
In order to protect its local farmers, Japan has imposed a ____ to limit the amount of rice that can be imported from other countries.
import quota
Sometimes countries will restrict the amount or number of products that can be imported in order to protect their domestic industries. These limits are called:
import quotas
America purchases over 50% of its crude oil and petroleum products from other countries. This is an example of
importing
Buying products from another country is definition of ______.
importing
All of the following economic/financial forces can have a significant impact on business operations EXCEPT:
internet
The US has had a trade deficit since 1975 because:
it bought more goods from other nations than it has sold
Difference in trade practices and tax requirements can represent the _____ forces that impact global business.
legal and regulatory
Differences in labor laws and pay requirements can represent the ___ forces that impact global business.
legal and regulatory
Granting a foreign company the right to manufacture your product or to use your firm's trademark in return for a fee is called:
licensing
The definition of _____ states: a global strategy in which a firm allows a foreign company to produce its product in exchange for a fee.
licensing
Under this global strategy, a US footwear manufacturer allows a foreign producer to use it designs and manufacture its products in exchange for a royalty.
licensing
Free trade allows labor to be outsourced to other markets where it may be less expensive. This negative consequence of free trade most commonly created a loss of domestic:
manufacturing jobs
When trying to decide where to expand his operations, a small business owner studied several different nations. He analyzed each nation's balance of trade and balance of payments. This small business owner was:
measuring global trade
The "second wave" of offshore outsourcing refers to:
moving skilled service jobs such as those in information technology offshore
G.E. owns and operates hundreds of companies worldwide with facilities in Europe, India, China, and the Us-to name a few. G.E. is an example of
multinational corporatin
Many times free trade has a ____ impact on US domestic jobs, particularly manufacturing jobs.
negative
China omits many American-made products from the government catalogs that specify what products may be purchased by its government. This is an example of:
non-tariff barrier
Denmark requires foreign companies that sell butter in Denmark to sell it in cubes, as opposed to tubs or sticks. This type of requirement is known as a
non-tariff barrier
____ is the process in which one company contracts with companies in other countries to do some or all of its functions.
offshore outsourcing
Tinkel, a small maufacturing firm in Nebraska, needs to free up time to focus on areas in which it can excel and grow in order to meet competitive demands, Tinkel should consider:
outsourcing less strategic tasks tolower costs and free up resources
Computer and Internet use in developing countries is an example of ______ forces that affect global business.
physical and environmental
Differences in electrical power and transportation systems can represent the _____ forces that impact global business.
physical and environmental
When the government of one country prohibits trade with another country, what factor in the general environment is becoming a barrier to trade?
political and legal
When the Vietnamese government imposes a tax on imported electronics products to help their relatively young electronics industry, a _____ is being levied.
protective tariff
Tariffs can be categorized as either _____ or _____ tariffs.
protective; revenue
Which of the following sociocultural forces can have a significant impact on business operations?
religion
Importing involves buying products from other countries while exporting involves:
selling products to other countries
When GM introduced the Chevy Nova in South America, it was perplexed to find that, despite its vest efforts, it wasn't selling many cars. FM finally realized that "nova" in Spanish means "it won't go." This is an example of a _____ force that adversely affected GM in its globalization efforts.
sociocultural
if the US exchange rate increased dramatically in favor of a nation's foreign currency
the cost to purchase from foreign suppliers would increase
Which of the following are disadvantages of international joint ventures?
the joint venture may become too large and inflexible; shared technology may become obsolete
What is the idea behind offshore outsourcing?
to allow a company to save money to keep the prices of its product lower than the competition.
Balance of _____ is the total value of nations of a nations exports compared to its imports measured over a particular period.
trade
Because it is a state suspected of terrorism, the US refuses to trade with Sudan. This is considered a____.
trade embargo
using government regulations to limit the import of goods and services is called:
trade protection
Common markets are also called ___
trading blocs