Intro to Business Ch 3
NAFTA and the European Union are ______ that promote trade among member nations by eliminating tariffs and trade restrictions.
trade agreements
Which of the following are considered major hurdles to successful international trade?
Political barriers; Economic barriers; Legal barriers
What type of tax is levied by a nation on goods imported into the country?
import tariff
When a U.S. grocery store chain purchases bananas from Honduras and coffee from Colombia to sell in its stores, it is involved in _____.
importing
The purchase of goods and services from foreign sources is called ______________ , while the sale of goods and services to foreign markets is called _______________ .
importing; exporting
What two characteristics would describe countries such as the United States, Japan, Great Britain, and Canada?
industrialized economically advanced
A country's economic activity is supported by that country's _____, which may include things such as highways, schools, utilities and power plants, and commercial distribution systems.
infrastructure
A characteristic of an LDC is that ______.
its per capita income is low
Tariffs and other trade restrictions are part of a country's ______ structure but may be established or removed for political reasons.
legal
When a company decides to do business outside its own country, it will encounter a number of barriers to international trade. Any firm considering international business must research the other country's economic, social, cultural, political, ______________ , and technological background (answer is one word).
legal
A maquiladoras is ______.
A Mexican production facility that allow US companies to take advantage of lower production costs
______, which was established in 1989, promotes open trade and economic and technical cooperation among 21 member nations representing nearly 44% of world trade, and 54% of world GDP.
APEC
Which trade alliance, established in 1967, promotes trade and economic integration among member nations in Southeast Asia?
ASEAN
_______ are based on the value of the item and levied on each unit of a product brought into the country.
Ad valorem tariffs
_______ encourages the sale of domestic goods and tourism.
Devaluation
Eventually, the EU plans to eliminate all trade barriers between ______.
EU member nations
What is it called when an American company sells its goods to foreign markets?
Exporting
True or false: Export agents either purchase products outright or take them on consignment, but are not responsible for storage and transportation of the product.
False
True or false: The Asia-Pacific Economic Cooperation (APEC) is a trade alliance that promotes trade and economic integration among member nations in Southeast Asia.
False
This trade agreement, originally signed by 23 nations in 1947, provides a forum for tariff negotiations and a place where international trade problems can be discussed and resolved.
General Agreement on Tariffs and Trade (GATT)
Which of the following is an example of importing?
Hewlett-Packard, an American company, buys computer parts from suppliers in Asia to build its laptops.
Why are countries like China and Vietnam flooded with counterfeit videos, movies, CDs, computer software, furniture and clothing? (select all that apply)
Intellectual property laws in those countries are minimally enforced. Laws protecting copyrights in those countries are weak. Copying is a tradition in those countries.
The _______ was established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation.
International Monetary Fund
What was the primary benefit for the European Union (EU) of adopting the euro as a common currency?
It eliminates the need for currency conversions.
Which of the following is NOT true about APEC?
Its common currency is the euro.
Select the five items that make up a country's balance of payments.
Money spent by tourists Foreign aid and loans Balance of trade Military expenditures Foreign investments
What strategy is a company using when it customizes its products, promotion, and distribution to fit cultural, technological, and other national differences?
Multinational
Why have Mexicans been disappointed with the North American Free Trade Agreement?
NAFTA has failed to create more jobs for Mexicans.
What has been the result of NAFTA on trade between the United States and Mexico?
Since NAFTA was initiated, trade between the United States and Mexico has dramatically increased.
Which of the following is true regarding effective global business leaders?
They acknowledge the practices of other cultures.
Which of the following is an example of exporting?
To meet growing global demand for almonds, American producers of almonds have increased sales outside of the United States in recent years.
The activities of U.S. firms that are engaged in international trade are governed by which of the following? (Select all that apply)
Treaties Laws Regulations
True or false: By linking sellers and buyers of goods in different countries, trading companies promote international trade among nations.
True
Which organization, established in 1946, primarily serves to loan funds to underdeveloped and developing nations, where the funds are used to finance projects ranging from road and factory construction to the building of medical and educational facilities?
World Bank
A(n) ______ advantage exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item.
absolute
A is a group of firms or nations that agree to act as a monopoly and not compete with each other in order to generate a competitive advantage in world markets.
cartel
OPEC, the Organization of Petroleum Exporting Countries, was founded in the 1960s to increase the price of petroleum throughout the world and to maintain high prices. OPEC is an example of a(n) _____.
cartel
A ___________________ agreement is a complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.
countertrade
Differences in spoken and written language are a(n) ______ barrier to international trade.
cultural
If the United States government were to devalue the dollar, it would _______ the cost of American goods abroad.
decrease
Though U.S. exports to China have been increasing, they have not increased fast enough to offset imports from China, therefore the United States has a trade __________________ with China.
defecit
Companies that want to retain control and are willing to invest resources in international business will consider_________ investment, the ownership of overseas facilities.
direct
When Lowe's builds its home improvement stores in Australia and other countries, this level of international business is called ______.
direct investment
The act of a country or business selling products at less than what it costs to produce them is referred to as ______________________ .
dumping
The common currency adopted by the European Union is called the __________________. It was created to eliminate the need of dealing with complex exchange rates.
euro
A country that wants to restrict the amount of currency that can be bought or sold in its country would do so through the use of an .
exchange control
The ratio at which one nation's currency can be exchanged for another nation's currency is called the ______.
exchange rate
Although a company may export its wares overseas directly or import goods directly from their manufacturer, many choose to deal with an intermediary, commonly call a(n) _______.
export agent
A __________________________ strategy involves standardizing products (and as much as possible, their promotion and distribution) for the whole world, as if it were a single entity.
global
A(n) ____________ tariff is a tax levied by a nation on goods imported into the country.
import
When the NBA formed an agreement with adidas to allow the adidas be the official apparel provider of the NBA, this arrangement is referred to as ______.
licensing
When an international company customizes its product, promotion, and distribution according to cultural, technological, regional, and national differences, it is using a _____________________ strategy.
multinational
A(n) ______ is an organization that manufactures and markets products in many different countries without significant ties to any one nation or region.
multinational corporation
Trade restrictions imposed on international trade are an example of a _____ barrier.
political
The World Trade Organization (WTO) promotes global business by ______.
presenting a forum for trade negotiations
The Uruguay Round of GATT negotiations provided new rules to ______.
prevent dumping
A country may attempt to protect its own domestic industries by imposing a(n) _____, a type of tax, on imported products.
tariff
NAFTA virtually eliminated all ___________________ on goods produced and traded among Canada, Mexico, and the United States to create a free trade area.
tariffs
A(n) import is a tax imposed on imports. (one blank/one word)
tarriff
A(n) import ________________ is a tax imposed on imports. (one blank/one word)
tarriff
Advances in the development of computers, cell phones, and access to broadband Internet in developing countries are examples of _____ advances that are creating global marketing opportunities.
technological
Hewlett Packard, Dell, and Lenovo are all companies that have been affected by competition stemming from ______ advances in developing countries.
technological
The term "Brexit" refers to ______.
the United Kingdom's decision to leave the EU
Critics that argue against the use of protective tariffs state that ______.
the use of protective tariffs inhibits free trade and competition
Critics that argue for the use of protective tariffs state that ______.
the use of protective tariffs protects domestic industries against foreign competitors
The United Kingdom's decision to exit the European Union resulted in ______.
the value of the pound falling sharply
Companies that promote international trade by buying goods in one country and selling those goods to buyers in another country are called ______.
trading companies
A(n) _____ buys goods in one country and sells them to buyers in another country.
trading company
True or false: Some countries have strict laws limiting the amount of local currency that can be taken out of the country; while other countries limit how foreign companies can operate with the country.
true
In Thailand and many other countries, public displays of affection between the sexes are _____ in advertising messages.
unacceptable
The _______________ ___________________ Organization was established in 1995 to mediate trade disputes among nations and is headquartered in Geneva, Switzerland.
world trade
__________________is a form of licensing in which one company, the franchiser, agrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with the franchiser's business, in return for a financial commitment and agreement to conduct business in accordance with the franchiser's standard of operations.
Franchising
Which of the following is NOT a benefit associated with licensing and franchising agreements?
The company may experience a damaged image if the franchisee does not maintain high standards of quality.
Which of the following is a disadvantage of trading through an export agent?
The export agent makes a profit, which cuts into the company's profit.
Less developed countries are characterized by ______.
a low per-capita income
When a company hires a foreign company to produce a specified volume of the firm's product to specification; the final product carries the domestic firm's name, it is called _____________ _________________ .
contract manufacturing
What type of agreement exists when trade involves bartering products for other products, instead of for currency?
countertrade agreement
Which of the following is NOT a long-term goal of the European Union (EU)?
increase trade between EU countries and the United States
Since the implementation of NAFTA in 1994, trade between Mexico, Canada, and the United States has ______.
increased
When a country imports more products than it exports, it has a _______________ balance of trade.
negative
The balance of ________________ is the difference between the flow of money into and out of a country.
payments
_____ prohibits trade in a particular product and may be established for political, economic, health, or religious reasons.
An embargo
Which of the following are controversial issues associated with NAFTA?
Mexicans have been disappointed that the agreement failed to create more jobs. Mexico's rising standard of living has increased the cost of doing business there.
True or false: Copyright and patent laws are universal worldwide.
False
Which statement is TRUE regarding the practice of outsourcing in the United States?
It is a controversial practice because it has taken jobs away from U.S. workers.
Select three ways in which the WTO promotes global business.
It provides technical assistance to developing countries. It helps to negotiate trade disputes between countries. It monitors national trade policies.
How did NAFTA change the trade rules between the United States, Canada, and Mexico?
It virtually eliminated all tariffs on goods produced and traded among the three member nations.
Which four items are part of the infrastructure of a country and thus supports its economic activities?
Railroads Utilities and power plants Schools Hospitals
Then the North American Free Trade Agreement (NAFTA) went into effect in 1994, it merged which three countries into one free trade market?
The United States Canada Mexico
What is a primary reason why countries engage in dumping?
To permit a quick entry into a market
What three barriers to trade fall into the ethical/legal/political category?
Trade restrictions imposed on international trade Different ethical values International laws
True or false: Maquiladoras are production facilities set up to take advantage of Mexico's low labor cost and proximity to the United States.
True
A country that specializes in products it can supply more efficiently or at a lower cost than it can produce other items is said to have ______.
a comparative advantage
A trade surplus occurs when ______.
a country exports more goods than it imports
A trade deficit occurs when ______.
a country imports more products than it exports
A country whose consumers are less likely to purchase nonessential products because they have a low per-capita income is considered to be ______.
a less-developed country
Although many countries produce software, the United States is more efficient in this trade.The production of software is an example of a(n) ______ advantage for the United States.
comparative
A(n) _____________ advantage is a monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item while a(n) _______________ advantage is when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.
absolute; comparative
If the United States were to prohibit Venezuela from selling its coffee in the United States, then the U.S. is establishing ______ on that particular product.
an embargo
The difference between the flow of money into and out of a country is its ______.
balance of payments
The total value of a nation's exports compared to its imports measured over a particular period is the definition of a ______.
balance of trade
Nonverbal, usually unconscious communication through gestures, posture, and facial expression is referred to as language.
body
Nonverbal, usually unconscious communication through gestures, posture, and facial expression is referred to as _______________ language
body
In the 1970s, during a visit to Brazil, President Richard Nixon gave the A-OK sign to the crowd. This hand gesture in America means OK, however, Brazilians were embarrassed because in their culture the gesture is considered obscene. This situation exemplifies how even simple differences in _____ can cause misunderstandings in international relationships.
body language
Importing can be defined as ______.
buying products from another country
The United States is efficient in producing certain fruits like pineapple and oranges; however, it cannot produce textiles as efficiently as other nations. Therefore, the United States exports its fruit to other countries and imports clothing from other countries. The ability of the United States to specialize in the production of fruit represents a(n) ______.
comparative advantage
Brazil has excellent resources and expertise to farm and produce coffee beans, whereas the United States is ill-suited for the production of coffee. Brazil should ______.
continue to produce coffee and trade it for U.S. products Brazil needs and cannot produce
When a country makes a deliberate downward adjustment to its exchange rate, relative to other currencies, it is called ______.
devaluation
A country that sells its products in a foreign country for less than what it cost the country to produce those products is ______.
engaged in dumping
When a government intentionally decreases the value of its currency in relation to other currencies, that government is _______
engaging in devaluation
True or false: Due to increasing exports from the United States to China in recent years, the United States now has a trade surplus with China.
false
True or false: The U.S. market makes up the majority of consumers in the world to whom global companies must consider marketing.
false
A country that exports more goods than it imports has a ______.
favorable balance of trade
A type of import tariff, a(n) _______________ tariff is a specific amount of money levied on each unit of a product brought into the country.
fixed
The North American Free Trade Agreement went into effect in 1994 and effectively merged Canada, the United States, and Mexico into one market by ______.
making it easier for businesses to invest in the other member countries eliminating virtually all tariffs on good produced and traded among the three member nations. providing intellectual property protections
A limit on the importation of a particular good brought into one country from another country is referred to as a(n) ______.
quota
If the United States restricts the number of garments imported from China in order to protect American producers and jobs, it is imposing a(n) ______.
quota
The suspicion of dumping often leads countries to impose ________________ or __________________ , in order to restrict the number of units of a particular product that can be imported into a country.
quotas; tariffs
Protective tariffs are typically imposed on imports in order to protect domestically produced products by ______.
raising the price of the imported products.
A country that imposes tariffs or embargoes in response to political events is doing so to ______.
restrict trade with other nations
For the United States, importing involves the purchase of goods and services from foreign sources while exporting involves ______.
selling goods and services to foreign markets
Providing a forum for trade negotiations, monitoring national trade policies, and providing technical assistance and training for developing countries are all functions of ______.
the World Trade Organization (WTO)
Which organization was established by the Uruguay Round of the GATT and serves as an organization dealing with the rules of trade between nations?
the World Trade Organization (WTO)
A country with a trade surplus generally has a favorable balance of payments, which means ______.
the country is receiving more money from trade with foreign countries than it is paying out
Americans value promptness in business meetings, whereas in other cultures it is not unusual for meetings to be delayed for an hour or more. Thus, Americans conducting business in foreign markets must understand the different perceptions of _____
time
Balance of _________________ is the difference in value between a nation's exports and its imports
trade
A(n) _______ promotes trade among member nations by eliminating or reducing barriers to trade.
trade agreement
In 1994, ratification of which agreement created a free trade area among the United States, Mexico, and Canada?
North American Free Trade
A company based in the United States is thinking about selling its products globally. What should this company's owners understand before undertaking this endeavor?
Since the majority of consumers reside outside the United States, this company has the potential to earn greater profits.
On her first day at a factory in Morocco, Pat saw production come to a stop when half of the workers walked out for a five-minute prayer break. What type of force affecting global trade did Pat encounter?
Social and cultural
Which of the following is a trade restriction that governments impose on businesses in response to political events? (select all that apply)
Embargoes Tariffs
Which three of the following are functions of the World Trade Organization?
To provide technical assistance for developing countries To mediate trade disputes among nations To monitor national trade policies
What is the primary function of protective tariffs?
To raise the price of imported products so that domestic goods are more competitively priced
Schweppes Tonic Water discovered during an ad campaign in Italy that its name translated to read "Schweppes Toilet Water." This is an example of the fact that cultural differences include differences in ______. (select two answers)
written language; spoken language