MKT 320 CH. 3
50) Considering the progress, attempts to achieve integration in Central America has been described as: A) uncoordinated. B) coordinated. C) efficient. D) costly. E) productive.
A) uncoordinated
86) According to experts, mastering the Japanese market is considered to be a very difficult task. However, with the lucrative market in Japan, it is imperative to understand the intricacies in order to be successful in business. What are some of the factors that need to be considered by corporations that would like to conduct business in Japan?
Answer: Conducting business in the Japanese market demands understanding, flexibility, ambitions, and long-term commitment. Although the Japanese market has changed from a closed market to just being a tough market, there are still several barriers that need to be overcome. These barriers include differences in business attitude as well as laws. Companies interested in doing business with Japan should be willing and able to provide top-quality products and services. Also, the products and services should be tailored to local tastes. All this requires countless visits and socializing to build trust as well as mutual understanding. Marketers must also master the "keiretsu" system of tightly knit corporate alliances.
60) Which of the following ASEAN countries ranks number one in terms of two-way trade with the United States? A) Brunei B) Malaysia C) Singapore D) Thailand E) Vietnam
C) Singapore
70) With the global economic crisis as a backdrop, the first-ever Happiness Congress was held in: A) Sweden. B) Austria. C) Spain. D) Italy. E) Greece.
C) Spain
71) Political and social instability in the Middle Eastern region can primarily be attributed to: A) desert conditions and lack of agricultural land. B) cultural differences among nations. C) a wide gap between rich and poor nations due to oil revenues. D) lack of water purification facilities. E) the "Arab Spring."
C) a wide gap between rich and poor nations due to oil revenues
4) Trade ministers representing the WTO member nations meet ________ to work on improving world trade. A) weekly B) monthly C) annually D) biannually E) fortnightly
C) annually
58) There are barriers in Japan for global marketers in terms of attitudes as well as laws. Barriers include all of the following except: A) any organization wishing to compete in Japan must be committed to providing top-quality products and services. B) repeat visits and extended socialization with distributors. C) goods marketed should have a semblance of western products and services. D) marketers must master the keiretsu system of tightly knit corporate alliances. E) trust has to be built before conducting successful business.
C) goods marketed should have a semblance of western products and services
68) The enlargement of the EU has impacted marketing strategies in the Eurozone countries by: A) making it difficult to export food products from one country to another. B) increasing the cost of production since the euro replaced local currency. C) shifting products from one market to another in the event of shortages. D) reduced tariffs and quotas for products imported from non-EU members. E) having less flexibility in the placement of factories.
C) shifting products from one market to another in the event of shortages
1) The United States and the EU have the world's largest trading relationship.
True
10) In addition to eliminating internal barriers to trade, members of a customs union agree to the establishment of common external tariffs.
True
11) In a Common Market there are no internal barriers to trade, and it allows for free movement of factors of production such as labor and capital.
True
12) Under Economic Union, a doctor or lawyer qualified in one country can practice in another member country.
True
13) In spite of NAFTA creating a free trade area, Mexican avocado growers can ship their fruit to the United States only during the winter months, and only to states in the northeast subject to a quota of $30 million worth of avocados per year.
True
15) Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA.
True
16) Despite trade agreements, attempts to achieve integration in Central America have been described as uncoordinated, inefficient, and costly. There are still tariffs on imports of sugar, coffee, and alcoholic beverages.
True
17) About one-fourth of the cut roses sold in the United States come from Ecuador.
True
2) GATT (General Agreement on Tariffs and Trade) itself had no enforcement power, and the losing party in a dispute was entitled to ignore the ruling.
True
21) CARICOM's main objective has been to achieve a deepening of economic integration by means of a Caribbean common market.
True
22) Individually and collectively, Association of Southeast Asian Nations (ASEAN) countries are active in regional and global trade.
True
23) Since 2010 there is a formal establishment of a new China/ASEAN Free Trade Agreement.
True
24) Singapore alone accounts for more than one-third of U.S. trading activities with ASEAN countries.
True
25) Bhutan has relied on a measure besides economic growth referred to as the Gross National Happiness (GNH).
True
26) The Vatican City uses the euro although it is not a part of the European Union.
True
27) Coca-Cola had to delay launching its Powerade sports drink in Europe due to the lack of uniform food safety laws in the European Union.
True
28) Movements such as "the Arab Spring" have forced some of the regional leaders to make economic and political concessions.
True
29) The six countries in the Gulf Cooperation Council (GCC) hold about 45% of the world's known oil reserves, but production is only about 18% of world oil output.
True
3) The WTO's neutral trade experts also serve as mediators in global trade disputes.
True
30) The Middle East and North Africa are sometimes viewed as a regional entity known as "Mena."
True
5) A preferential trade agreement is a mechanism that confirms special treatment on select trading partners, thereby at times discriminating against other trading partners.
True
8) In October 2011, the United States Congress finally ratified the long-delayed free trade areas with South Korea, Panama, and Colombia.
True
38) A true economic union requires: A) political unity. B) social services. C) welfare. D) regional development. E) taxation.
A) political unity
78) African companies will find it easier to gain access to financing from the U.S. Export-Import Bank due to: A) AGOA. B) GATT. C) SADC. D) TDCA. E) SACU.
A) AGOA
57) Which one of the ASEAN members has the World's second-largest container port? A) Singapore B) Thailand C) India D) Philippines E) Brunei
A) Singapore
62) The introduction of the euro by EU resulted in multifaceted advantages which include: A) elimination of costs associated with currency conversion. B) fixed exchange rate worldwide. C) elimination of paper currency and coins. D) withdrawal of French Francs from circulation. E) a choice for using local or European currency.
A) elimination of costs associated with currency conversion.
39) As a result of CFTA, the U.S. automakers participate in the Canadian auto market, thereby benefiting due to: A) greater economies of scale. B) decreased production costs. C) reduced competition. D) ease of exporting automobiles. E) creating a continental demand.
A) greater economies of scale
40) Custom unions or a common market does not create a free trade area as compared to NAFTA due to: A) no common external tariffs. B) decreased production costs. C) reduced competition. D) ease of exporting commodities. E) creation of a continental demand.
A) no common external tariffs
81) Why do some critics refer to GATT as the "General Agreement to Talk and Talk" and how does its successor, WTO, provide a better forum for trade agreements?
Answer: GATT was an organization that was handling 300 trade disputes during its half century of existence. It itself had no enforcement power, and the process of dealing with disputes stretched for years. The losing party had the right to ignore the ruling. Therefore, it was referred to as more of a talking rather than enforcing body. WTO provides a forum for trade-related negotiations among its 150 members. The WTO has a Dispute Settlement Body (DSB) that mediates complaints concerning unfair trade barriers and other issues between the WTO's member countries. During a sixty-day consultation period, parties to a complaint are expected to engage in good-faith negotiations and reach an amicable resolution. If that fails, the complainant can ask the DSB to appoint a three-member panel of trade experts to hear the case. The panel has nine months within which to issue its ruling. The losing party has the option of turning to a seven-member appellate body. If, after due process, a country's trade policies are found to violate WTO rules, it is expected to change those policies. If changes are not forthcoming, the WTO can authorize trade sanctions against the loser. Thus, the formation of WTO took care of many of the problems that existed during GATT.
89) With the increase in oil prices, many of the Middle Eastern countries will find a hefty windfall income. Also, with greater involvement of world powers in the Middle Eastern region, there are certain unprecedented opportunities. What are some of the marketing issues that should be taken into consideration?
Answer: In Middle Eastern countries, the majority of the resident population is Arabs. Islam is the predominant religion. In spite of the apparent homogeneity, there are vast differences. The price of oil is the driving force behind all businesses. Although oil revenues help economically, they also widen the gap between rich and poor countries within the region. This disparity also creates political and social instability. As far as the business dealings are concerned, connections are keys for any success. Relationships with key government and business individuals open many doors. A predilection for bargaining is culturally ingrained. The Arab business person does business with the individual, not with the company. Understanding of Arab customs is very important. Women usually do not play an apparently prominent role in business.
90) What are some of the concerns if European Union decides to sign a free trade agreement with the United States?
Answer: One of the issues related to this agreement would be the tariffs on goods imports and exports, which will amount to be a significantly large amount. Tariffs are only one part of the picture. Nontariff restrictions create major bureaucratic obstacles. The use of genetically modified agricultural products such as corn and soy, which are restricted in Europe, will be one of the issues. Another issue concerns the product labeling which is profoundly different in Europe compared to that in the United States. Other issue of concern is related to the cultural diversity. In parts of Europe, some hold view that American cultural exports such as Hollywood movies overwhelm the works of the local film producers. This has prompted European policymakers to demand "carve-outs" that exempt certain industries from the trade pact. All these aspects have to be addressed before any agreement can be signed and implemented.
85) Although the ASEAN countries are geographically close, they have historically been divided in many respects. Elaborate on this statement and highlight the important economic development of member countries within ASEAN. How does Singapore represent a special case within the ASEAN nations?
Answer: The Association of Southeast Asian Nations (ASEAN) was established as an organization for economic, political, social, and cultural cooperation among its member countries. Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand were the original six members. Vietnam, Cambodia, Laos, and Myanmar joined later on. Individually and collectively, ASEAN countries are active in regional and global trade. However, all the above-mentioned countries were under different political orders, and the population is very different from the religious and cultural point of view. Some of these countries are advancing rapidly whereas others still have a long way to go. There are different natural resources in each of the member countries. Some have undergone political unrest and wars recently. For example, Singapore transformed itself from a British colony to a vibrant industrial power. One of the reasons for its success is its extremely efficient infrastructure. The Port of Singapore is the world's second-largest container port. It has a high standard of living, second only to Japan. There is 93-percent literacy rate and is very much advanced in business. Many foreign companies are attracted to Singapore. Singapore alone accounts for more than one-third of U.S. trading activities with ASEAN countries.
87) The formation and enlargement of the European Union have wide everlasting impact on marketing strategies and marketing mix. Discuss this giving example from member nations.
Answer: The European Union has concluded over 20 different trade pacts with other nations. The business environment in Europe has undergone considerable transformation with significant implications for all elements of the marketing mix. For example, there is harmonization of product standards, thereby reducing the number of adaptations needed in each country. Similarly, from a pricing point of view the environment has become more competitive. Common guidelines are also set for promotion and distribution. Thus, all components of the marketing mix are getting standardized and harmonized. Corporations are beginning to treat the entire region as one entity with very little adaptation. For example, France will be able to shop around for distributions of products or services and select the best one in any member country. This selection can be based on cost, quality, or local preferences. Food safety laws can also be made uniform with some modifications that can be adapted. The members in the European Union will find it easier to do business at any of the member countries including setting up of manufacturing plants or headquarters. It will also help in balancing the inventory and moving products from one country to another in case of shortages.
75) The Middle East and North Africa are sometimes viewed as a regional entity referred to as: A) GCC. B) AMU. C) MENA. D) ACC. E) ECOWAS.
C) MENA
84) Historically, most of the Latin American nations have witnessed decades of slow or no growth, crippling inflation, increasing foreign debt, protectionism, the bloated government payrolls, money laundering problems, and currency fluctuations. What measures are now being taken by countries in that region that will begin the process of economic transformations?
Answer: The allure of the Latin American market has been its considerable size, its strategic location, and huge resource base. Many countries are implementing economic reforms such as priority to have a balanced budget and privatization of certain industries. Free markets, open economies, and deregulation are becoming governmental priorities. Tariffs are being lowered, and free trades are being encouraged. Global corporations are encouraged by import liberalization, lower tariffs, and the potential for establishing more efficient regional production. Many observers envision a free trade area within the entire region. The four most important preferential trading arrangements in Latin America are the SICA, the Andean Community, the Common Market of the South (Mercosur), and the Caribbean Community and Common Market (CARICOM).
88) McDonalds, Philips Electronics, 3 M International and many other similar well known global corporations are operating in Central and Eastern Europe. Some countries in the region are still recovering from decades of command economies. What makes the region so attractive for global business corporations?
Answer: The extraordinary political and economic reforms that swept through Central and Eastern Europe in the 1990s attracted the attention of many corporations toward the new 430-million person market. The transition in the region from command to market economies has toppled a number of entrenched institutions. New pacts such as Central European Free Trade association (CEFTA) are being formed. The signatories are pledging cooperation in areas such as infrastructure and telecommunications. The governments of Russia and Belarus agreed to form a customs union and remove border posts between their two countries. Ford opened a $10 million vehicle assembly plant outside Minsk, predicting future economic growth in that region. The markets of central and Eastern Europe present interesting opportunities since they are in the process of transition. Also, with wage rates in these regions being much lower than those in Spain or Portugal, the region offers attractive locations for low-cost manufacturing.
82) A laptop manufactured in Canada and imported by Chile would not be subjected to duty. If the same laptop was manufactured in the USA and exported to Chile, it will have to pay duty. In order to avoid duty, can the manufacturer in the USA send the computer via Canada?
Answer: There is a Free Trade Area (FTA) which is formed when two or more countries agree to eliminate tariffs and other barriers that restrict trade. However, there are rules of origin that discourage the importation of goods into the member country with the lowest external tariff for transshipment to one or more FTA members with higher external tariffs. Thus, even though the laptop can be shipped via Canada, it will have the label as "made in USA" and therefore subject to duty.
83) Why does NAFTA create a free trade area as opposed to a customs union or a common market? Explain the difference giving examples.
Answer: Under a customs union, in addition to eliminating internal barriers to trade, members agree to the establishment of common external tariffs. For example, the EU and Turkey initiated a customs union in an effort to boost two-way trade. In a common market, in addition to the removal of internal barriers to trade and the establishment of common external tariffs, free movement of factors of production such as labor and capital is allowed. NAFTA helps in promoting economic growth through tariff elimination, expanded trade and investment, as well as no restrictions on labor and other factor movements within the three nations. The benefits of continental free trade will enable all three countries to meet the economic challenges of the decades to come. The gradual elimination of barriers to the flow of goods, services, and investment, coupled with strong protection of intellectual property rights will further benefit businessmen, workers, farmers, and consumers. The agreement also leaves the door open for discretionary protectionism.
72) The Gulf Cooperation Council (GCC) includes all of the following countries except: A) Kuwait. B) Saudi Arabia. C) Iraq. D) Bahrain. E) Oman.
C) Iraq
54) Argentina provides a good example of how a country can emerge from an economic crisis as a stronger global competitor as per the following statement: A) Argentina reduced the duties on consumer goods. B) Argentina devalued its currency for exports and capital transactions. C) Argentina added tariffs on imported wines. D) Argentina adopted the U.S. dollar as official currency. E) Argentina added tariffs on wine produced within the country.
B) Argentina devalued its currency for exports and capital transactions
51) The country that withdrew from the original members of the Andean Community is: A) Bolivia. B) Chile. C) Ecuador. D) Peru. E) Venezuela.
B) Chile
73) A key word(s) in conducting business in the Middle East is: A) Arab Spring. B) Connection. C) Discrimination. D) Male dominance. E) haggling.
B) Connection
77) In order to form a free trade area, South Africa has signed a Trade, Development, and Cooperation Agreement (TDCA) with: A) Swaziland. B) EU. C) Namibia. D) Angola. E) Japan.
B) EU
64) The new country joining the EU at the beginning of 2014 is: A) Slovakia. B) Estonia. C) Latvia. D) Slovenia. E) Cyprus.
B) Estonia
32) The World Trade Organization, which came into existence on January 1, 1995, is the successor of another organization with the abbreviation: A) DSB. B) GATT. C) FTAA. D) NAFTA. E) ASEAN.
B) GATT
53) The "Common Market of the South" in Latin America is used to describe: A) SICA. B) Mercosur. C) Andean Community. D) CARICOM. E) FTAA.
B) Mercosur
42) NAFTA creates a free trade area in North America. However, Mexican avocado growers: A) cannot hire illegal immigrants. B) can only ship avocados to the United States in winter months. C) have no quotas for the quantity of avocados shipped to the United States. D) cannot impose tariffs of their own. E) None of the above
B) can only ship avocados to the United States in winter months
44) The allure of the Latin American market has been its: A) lack of inflation. B) considerable size. C) rapid economic growth. D) low foreign debts. E) protectionism.
B) considerable size
52) About 70% of Ecuador's flower harvest is exported to: A) Bolivia. B) the United States. C) Colombia. D) Peru. E) Venezuela.
B) the United States
61) The Maastricht Treaty called for: A) the creation of an Asia Free Trade Area (AFTA). B) the creation of an economic and monetary union in Europe. C) Chile's acceptance into Mercosur. D) the purchase of CDs and tapes from distributors in Europe. E) the creation of the seven-nation European Free Trade Association (EFTA).
B) the creation of an economic and monetary union in Europe
43) NAFTA creates a free trade area, as opposed to a customs union or a common market, due to the fact that: A) the agreement does not leave the door open for discretionary protectionism. B) the governments of all three nations decided to eliminate tariffs. C) the issue of illegal immigration from Mexico to the United States is resolved. D) restrictions are imposed on the use of goods, services, and investments. E) restrictions are imposed on labor movements among members.
B) the governments of all three nations decided to eliminate tariffs
35) The form of economic cooperation that calls for 1) eliminating internal barriers to trade and 2) establishing common external barriers is known as a(n): A) European Union. B) Economic union. C) Customs union. D) Free trade area. E) Common market.
C) Customs union
36) ________ builds upon the elimination of internal tariff barriers, the establishment of common external barriers, and the free flow of factors. A) European Union B) Economic union C) Customs union D) Free trade area E) Common market
C) Customs union
41) The form of economic cooperation that calls for countries to eliminate all internal barriers to trade among themselves even while maintaining independent trade policies vis-à-vis third countries is known as a(n): A) Economic union. B) Customs union. C) Free trade area. D) Common market. E) None of the above
C) Free trade area
59) For the past 40 years Bhutan, a kingdom of 700,000 people in the Himalaya mountains, has relied on the following measure: A) GNI. B) GDP. C) GNH. D) GNP. E) GTE.
C) GNH
47) Which member of the Central American Integration System has both the largest economy and the largest population? A) El Salvador B) Honduras C) Guatemala D) Nicaragua E) Costa Rica
C) Guatemala
49) The Secretariat for Central American Integration is headquartered in: A) El Salvador. B) Honduras. C) Guatemala City. D) Nicaragua. E) Costa Rica.
C) Guatemala City
56) The original six members of the ASEAN (Association of Southeast Asian Nations) included all of the following countries except: A) Singapore. B) Thailand. C) India. D) Philippines. E) Brunei.
C) India
80) The reason why Greece, Ireland, Portugal, and Spain sometimes are referred to as the eurozone's "peripheral countries" is: A) that all have tourist attractions. B) that they are situated in the peripheral parts of Europe. C) that they all rank lower than their EU neighbors in terms of infrastructure. D) that they are riding on the way of technology boom. E) that they are all marred by sex scandals.
C) that they all rank lower than their EU neighbors in terms of infrastructure
55) The English-speaking CARICOM members in the eastern Caribbean are concerned with defending their privileged trading position with: A) Russia. B) China. C) the United States. D) the United Kingdom. E) Australia.
C) the United States
74) In spite of having about 45% of the world's known oil reserves, Saudi Arabia and other Middle Eastern countries post current-account deficits, largely because: A) of poor accounting practices. B) of vast economic diversification. C) they must import most of the goods and services. D) most of the oil is exported. E) new businesses are being developed.
C) they must import most of the goods and services
69) The markets of Central and Eastern Europe present interesting opportunities and offer attractive locations for low-cost manufacturing due to: A) their location being close to the sea. B) the cultural similarities. C) wage rates being lower than in Spain, Portugal and Greece. D) strict laws and regulations. E) prohibitive tariffs and export restrictions.
C) wage rates being lower than in Spain, Portugal and Greece
33) Which form of regional cooperation agreement, when fully implemented, entails creation of a unified central bank, the use of a single currency, and common policies on agriculture, social services and welfare? A) Free trade area B) Customs union C) Common market D) Economic union E) Dispute settlement body
D) Economic union
79) Other than tariffs, there are certain problems that restrict free trade between the European Union and the United States which includes all of the following except: A) use of genetically modified agricultural products. B) product labeling. C) Hollywood movie domination. D) Internet usage. E) cultural diversity.
D) Internet usage
48) Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA that includes all SICA members except: A) Honduras. B) Guatemala. C) Nicaragua. D) Panama. E) Costa Rica.
D) Panama
76) In recent years, the economy of selected countries in ECOWAS has improved except in: A) Ivory Coast. B) Ghana. C) Benin. D) Sierra Leone. E) Nigeria.
D) Sierra Leone
63) The non-EU member which uses the euro as its currency is: A) Estonia. B) Kosovo. C) Montenegro. D) Vatican City. E) San Marino.
D) Vatican City
37) Arrange the following in order from lowest to highest level of economic integration. A) customs union→economic union→free trade area→common market B) economic union→customs union→common market→free trade area C) common market→free trade area→economic union→customs union D) free trade area→customs union→common market→economic union E) common market→economic union→customs union→free trade area
D) free trade area→customs union→common market→economic union
45) The most important preferential trading arrangements in Latin America do not include: A) SICA. B) the Andean Community. C) CARICOM. D) Mercosur. E) BRIC.
E) BRIC
46) The five original members of the Central American Integration System did not include: A) El Salvador. B) Honduras. C) Guatemala. D) Nicaragua. E) Venezuela.
E) Venezuela
66) Management strategic options pertaining to products that are facilitated by a single European market include: A) standardized packaging and labeling. B) consolidated production. C) shift from brand to benefit segmentation. D) seeking marketing economies. E) all of the above
E) all of the above
67) Because they are in transition, the markets of Central and Eastern Europe present interesting opportunities and challenges which include: A) new source of growth. B) first mover advantage. C) exporting as an entry mode. D) lower wage rate. E) all of the above
E) all of the above
65) Markets of Central and Eastern Europe present interesting opportunities and challenges. Companies such as 3M International, McDonald's, Philips Electronics, and Henkel are moving into the region for all of the following reasons except: A) the region is an important new source of growth. B) that the first company to penetrate a country market often emerges as leader. C) wage rates are much lower than those in Spain, Portugal, and Greece. D) the region offers attractive locations for low-cost manufacturing. E) core products and Western brand names need changes to meet consumer demands.
E) core products and Western brand names need changes to meet consumer demands
31) Before an agreement can be reached between the United States and European Union, major differences will have to be worked out. These differences include aspects related to all of the following except: A) agriculture. B) genetically modified crops. C) tariff reduction. D) cross-border investment. E) job creation.
E) job creation
14) The five original members of the Central American Common Market (CACM) are El Salvador, Honduras, Guatemala, Panama, and Cost Rica.
False
18) Competing ideologies in South America help explain why intraregional trade is yielding more benefits.
False
19) Mercosur or the Common Market of the South resulted from a treaty signed by four countries: Argentina, Brazil, Paraguay, and Venezuela.
False
20) Chile decided to become only an associate member of Mercosur and hence participates in the free trade area aspect of Mercosur as well as the customs union.
False
4) It is mandatory for countries to notify the WTO when they enter into preferential trade agreements.
False
6) The ultimate goal of a free trade agreement is to have standardized duties on goods that cross borders between the partners.
False
7) A free trade area represents the most fully developed form of preferential trade agreement among nations.
False
9) A Customs Union represents the most fully developed form of preferential trade agreement among nations.
False
