Global Business Chapter 1

Some demonstrations against globalization are based on the idea that falling barriers to international trade

result in job losses in industries targeted by foreign competitors.

Global institutions are needed to

stabilize and monitor the global marketplace.

A country with high _____ has a barrier to international trade.

tariffs on imports of foreign goods

Just a few decades ago, it would have cost a business much more money to find buyers in a foreign country. What has helped lower the cost of this process and allows buyers and sellers to easily find each other regardless of their location?

Internet

The ______ has developed into the information backbone of the global economy and reduced the constraints of location, scale, and time zone.

Internet

Which country has seen their share of world output increase the most from 1960 to today?

China

The doubling of the power of microprocessor technology while the costs of its production decreases by half is called ______ Law.

Moore's

A critic of globalization would say that falling trade barriers result in what two situations?

Depression of wages in developed nations. Destruction of manufacturing jobs in advanced economies

True or false: The first web browser was introduced to the public in the 1970s and started the explosive growth of the Internet in foreign transactions.

False

The World Trade Organization (WTO) is the successor to ______.

GATT

Moore's Law predicts that

computer power will approximately double every 18 months.

Critics of globalization protest in order to

diminish the impact of the culture of multinational enterprises on the world.

The labor, energy, land, and capital that a company has access to are known as

factors of production.

The International Monetary Fund and the World Bank are both examples of _____ that help govern the global business system.

global institutions

Brite-Way Lighting is based in California and sells products within the United States as well as to ten foreign countries. Brite-Way Lighting is an example of a(n) _____ business.

international

Canadian company Yummy Snacks exports a number of products to consumers in Peru, Chile, and Argentina. According to this information, Yummy Snacks is most likely involved in

international trade.

The globalization of _____ is the term used to describe the merging of national markets into one large global place.

markets

If you were to describe the global economy of the twenty-first century, it would be accurate to say that

more nations are becoming part of the developed world.

Supporters of globalization argue that bodies such as the World Trade Organization and the United Nations exist to serve the collective interests of member states, not to subvert those interests.

True

True or false: While lowering trade barriers initially made global production possible, the advent of technology made globalization a reality.

True

When NAFTA was first introduced, what was the biggest argument opponents presented?

U.S. firms would move manufacturing to Mexico and feel free to pollute the air and employ child labor.

During the 1960s, which country was the predominant world power in terms of foreign direct investment?

US

The negotiations called the _____, finalized in December 1993, established the World Trade Organization to police the international trading system.

Uruguay Round

Which institution was established as a result of the Uruguay Round of GATT?

World Trade Organization

As the barriers to the free flow of goods, services, and capital fell during the 1970s, one motivation for foreign direct investment by non-US firms was the desire to

move production activities to more desirable locations.

Gigantic Games., a U.S.-based company that specializes in strategy-based board games, has production facilities in Poland and Spain. Based on this information, Gigantic Games can be classified as what type of enterprise?

multinational

Select the four facts that describe the demographics of the global economy up until the 1960s.

Dominance of large, multinational US firms in international business scene US dominance in world foreign direct investment Roughly half of the globe was off-limits to Western international business US dominance in the world economy and world trade

______ refers to the shift toward economic international integration.

Globalization

According to globalization opponents, what is a disadvantage of globalization?

Globalization results in companies "exporting jobs" to low-wage nations.

In the early 1960s, the US was the world's dominant industrial power. How does the US position compare today?

It has diminished in power.

What is an accurate description of microprocessors?

They can decode vast amounts of information.

According to critics of globalization, increased free trade and investment over the past few decades have

broadened the gap between the rich and poor nations.

Shannon works as the executive manager of an international business, while Bob is the executive manager of a purely domestic business. Which of these responsibilities apply to both Shannon and Bob?

dealing with business attacks from competitors

What was the motivation for non-U.S. firms to begin investing across national borders in the 1970s?

desire to disperse production activities to optimal locations

California-based Urban Health Source has invested resources in business activities in Italy. What type of business activity does this represent?

foreign direct investment

A United States-based shoe company has decided to invest in a British company that specializes in clasps and buckles. This would be an example of

foreign direct investment.

Renata is traveling across Europe and is surprised to find Starbucks, McDonald's, and Coca-Cola in nearly every city she visits. This shows a convergence of consumer tastes which creates a _____.

globalization of markets

When Jerry started his small appliance manufacturing company in the 1950s, every component part was made in the USA and the product was assembled in the USA. Today, he sources the components from China. The change at this company is an example of the _____.

globalization of production

The risks of doing business in countries that are facing revolutions is

higher than in countries not facing revolutions.

The Uruguay Round negotiations resulted in

lowering the trade barriers between various national markets.

Foreign direct investment occurs when a(n)

investment is made by a company based in one country into a company or entity based in another country.

Those who support globalization argue that increasing globalization will

lead to reduced prices for goods and services.

The decline of the United States standing in industrial power since the 1960s, is considered a relative decline because it is a reflection of

the faster economic growth of other economies

Paragon Corp., based in Ohio, sources goods from Southeast Asia to take advantage of labor cost savings. This company is benefiting from _____.

the globalization of production

There have been two notable trends in the demographics of multinational enterprises since the 1960s. These include _____.

the rise of non-US multinationals the growth of mini-multinationals

Why was the World Trade Organization established?

to police the international trading system