IBA 350 Test 2
What ethical concerns do government intervention and trade barriers raise for developing economies?
Tariffs can hurt poor countries like Bangladesh, where clothing exporters are concentrated
A(n)________ is a designated location within a country that receives imported goods for assembly and then re-exports finished products.
Foreign trade zone
An upscale hotel chain is developing a global marketing strategy to expand into foreign markets. Which market segment should be targeted?
Frequent business travelers
________ means serving a key international customer in a consistent and standardized manner, regardless of where in the world it operates.
Global account management
A(n) ________ is the firm's integrated network of sourcing, production, and distribution, organized on a worldwide scale and located in countries where competitive advantage can be maximized.
Global supply chain
________ formulate best practices that the firm implements in all its units worldwide.
Global new-product planning teams
There is a high degree of unrest in the Middle East. Given these conditions, which of the following participants is the most important in transforming political and legal systems?
Government
What can governments do to lessen the harm that global sourcing can cause?
Governments can foster the development of new technologies at home.
Which of the following is an example of protectionism used to support local businesses?
Governments institute trade barriers on foreign imports to let young, domestic firms gain market share
________ refers to the legal importation of genuine products into a country by intermediaries other than authorized distributors (also known as parallel imports).
Gray market activity
An international technology company is deciding how to utilize its advertising budget for the year. Which of the following is the best option?
Hire a global advertising agency
What effect do import licenses have on businesses overseas?
Import licenses allow companies to do business legally overseas by allowing them to import products
A large cosmetics company is looking to break into international markets. What strategy should the company pursue to achieve this goal?
It should develop a global brand
Which of the following describes the Foreign Corrupt Practices Act (FCPA)?
Firms are prohibited from offering bribes to foreign firms to obtain business
Which statement about free trade zones (FTZs) is true?
Firms can use FTZs to assemble foreign materials and components into finished products, which are re-exported
________ is a group of customers who share similar characteristics across many national markets.
A global market segment
Toyota uses ________ to ensure that its supply of brown seat covers is delivered when needed on the assembly line.
A just-in-time inventory system
What is a bill of lading?
A legal contract between exporters and importers for shipping goods
________ is an alliance of two or more countries that have agreed to eliminate tariffs and other restrictions to cross-border flow of products, services, capital, and occasionally labor.
A regional economic bloc
Which of the following statements about the General Agreement on Tariffs and Trade (GATT) is FALSE?
According to the GATT, a trade concession to one country did not become a concession to all countries
In marketing products to bottom of the pyramid (BOP) countries, Unilever decided to ________ its products to the cultural, social, and political local environment.
Adapt
TDC Industries, a U.S. firm, has established operations in Germany, so TDC Industries has free trade access to ________of the EU market.
All
Which of the following examples includes a compensation deal?
An energy company purchases timber using oil and a $10,000 check.
Which of the following characterizes extraterritoriality?
Applying home-country laws to persons outside national borders
What is the benefit of environmental scanning?
Assessing potential threats to the firm
When Coca-Cola began to sell beverages in Japan, research showed that products labeled "diet" were unappealing to the Japanese, a population not considered obese. The company changed the name to Coke Light. This is an example of positioning according to ________.
Attributes
Unilever's global marketing strategy is to ________.
Be both global and local
Activists organized a(n) ________ of petroleum company BP following the oil spill in the Gulf of Mexico
Boycott
The strength of a global brand is measured by ________.
Brand equity
________ is the outsourcing to independent suppliers of business service functions such as accounting, payroll, or technical support.
Business process outsourcing
An American company that does business overseas has to be concerned about local events. Why should a company be concerned about political events and the legal environment in the country in which it does business?
Changes in the political climate might influence government interference in business practices, putting the safety of the company's employees in jeopardy
What is the basis of civil law?
Codified rules
Which of the following statements best describes socialism?
Collective welfare outweighs individual welfare
In the Middle East, Iran is a theocratic totalitarian state. Which economic system is expected to be aligned with this political system?
Command economy
Which type of economic system is associated with totalitarianism?
Command economy
In its current state, the EU can be described as being at which stage of economic integration?
Common market
Which of the following is NOT a benefit of standardization?
Compliance with local regulations
If one of the politically unstable countries in the Middle East decides to take over all foreign firm possessions without any form of payment, ________ has occurred.
Confiscation
Which of the following is an arrangement in which a focal firm has an agreement with an independent supplier to produce items according to well-defined specifications?
Contract manufacturing
In selecting a transportation mode, firms should keep three factors in consideration: ________.
Cost, transit time, and predictability
Which of the following involves paying for goods or services using other goods or services when conventional means of payment are difficult or unavailable?
Countertrade
________ refers to the possibility of loss or adverse effects on company operations and profitability as a result of changes in a country's political and/or legal environment.
Country risk
Which of the following was NOT a step taken by the European Union (EU) in becoming an economic union?
Creation dispute settlement methods in areas such as investment, unfair pricing, labor issues, and the environment
Which of the following are environmental conditions that influence a firm's product development?
Cultural and financial factors
Which of the following determines buyer attitudes toward advertising?
Culture
The second level of regional integration is a(n) ________.
Customs union
Many firms are avoiding traditional distribution channels by using ________.
Direct marketing
An agricultural firm is considering doing business in a foreign country with environmental laws, foreign investment laws, e-commerce laws, an underdeveloped legal system, and a socialistic government. Which of the following would most prevent the company from maximizing its profits?
Environmental law would cause the greatest hindrance because firms must pay for pollution
Six countries formed an alliance in 1957 called the ________.
European Economic Community
Which of the following is a regional trade organization?
European Union (EU)
________ involves producing products or services in one nation and selling them in another.
Exporting
What kind of government seizure compensates foreign-owned businesses?
Expropriation
A U.S. pharmaceutical corporation outsources its research and development of new medications to various other countries in order to complete more clinical trials at one time. Which of the following benefits to global sourcing does this example best demonstrate?
Increasing speed to market
________ is accomplished by contracting with intermediaries located in the firm's home market.
Indirect exporting
Regional integration leads to increased ________ by firms inside their economic bloc.
Internationalization
Which type of government intervention encourages foreign companies to enter a host-country market?
Investment incentives
Which of the following best describes a political system?
It ensures stability based on laws
Why would a nation choose to be a member of an economic bloc?
It is easier to reach an agreement on free trade with a few nations than with numerous countries.
A huge MNE was the victim of creeping expropriation from a foreign government. Why is creeping expropriation ethically wrong?
It occurs after an MNE makes large investments in a country's property and facilities
A U.S. liquor company is establishing a distribution chain for stores across several national markets. The company wants to ensure close control over marketing activities. Which of the following is best for this company and why?
It should use foreign direct investment because this allows the firm to stay close to the market.
Which of the following benefits most from global sourcing?
Large-scale manufacturing firms
________ occurs when one party files a lawsuit against another.
Litigation
Which of the following is a disadvantage of regional integration?
Loss of direct investment
Which of the following best describes global sourcing?
Low-control strategy
An Italian exporter of designer clothes who sells products in the United States has gained a price advantage because the euro is weakening in relation to the dollar. What is a good strategy for dealing with this situation?
Maintain normal price levels, expand the product line, or add more costly features
Which of the following is a strategy managers can employ to manage country risk?
Maintaining a strict adherence to ethical behavior
Which of the following is an internal factor that affects international pricing?
Management's market share goals
Economists Debbie and Don are discussing the effect of government intervention on business. Debbie believes that businesses that operate internationally have a more difficult time succeeding than those that operate solely domestically because of government intervention abroad. Don disagrees and asserts that international businesses experience ease of trade more readily than exclusively domestic businesses. Which of the following is the strongest argument for Debbie's point of view?
Many governments enforce strict tariffs and restrictions on imports
Unilever used ________ to inform consumers in Africa about the health benefit of using iodized salt, even though the cost was higher.
Marketing communications
Which of the following determine(s) the nature of international marketing communications?
Media availability and quality
Asterix, a French theme park, spoke out against the French government's support for the creation of Disneyland Paris because Disney is an American company. This example shows that ________.
Rival domestic firms complain to their government when foreign firms receive governmental support
Today, the Tunisian legal system is based on French civil law, whereas the Law of Personal Status is based on Islamic law. Tunisia's legal system is an example of which of the following?
Mixed system
Which of the following best describes the role of an intermediary?
Moving products through a distribution channel to a retailer
Which of the following statements about NAFTA is true?
NAFTA allowed member-country firms to submit bids for government contracts in the three countries
The United States blocks exports of nuclear and military technology to nations considered state sponsors of terrorism, such as Iran and Syria. This is an example of which defensive motive by the U.S. government?
National Security
A government policy or procedure that restricts trade through means other than tariffs is known as a(n) ________.
Nontariff trade barrier
Which of the following limits a manager's success in global sourcing?
Outsourcing all value-chain activities
Which of the following is NOT a key strategy to combat export price escalation abroad?
Outsourcing production to a country with a higher standard of living and higher wages
Which of the following characterizes the cash in advance method?
Payment is made prior to product shipment.
________ refers to making the marketing program elements uniform with a view to targeting entire regions, or even the global marketplace, with the same product or service.
Standardization
An international supermarket chain is opening stores in foreign markets. Which adaptation could be made to accommodate national preferences?
Stocking local produce
The World Bank has published an index entitled Ease of Doing Business. Which of the following is most likely to make a country "easy" to do business in?
Subsidies
Which of the following is an advantage of direct exporting?
Potential for greater profit margins
Which of the following participants is LEAST likely to transform a nation's political and legal system?
Private MNEs such as Unilever and Coca Cola
Which of the following best characterizes a democracy?
Private property rights
Which statement about international promotional activities is true?
Promotions are intended to stimulate first-time purchases
________ pertains to national economic policies that restrict free trade and protect domestic industries from foreign competition.
Protectionism
A large consumer home products exporter issues a document that lists the cost of its cleaning products and describes the products themselves and their uses. The document is most likely a(n) ________.
Quotation
Which of the following is NOT a risk of global sourcing?
Redesigning business processes
Many critics of global sourcing assert that global sourcing________.
Reduces the number of home country jobs
An electronics firm in the United States procures production parts from a manufacturer in Japan. Recently, the Japanese manufacturer received a larger client. Consequently, the Japanese manufacturer is not providing the level of service to the U.S. electronics firm as in the past. Which global sourcing risk does this scenario illustrate?
Relying too heavily on suppliers
What is a disadvantage of foreign direct investment?
Requiring costly investments
Which of the following is a characteristic of exporting?
There is less of an opportunity to learn the purchase behavior of foreign customers.
Which of the following describes a legal system with clear rules that are publicly disclosed, enforced fairly, and respected by individuals, organizations, and the government?
Rule of law
It has recently been found that special interest groups (SIGs) have unprecedented access to politicians through social events. Why should companies be concerned with the SIGs' access to government officials?
SIGs influence elected officials who can change policy
The United States has implemented trade sanctions on Iran and Syria. What is the purpose of sanctions?
Sanctions punish unwanted activities by foreign countries
All of the following are ways to find foreign intermediaries EXCEPT by ________.
Searching the U.S. Small Business Administration website
According to the author, managers should pursue a strategy that ________.
Seeks local responsiveness and international integration
China has added democratic approaches such as land reforms and open markets to increase commercial activity. This example shows that ________.
Some totalitarian regimes are evolving toward democracy and capitalism
Which of the following coordinates economic, social, and cultural affairs among Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates?
The Gulf Cooperation Council (GCC)
If you are a business looking for a foreign market in which to sell goods, what does economic freedom in a country mean to your business?
The government will support foreign business by enacting laws that decrease import quotas
Which of the following does NOT describe Islamic law, also known as sharia law?
The origins of Islamic law date back to Roman law and the Napoleonic Code
How can export-led development models help countries improve their economies?
The export-led development model enables countries to make goods and then sell them to the world
Many countries in the Middle East and North Africa exhibit which of the following political systems with substantial dictatorial powers?
Totalitarianism
Today, no automaker owns or makes its own parts. So, how does Toyota get suppliers?
Toyota has a global supply chain
What is one potential reason for Toyota outsourcing value-chain activities to suppliers?
Toyota is not superior in all value-chain activities
Which of the following statements best describes the European Union (EU)?
Trade among the EU members takes place unobstructed
What type of intermediary handles transactions for the importing and exporting of commodities, products, and services?
Trading company
What is the basis of common law?
Tradition, previous cases, and legal precedents
A U.S. computer company utilizes FedEx for all of its shipping and delivering needs. Which aspect of implementing global sourcing does this example demonstrate?
Using third-party logistics providers
Which of the following is a key risk associated with global branding?
Violating host-country laws and regulations
You own a company in Texas and have an offer to open up a manufacturing plant as a maquiladora within the territory of one of your largest customers, Mexico. Why is this scenario beneficial to your business's profit?
You can manufacture your goods in the destination country and take advantage of low-cost labor
You own a firm that engages in overseas business. Recently, the exchange rate became much higher for your country's currency. How would the new exchange rate most likely affect your sales?
Your sales would likely decrease because your goods are now more expensive than those of your local counterparts
What is the most typical type of intermediary in the exporting process?
Foreign-based independent distributor
