BUS 3
Global trade is measured using two key indicators known as the:
*Balance of payment *Balance of trade
What are three threats to the future of global trade?
- terrorism - rogue states - nuclear proliferation
In what way will globalization impact U.S. businesses?
-Loss of jobs in manufacturing - Concerns for product safety -Increased competition
When it comes to getting involved in international business what are the three strategies that require the least amount of commitment and effort?
1) Licensing 2) exporting 3)franchising
Which of the following are benefits associated with offshore outsourcing?
1) companies can create efficiencies 2)companies can focus on business areas where they can expand and grow.
Which of the following countries are members of the Central American Free Trade Agreement (CAFTA)?
1) guatemela 2) nicaragua 3) costa rica 4) honduras
When the value of a currency is fixed by supply and demand it is the system known as _____ _______ rates.
Blank 1: floating Blank 2: exchange
The acronym for the U.S. free trade agreement with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Nicaragua, and Honduras is ______.
CAFTA
The North American Free Trade Agreement (NAFTA) created a free-trade area among the United States, _______, and ________.
Canada and Mexico
The largest automobile market in the world is _____.
China
Which theory states that a country should sell to other countries those products it produces most efficiently and import those it doesn't?
Comparative advantage
Selling a product at a lower price in a foreign country than in the country where it is produced is ______.
Dumping
True or false: A quota is a tax placed on imports.
False
True or false: A trade deficit occurs when the value of Germany's exports is greater than its imports.
False
True or false: Devaluation is the value of one nation's currency relative to the currencies of other countries.
False
True or false: The buying of permanent property and businesses in foreign nations is called a strategic alliance.
False
True or false: Licensing is a contractual agreement whereby someone with a good idea for a business sells others the rights to use the business name to sell a product or service in a given territory in a specified manner.
False; franchising
What form of business ownership is a contractual agreement whereby someone with a good idea for a business sells others the rights to use the business name and sell a product or service in a given territory in a specified manner?
Franchising
China has been penalized for selling steel at a lower price in the U.S. than it does in China because:
Its dumping
A disadvantage of an international ______ is that one partner can learn the other's technology and practices, then use what it learned to its own advantage.
Joint venture
Problems created by differences between countries' antitrust rules, labor laws, patents, copyrights, taxes, product liability, and child labor laws relate to which forces in the global business environment?
Legal and regulatory forces
Which of the following are considered major hurdles to successful global trade?
Legal and regulatory forces Economic and financial forces
Which of the following is considered to be a disadvantage of offshore outsourcing for the United States?
Loss of jobs in the United States
A widely debated issue of the early 1990s was the ratification of the __ __ __ __ Agreement, which created a free-trade area among the United States, Mexico, and Canada.
North American Free Trade
A foreign subsidiary is a company owned in a foreign country by a(n) ______ company.
Parent
The outcome of FDI (foreign direct investment) is a foreign subsidiary, a company located in a different country from the _______ company.
Parent
Primitive transportation and storage systems that make local distribution ineffective if not impossible, the lack of clean water, and the lack of effective sewer systems are all examples of what type of barrier?
Physical and environmental
Distribution in many developing countries is difficult because of the lack of reliable transportation infrastructure due to natural disasters. This is an example of what type of forces affecting global trade?
Physical and environmental forces
Which of the following are disadvantages of international joint ventures?
Shared technology may become obsolete The joint venture may become too large and inflexible
What are two important reasons to do business globally? (Check all that apply)
There are many potential customers in other countries There are more people and countries in the world markets
What are two functions of the World Trade Organization?
To oversee cross-border trade issues To mediate trade disputes among nations
An independent entity whose purpose it is to oversee cross-border trade issues and global business practices is called the ______ _______ _______.
World Trade Organization
Mediating trade disputes among nations and overseeing cross-border trade issues and global business practices are functions of:
World Trade Organization (WTO)
A common market, also called a trading bloc, is a regional group of countries with:
a common external tariff no internal tariffs
What occurs in contract manufacturing?
a foreign company produces private-label goods to which a domestic company then attaches its own brand name or trademark
The definition of ______ advantage is the advantage that exists when a country has a monopoly on producing or is able to produce something more efficiently than all other countries.
absolute
The advantage that exists when a country has a monopoly on producing a specific product is called:
absolute advantage
Job seekers should recognize that small businesses in the U.S. ______.
account for about 1/3 of the total U.S. exports
The total value of a nation's exports compared to its imports measured over a particular period is the definition of ______.
balance of trade
Global trade is measured using two key indicators known as the:
balance of trade balance of payments
An embargo:
bans all trade of a certain product bans all trade with a particular country
Howard Schultz started Starbucks for which two reasons?
because he liked the ambience of Italian coffee houses because he enjoyed the sense of community of the Italian coffee bars
Importing can be described as _____.
buying products from another country
Small and medium-sized firms are often better prepared to leap into global markets because they ______.
can react quickly to opportunities
A regional group of countries with a common external tariff, no internal tariffs, and coordinated laws to facilitate exchange among members is the definition of ______.
common market
China has excellent manufacturing capabilities, whereas Russia has excellent natural gas production capabilities. Therefore, China manufactures products for Russia and Russia produces natural gas for China. This is an example of ______.
comparative advantage
The United States is efficient at producing software and engineering services, but cannot produce clothes and electronics as efficiently as other nations. As such, the United States sells software and engineering services to other countries and buys clothes and electronics. This is an example of ______.
comparative advantage
The guiding principle of free economic exchange is _______ _______ theory.
comparative advantage
The guiding principle of free economic exchange is:
comparative advantage theory
A foreign country's production of private-label goods to which a domestic company then attaches its brand name or trade mark is called ______.
contract manufacturing
By buying more than it has sold, making the value of its exports less than its imports, the United States faces a trade ______.
deficit
The United States has had a trade ______ since 1975, when it first started importing more products than it exported.
deficit
The definition of ______ states: lowering the value of one nation's currency relative to other currencies.
devaluation
___ lowers the value of a nation's currency relative to others.
devaluation
Export Assistance Centers work with small and medium-sized businesses who wish to get involved in
direct exporting
Selling a product at a lower price in a foreign country than in the country where it is produced is ________.
dumping
The definition of ______ states: a complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.
embargo
The definition of ______ states: an attitude that your own culture is superior to other cultures.
ethnocentricity
U.S. businesspeople are often accused of ______, an attitude that your own culture is superior to other cultures.
ethnocentricity
The __________ ______ is the value of one nation's currency relative to the currencies of other countries.
exchange rate
The value of one nation's currency relative to currencies of other countries is referred to as ______.
exchange rate
Goods or services from the U.S. can be __________ to many countries for different uses, such as snowplows to clear sand from driveways in Saudi Arabia.
exported
A trade surplus occurs when a country's:
exports are greater than imports
A trade deficit occurs when a country's ______.
exports are less than imports
The system in which the value of a currency is fixed by supply and demand is
floating exchange rate
The definition of __ __ __ states: the buying of permanent properties or businesses in foreign nations.
foreign direct investment
The definition of ______ states: the movement of goods and services among nations without economic or political barriers.
free trade
A subsidiary must observe the legal requirements of both the country where the parent firm is located, called the ______ country, and the foreign country where the subsidiary is located, called the ______ country.
home host
A(n) _________ ______ is a limit on the number of products in certain categories that a nation can import and is considered a form of trade protectionism.
import quota
The definition of ______ states: a limit on the number of products in certain categories that a nation can import.
import quotas
Buying goods and services from other countries is referred to as ______.
importing
China has transformed the world economic map because
it has a population of 1.4 billion people it has become an exporting powerhouse
There are more than 7 billion potential customers in 195 countries around the globe. Each country possesses unique materials and skills, and as technology advances, communication barriers are being brought down. Because of this, ______.
it is important to conduct business globally
The definition of ________ ______ states: a partnership in which two or more companies,often from different countries, join to undertake a major project.
joint venture
When two or more companies, often from different countries, join together to take on a major project it is called a ______.
joint venture
Legal and regulatory forces can create problems in the global market because ______.
laws and regulations vary greatly between countries
Of all the strategies for reaching global markets, _____ offers the least amount of commitment, control, risk, and profit potential.
licensing
What entry strategy gives a firm the right to manufacture another firm's product or use its trademark for a royalty fee?
licensing
What is the global strategy in which a firm allows a foreign company to produce its product in exchange for a fee?
licensing
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
U.S. workers will see increased competition from other countries in the future due to:
outsourcing to foreign countries
A foreign subsidiary is a company owned in a foreign country by another company called the ______.
parent company
The balance of _______ is the difference between the flow of money into and out of a country.
payments
The balance of __________ is the difference between money from exports and money from imports, as well as from other sources such as foreign investment and military expenses.
payments
When the retail price of imported products is increased for the purpose of making domestic goods more competitively priced it is called a(n)
protective tariff
What is the function of revenue tariffs?
raise money for the government
______ tariffs are designed to raise money for the government.
revenue
Global trade with 7.7 billion potential customers is attractive, but the threats to trading globally include which of the following?
rogue states income inequality terrorism
Job seekers who want to work in global business should recognize that ________ businesses account for about 1/3 of the U.S. exports.
small
Export Assistance Centers provide hands-on exporting assistance and trade-finance support for ______ and ______ -sized businesses.
small medium
_____ and _____ sized businesses are often better prepared for the global market because they are able to react more quickly to opportunities.
small to medium
What is considered to be a major hurdle to successful global trade?
sociocultural differences
A company situated in a foreign country that is owned by a parent company located in a different country, is a foreign ____.
subsidiary
The definition of ______ is a tax imposed on imports.
tariff
A(n) ________ is a tax imposed on imports.
tariffs
What is the definition of trade protectionism?
the use of government regulations to limit the import of goods and services
Benefits of exporting goods such as snowplows and sand to the Middle East include that:
there is likely to be less competition the product may be used differently than in the U.S.
What is the primary function of protective tariffs?
to raise the price of imported products so that domestic goods are more competitively priced
Balance of ______ is the total value of a nation's exports compared to its imports measured over a particular period.
trade
Since 1975 the United States has bought more goods from other nations than it has sold resulting in a ______.
trade deficit
The United States has spent more money on imports than it has made by exporting. Accordingly, the United States experiences:
trade deficit
The definition of a _________ _________ states: an unfavorable balance of trade, which occurs when the value of a country's exports is less than its imports.
trade deficit
The use of government regulations to limit the import of goods and services is called ______.
trade protectionism
When the value of a country's exports exceeds that of its imports, the country exhibits a(n) ______.
trade surplus
Free trade is the movement of goods and services among nations ______.
without political or economic barriers
When students attending colleges and universities abroad notice that products widely available in their home countries are not available abroad or are more expensive, they might do which of the following?
work with native producers to export the products to different countries develop start up financing to become importers of that product while still students
