ch 1: Globalization
According to the World Trade Organization, the COVID-19 pandemic will affect world trade and cross-border investment may fall by as much as _____.
40%
The United Nations was established by _____ countries committed to preserving peace through economic cooperation and trade support.
51
Boeing outsources a large portion of its production. For example, for its most recent jet airliner (the 787), nearly ______ of the total value of the aircraft is outsourced to foreign companies.
65%
During the 1960s, U.S. firms created just over _____ of worldwide foreign direct investment and British firms were second accounting for just over 10 percent.
65%
According to the International Trade Administration, more than 300,000 small- and mid-sized firms account for _____ of U.S. companies that export.
98%
Which statement regarding conducting international business in China is accurate?
China represents a large and basically untapped market.
What is a challenge faced by companies entering the global market?
Differences in consumer tastes and preferences
What are three things that result from the fact that the volume of world trade has been growing faster than world GDP?
Economies of nation-states are becoming more intertwined. More firms are dispersing parts of their production process around the globe. World has become significantly wealthier.
Which organization did nations turn to for a coordinated policy response during the 2008-2009 financial crisis?
G20
The World Trade Organization (WTO) is the successor to ______.
GATT
Which two items have reduced the cultural distance between countries?
Global communication networks Low-cost transportation
Boeing's rationale for outsourcing so much production to foreign suppliers is based on which two factors, according to the text?
Increasing the chance to win significant orders from airlines in those countries Using suppliers that are the best in the world at a particular activity
What is an accurate description of the World Bank?
It focuses on helping developing countries to fight poverty through investments in the underlying structure of the country.
What is one benefit of the Internet?
It makes it easier for buyers and sellers to connect.
What are some companies reportedly considering regarding their production efforts and minimizing catastrophes like the COVID-19 pandemic?
Moving production closer to home to avoid future disruptions
How have tariff rates for manufactured goods been affected by the global efforts of GATT?
Tariff rates fell significantly since 1950.
Which statement best describes the International Monetary Fund (IMF)?
The IMF is often seen as the lender of last resort to nation states whose economies are in turmoil.
What is an accurate description of microprocessors?
They can decode vast amounts of information.
During the 1920s and 1930s, many of the world's nation-states put formidable trade barriers in place. What was the main reason behind these actions?
To protect domestic industries from foreign competition
Which of these companies is facing an impediment to the globalization of production?
U.S. law dictates that Tru-Brite Dental cannot send X-rays electronically to be read by an overseas company.
The negotiations called the _____, finalized in December 1993, established the World Trade Organization to police the international trading system.
Uruguay Round
In terms of international business, which statement accurately describes Latin America?
While favorable economic trends have recently occurred, there is no guarantee that they will continue.
Advances in _____ technology make it possible for companies to outsource customer service operations to another country.
communication
Moore's law predicts that
computer power will double every 18 months
A refrigerator parts manufacturer in China receives an order and loads the goods into a large receptacle that is then loaded on a ship headed for the United States. When the ship docks, this receptacle is placed onto a truck and the goods are delivered to a warehouse in Iowa. This scenario shows how _____ made the delivery of goods in the global marketplace much easier.
containerization
The globalization of the world economy has resulted in a relative _____ in the dominance of U.S. firms in the global marketplace.
decline
Former communist nations present opportunities to Western international business as these nations show continued commitment to _____.
democracy
Why are consumer products less likely than industrial products to be a source for the global marketplace?
differences in consumer tastes
One reason why a global market does not fully exist is _____.
differences in legal regulations among national markets
The globalization of markets and production implies that
domestic firms are facing intense competition from foreign firms.
The G20 was originally established to _____.
formulate a coordinated policy response to financial crises
It is common practice for people today to use products that are produced or assembled in various nations around the world. This is a reflection of _____.
globalization
What is one impact of globalization?
greater uniformity replaces diversity
According to the supporters of globalization, falling barriers to international investment
help to create employment opportunities in countries that participate in the global trading system.
The risks of doing business in countries that are facing revolutions are
higher than in countries not facing revolutions.
The globalization of markets is facilitated by the
improvement in transportation technology.
The ______ has developed into the information backbone of the global economy and reduced the constraints of location, scale, and time zone.
internet
The Uruguay Round negotiations resulted in
lowering the trade barriers between various national markets.
FlexFabric is a medium-sized company based in Virginia. Over the past five years, the company has increased its international trade efforts and now 35 percent of its business takes place overseas. FlexFabric is an example of a(n) _____.
mini-multinational
The International Monetary Fund (IMF) has been criticized for
minimizing a nation's sovereignty.
As international trade expands, the economies of the world's nation-states are becoming ______.
more intertwined
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.
As the barriers to the free flow of goods, services, and capital fell during the 1970s, one motivation for foreign direct investment by non-U.S. firms was the desire to
move production activities to more desirable locations.
The development of the microprocessor has
reduced the cost of global communications.
The change in the U.S. economic position since 1960 has been labeled a(n) _____ decline because it reflected the faster growing economy of several other economies.
relative
Companies rely on containerization to _____.
simplify the transfer of shipments from one form of transport to another
Global institutions are needed to _____.
stabilize and monitor the global marketplace.
In terms of innovation in transportation technology occurring since the 1950s, the development of _____ has essentially reduced the size of our entire world.
superfreighters commercial jets
From the 1990s until today, foreign direct investment inflows can best be described as
surging and slumping
Within the past 10 years, China's share of world exports of goods and services ______ the United States.
surpassed
Advances in information processing and communication are two ways _____ has made the globalization of markets a reality.
technology
Based on predictions for the future share of world output, businesses should seek economic opportunities in _____.
the developing nations of the world
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.
Which organization ensures that nation states comply to the rules associated with trade treaties signed by member states?
the world trade organization
Why would a company engage in the globalization of production?
to lower their overall cost structure
The stock of foreign direct investment refers to the ______ of foreign investments.
total cumulative value
A(n) ______ is any entity that conducts business in at least two countries.
multinational enterprise
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
As emerging economies such as China, India, Russia, and Brazil continue to grow, forecasts predict a further relative decline in the share of world output and world exports accounted for by the United States and other long-established developed nations.
true
Containerization made the process of moving goods from one country to another less labor intensive.
true
The International Monetary Fund (IMF) was established to ensure the stability of the international monetary system.
true
The development of Internet technology has lowered the barriers that small firms face in building international sales.
true
While lowering trade barriers initially made global production possible, the advent of technology made globalization a reality.
true
When global institutions were introduced in the 1940s, governments in struggling nations would turn to the _____ for low-interest loans needed for infrastructure projects such as building roads.
world bank
What is an accurate description of the globalization of production?
Locating each stage of production where it can be done most economically
Globalization naturally leads to firms following each other around the world, which then _____.
creates some uniformity across markets
Creating and managing a globally dispersed production system is made easier by the ______ in costs of information processing and communication.
decrease
The opponents of globalization argue that falling barriers to international trade will
eliminate manufacturing jobs in wealthy economies.
In return for offering loans, the International Monetary Fund (IMF)
enforces its economic policies on nations
A U.S.-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 United States and the product was assembled in the United States. Today, he sources the components from China. The change at this company is an example of the _____.
globalization of production
A country's stock of foreign direct investment is the total cumulative value of foreign investments that are taken as a percentage of that country's _____.
gross domestic product
Global markets for industrial goods such as oil and wheat are more typical than those for consumer products because _____.
industrial goods serve universal needs
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
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
Based on rankings by Forbes in 2003, the second-largest source country of multinational enterprises was _____.
japan
Early outsourcing efforts were mostly limited to _____ activities while today numerous business activities can be outsourced.
manufacturing
The globalization of _____ is the term used to describe the merging of national markets into one large global place.
markets
Land, labor, capital, and energy are all examples of factors of _____.
production
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.
Which of the following are notable trends in the demographics of multinational enterprises since the 1960s?
the rise of non-U.S. multinationals The growth of mini-multinationals
How did nation-states react to the economic environment of the 1920s and 1930s?
trade barriers were increased
What can be an impediment to the globalization of production?
transportation costs
The doubling of the power of microprocessor technology while the costs of its production decreases by half is called ______ Law.
Moore's
Trade agreements between nations are another way in which trade barriers have been reduced. Which statement accurately depicts the current state of trade agreements in the world?
Since the 1990s, trade agreements have increased dramatically.
In today's marketplace, distribution of production to separate locations has become more economical because transportation costs have _____.
declined
The Johnson Automotive Group recently closed two of its U.S. manufacturing facilities and opened a new facility in Asia to take advantage of lower labor costs and savings in energy costs. The company made this change in order to benefit from _____.
factors of production
In order to best benefit from the globalization of markets, a company needs to be a multinational giant like the McDonald's Corporation.
false
It's a fact that the volume of world trade has been growing faster than world GDP. Based on this, it can be inferred that the world has become significantly poorer in recent decades.
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 International Monetary Fund and the World Bank are both examples of _____ that help govern the global business system.
global institutions
Which term refers to the shift toward a more integrated and interdependent world economy?
globalization
What are the four basic purposes of the United Nations?
Being a center for harmonizing the actions of nations Maintaining international peace Solving humanitarian, cultural, and social issues Developing friendly relations between nations
During the 1960s, which country was the predominant world power in terms of foreign direct investment?
The United States
Select the four facts that described the demographics of the global economy up until the 1960s.
The dominance of large, multinational U.S. firms in the international business scene U.S. dominance in the world economy and world trade U.S. dominance in world foreign direct investment Roughly half of the globe was off-limits to Western international business
Which statement accurately describes the prediction for changes in the share of world output?
There will be a decline in the share of world output associated with rich, industrialized nations.
Among developing nations, ______ has been the largest recipient of foreign direct investment.
china
While the United States was the dominant industrial power in the early 1960s, by 2018, _____ took over that role.
china
