Chapter 8 quiz

Which of the following is a similarity between licensing and franchising?

Both are types of cooperative contracts.

In the context of nontariff barriers, which of the following is a similarity between quotas and voluntary export restraints?

Both limit the amount of a product that can be imported annually.

_____ is selling domestically produced products to customers in foreign countries.

Exporting

Which of the following is an example of the process of exporting?

FootSoul, a U.S.-based shoe manufacturing company, selling its shoes in the U.S., Germany, and France

Which of the following is a disadvantage of franchising?

Franchisors face a loss of control when they sell businesses to franchisees who are thousands of miles away.

The _____ is a worldwide trade agreement that reduced and eliminated tariffs, limited government subsidies, and established protections for intellectual property.

General Agreement on Tariffs and Trade

_____ are new companies that are founded with an active global strategy and have sales, employees, and financing in different countries.

Global new ventures

Which of the following trade barriers is established to protect the health and safety of citizens?

Government import standards

_____ is the degree to which societies believe that a person should be self-sufficient.

Individualism

Which of the following is an advantage of licensing?

It allows companies to earn additional profits without investing more money.

Which of the following statements is true of the World Trade Organization (WTO)?

It ensures that trade between nations flows as predictably and freely as possible.

Which of the following best defines a tariff?

It is a direct tax on imported goods.

Which of the following statements is true of global consistency?

It simplifies decisions for managers at the headquarters of a multinational company.

Which of the following statements is true of the Maastricht Treaty of Europe?

Its purpose was to transform twelve different economies and currencies into one common economic market with one common currency.

Which of the following trends has allowed companies to skip the phase model of globalization when going global?

Low-cost communication technologies make it easier to communicate with global customers.

In the context of national culture, which of the following is a difference between masculine cultures and feminine cultures?

Masculine cultures emphasize assertiveness, whereas feminine cultures emphasize relationships.

_____ are defined as nontax methods of increasing the cost or reducing the volume of imported goods.

Nontariff barriers

_____ is associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.

Political uncertainty

_____ is the extent to which people in a country accept that authority is distributed unequally in society and organizations.

Power distance

_____ is a government's use of trade barriers to shield domestic companies and their workers from foreign competition.

Protectionism

In the context of global markets, which of the following factors helps companies determine the growth potential of foreign markets?

Purchasing power

_____ are specific limits on the number or volume of imported products.

Quotas

Who among the following can be considered expatriates?

The Chinese employees of a company based in Shanghai, China who are transferred to the U.S. for a special assignment

Which of the following is a regional trade agreement between most European countries?

The Maastricht Treaty of Europe

Which of the following is a disadvantage of wholly owned affiliates?

The expense of building new operations

Which of the following is an advantage of joint ventures?

They help companies avoid tariff and nontariff barriers to entry.

Which of the following is a disadvantage of exporting?

Transportation costs can significantly increase the price of an exported product.

Unlike a licensing arrangement, the parent company of a wholly owned business:

Unlike a licensing arrangement, the parent company of a wholly owned business:

In the context of national culture, which of the following is a difference between countries with short-term orientation and countries with long-term orientation?

Unlike countries with short-term orientations, countries with long-term orientations are savings-driven.

Which of the following is a difference between global consistency and local adaptation?

Unlike global consistency, a company following a policy of local adaptation modifies its standard operating procedures to adapt to differences in foreign customers, governments, and regulatory agencies.

_____ are foreign offices, facilities, and manufacturing plants that are 100 percent possessed by the parent company.

Wholly owned affiliates

One of the advantages of _____ is that the founding companies bear only part of the costs and the risks of that business.

a joint venture

Unlike nontariff barriers, tariffs _____.

are direct taxes on imported goods

In the context of the strategies used by firms to minimize risks, _____ is an active strategy to prevent or reduce political risks.

control

Unlike political uncertainty, policy uncertainty:

deals with the risk associated with changes in laws and government rules that directly affect the way foreign companies conduct business.

A(n) _____ is someone who lives and works outside his or her native country.

expatriate

John was born in America. He relocated to China when his company opened a branch there. In this scenario, John is a(n) _____.

expatriate

In the context of cross-cultural training, unlike cultural simulations, documentary training:

focuses on identifying specific critical differences between cultures.

For initial fee plus royalties, Inding Inc., a U.S.-based firm, will provide Caliste Works, a firm based in Singapore, with an exclusive right to conduct Inding's business in its country. This form of global business is an example of a _____.

franchise

A franchise is a collection of networked firms in which the manufacturer or marketer of a product or service licenses the entire business to another person or organization called the _____.

franchisee

Unlike joint ventures, wholly owned affiliates are:

fully owned by their parent company.

In the context of political risks, unlike cooperation, an avoidance strategy:

is used when the political risks associated with a country are too great.

The two kinds of cooperative contracts in global business are:

licensing and franchising.

If companies focus too much on local adaptation, they run the risk of:

losing the cost effectiveness and productivity that result from using standardized rules and procedures throughout the world.

Political uncertainty is the risk associated with:

social unrest.

A _____ is an agreement in which companies combine key resources, costs, risks, technology, and people.

strategic alliance

The most common _____ is a joint venture, which occurs when two existing companies collaborate to form a third company.

strategic alliance

In the context of nontariff barriers, _____ include government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition.

subsidies

The cultural difference of _____ is the degree to which people in a country are uncomfortable with unstructured, ambiguous, unpredictable situations.

uncertainty avoidance

The difference between voluntary export restraints and quotas is that:

unlike quotas, voluntary export restraints are imposed by the exporting company.