BUS 300 CH 1-3

NAFTA

Electra Bikes is an American brand with a global presence. Which of the following trade agreements allowed Electra Bikes to expand its business by opening a new market in Canada?

Empowerment

Enabling/authorizing lower-level employees to take action and make decisions.

many small businesses fail to be profitable.

Entrepreneurs start businesses because they expect to be profitable and add to their wealth. It is also true that

improve the quality of services provided, but do not necessarily increase productivity

Equipment in hospitals, such as CAT scanners, PET scanners, and MRI scanners:

Technological

Equipment such as phones, fax machines, and computers are all examples of which of the elements of the business environment?

foreign direct investment.

Even though the country faces political instability, an island nation with wide, expansive beaches is a destination hub for cruise lines. Recently, a large theme park company showed strong interest in buying land on this island with the intent of building a park targeted toward families. The company wants to make a commitment to the island, including the hiring of several hundred local employees. It is using a global marketing strategy called

direct exporting.

Export Assistance Centers work with small and medium-sized businesses who wish to get involved in

Profit

Financial benefit realized when the amount of revenue gained from a business activity exceeds its expenses.

increasing taxes decreasing taxes increasing or decreasing government spending

Fiscal policy is the government's tool to keep the economy stable by:

without political or economic barriers

Free trade is the movement of goods and services among nations Blank______.

Quality of life

General well-being of individuals and societies, measured by indicators such as health care, leisure, clean air, and so on.

terrorism rogue states income inequality

Global trade with 7.7 billion potential customers is attractive, but the threats to trading globally include which of the following?

China and India

Globalization has improved living standards in developing countries such as:

increased competition

Globalization has led to Blank______ with countries such as China and India.

produced by foreign owned companies located in the country produced by domestically owned companies

Gross Domestic Product refers to the total value of goods and services produced in a country in a given year. The goods and services can be:

in socialism

individuals own some smaller businesses and property government owns and operates some basic industries such as steel mills, utilities, or transportation

allows for open competition among companies.

A benefit of free markets is that it

around the world

A benefit of globalization is that it has greatly improved the standard of living:

any activity that seeks to provide goods and services to others while operating at a profit.

A business can be defined as

no internal tariffs a common external tariff

A common market, also called a trading bloc, is a regional group of countries with:

foreign subsidiary

A company in another country that is owned by a U.S. company would be an example of a Blank______.

dumping

A country exports $75 million worth of steel to the United States and sells it for $60 million in order to establish a new market in the United States. This is an example of

contract manufacturing

A foreign country's production of private-label goods to which a domestic company then attaches its brand name or trade mark is called Blank______.

parent company

A foreign subsidiary is a company owned in a foreign country by another company called the Blank______.

Entrepreneur

A person who risks time, energy, and money to start and manage a business.

socialism

A positive goal of Blank______ is social equality, while a negative outcome is taking income from citizens at extremely high rates.

a common market

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 Blank______.

unfavorable balance of trade

A trade deficit is also referred to as a(n)

Governments are considered stakeholders because they play a role in the outcome of the business through taxes, increased property values, and regulations designed to protect consumers.

How are governments considered stakeholders?

economic

Huge differences in the wealth of relatively similar countries such as North and South Korea are an example of how different ______ and political conditions affect businesses.

trade surplus.

If the United States exports more goods/services than it imports, then the United States would have a(n)

the market consisting of buyers and sellers

In a free market system, decisions about what and how much is produced are made by Blank______.

buyers and sellers negotiating in the marketplace

In a free market, prices are determined by

are negotiated by buyers and sellers

In a free market, the prices of products exchanged in the market Blank______.

the government owns almost all the factors of production

In an economic and political system called communism, Blank______.

Supply and demand

In free markets the price of a product depends on how much consumers are willing and able to buy and how much the producers are willing and able to sell. What does the market price depend on in a free market?

strive to create positive relationships with all stakeholders.

In general, it is wise for a business to

mixed.

In global markets today, most economies are

produced within the physical boundaries of a particular nation.

In order for the value of goods and services to be counted as part of a nation's gross domestic product, the goods and services must be

outsourcing.

In order to keep its manufacturing costs down, Electra manufactures its bikes in Taiwan because it is cheaper for the company than producing the bikes in the United States. The process of contracting the production of goods to an overseas company is called

intellectual capital

In the information age, a company's value is based on its:

Increased competition Loss of jobs in manufacturing Concerns for product safety

In what way will globalization impact U.S. businesses?

Low tax rates give the economy a boost. High taxes draw the money away from the private sector. The raising and lowering of tax rates are used to stabilize the economy.

In which three ways are taxes used to influence the economy?

Revenue

Income received by an organization from its normal business activities.

Stakeholders

Individuals and/or groups of people who stand to gain or lose by a business's policies and activities.

Services

Intangible products such as health care, insurance, and recreation.

small businesses major companies

Job seekers interested in working in global trade should consider applying to Blank______.

account for about one-third of the total U.S. exports.

Job seekers should recognize that small businesses in the United States:

oligopolistic competition

Keegan's wireless bill continues to increase with the price of her new phone, data charges, and long-term contract. In her geographical region, there are few choices in wireless carriers and monthly costs are very similar. What kind of competition exists here?

frictional

Keesha recently graduated from college and has been searching for a job for four months. What type of unemployment is Keesha experiencing?

laws and regulations vary greatly between countries

Legal and regulatory forces can create problems in the global market because Blank______.

knowledge.

Management expert Peter Drucker said the most important factor of production in our economy is, and always will be,

frictional

Mark graduated from college a short time ago and is still looking for his first (dream) job. Mark is part of the unemployment category known as Blank______ unemployment.

demand for tomatoes

Mark, the marketing manager of a large U.S. corporation, realizes that Afghanistan has virtually no supply of tomatoes. He conducts a study to see what quantity of tomatoes Afghan customers would be able and willing to buy at different prices. Mark is analyzing Afghanistan's Blank______.

structural unemployment

Mary worked for a GM factory in Detroit all her life. Unfortunately, when GM closed the plant because of restructuring, she could not find any jobs in the automotive industry in or around Detroit. Mary would be counted as an example of:

The World Trade Organization (WTO)

Mediating trade disputes among nations and overseeing cross-border trade issues and global business practices are functions of:

entrepreneurship and knowledge

Miles lives in an area where labor is plentiful and locations for start-ups are relatively cheap. He is also confident that he can find start-up funds for a graphic arts business. As he evaluates the opportunity for his proposed venture, which two other factors of production does he need to succeed?

It encourages entrepreneurs to start businesses that create jobs and wealth.

Minimizing government interference with the free exchange of goods and services can help developing countries. Why?

greater levels of competition among businesses than ever before

New technologies that connect people all over the world and the increased amount of information available to institutional, wholesale and retail consumers have created:

the governments who offer these funds may obtain sensitive technologies or gain control of strategic resources.

Sovereign wealth funds (SWFs) are a growing form of foreign direct investment. The size of these funds and the fact that they are investments from government coffers of other nations might be a cause for concern. More specifically, some fear

Demography

Statistical study of a population as to age, gender, income, education, and so on.

often conflict.

Stockholders, employees, and environmentalists are examples of various business stakeholders whose needs

socialist

That idea that some basic businesses such as steel mills, coal mines and utilities, should be owned and controlled by the government is indicative of a Blank______ economic system.

global

The Blank______ environment of business impacts all of the other environmental influences.

core inflation.

The CPI (consumer price index) minus food and energy costs measures

Canada Mexico

The North American Free Trade Agreement (NAFTA) created a free-trade area among the United States,_____________ , and _________ .

unemployed persons age 16 and over, who have been looking for work during the previous four weeks.

The U.S. unemployment rate is a key economic indicator because most of us need jobs to maintain our standard of living. A criterion used to calculate the unemployment rate is

a trade deficit.

The United States, one of the world's largest exporting nations, has bought more goods from other nations than it has sold since 1975. This is known as

Productivity

The amount of output per unit of input (e.g., labor, equipment).

competition that benefits consumers with better prices and service encouraging efficiency among competing businesses the opportunity for people to work their way out of poverty

The benefits of a free market economy include:

free trade

The definition of Blank______ states: the movement of goods and services among nations without economic or political barriers.

joint venture

The definition of a Blank______ states: a partnership in which two or more companies, often from different countries, join to undertake a major project

favorable balance of trade.

The economic goal for most nations is to achieve a(n)

Loss

The end result if a business's expenses exceed the amount of money it earns during a given period.

small and medium businesses

The firms often better prepared to leap into global markets and react quickly to opportunities are Blank______.

Identity theft is a challenge in the technological environment of businesses, while the desire for green living presents opportunities for new businesses in the global environment.

The following chart describes opportunities and challenges in the external environments that surround businesses. Which statement best completes the empty cells? Business EnvironmentOpportunityChallengeEconomic & LegalFreedom to choose and start your own businessHigh taxesTechnologicalThe Internet SocialWealthy senior citizensDecrease in Social Security contributionsGlobal War and Terrorism

companies have increased organizational costs, including insurance costs.

The impact of war and terrorism on U.S. business is that

increased the world's food supplies.

The increase in farm productivity as a result of the invention of the harvester and other farm equipment has

intellectual capital.

The knowledge and skills that can be used to create new products, attract new customers, and increase profits is called

brain drain

The loss of the best and brightest people to other countries is the:

business cycles

The periodic rises and falls that occur in economies over time are called:

supply

The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time is referred to as Blank______.

demand

The quantity of products that people are willing to buy at different prices at a specific time is referred to as Blank______.

the factors of production

The resources of land, labor, capital, entrepreneurship, and knowledge are:

service sector

The sector of the U.S. economy that generates 85% of its value is the

information

The service era is giving way to a new era based on:

85 percent

The service sector employs which percentage of the U.S. workforce today?

economics

The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals is __.

Demography

The study of the characteristics of human populations such as size, density, age, race, gender, and income is known as Blank______.

national debt.

The sum of all the federal deficits over time is known as the

increase

The supply concept refers to the relationship between the quantity of products produced and price. If the market price of a product increases, quantity supplied will Blank______.

natural, human, and financial resources used to produce goods and services

The term "factors of production" refers to the:

Risk

The threat of loss due to some unforeseen internal or external occurrence.

balance of trade

The total value of a nation's exports compared to its imports measured over a particular period is the definition of Blank______.

USMCA

The trade agreement in place between the United States, Canada, and Mexico is called

trade protectionism

The use of government regulations to limit the import of goods and services is called Blank______.

exchange rate

The value of one nation's currency relative to currencies of other countries is referred to as Blank______.

GDP.

The video identifies three economic indicators. However, almost every discussion about a nation's economy is based on its

freedom of choice.

The video tells the story of a woman who decided to start a mushroom farm, which is a different type of business than others in her community. Under the foundations of capitalism, she used the basic right of

the invisible hand.

The video tells the story of a woman who decided to start a new type of business rather than a business similar to others in her community. Her success as a mushroom producer benefited her family, her community, the other mushroom farmers she eventually trained and many others. This is an example of

it is important to conduct business globally

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, Blank______.

technological environment competitive environment economic and legal environments

Three elements that are part of the business environment.

accounting

Today, high-paying service-sector jobs in the United States can most likely be found in

True

True or False: Communities are improved when businesses pay taxes to the government.

False

True or false: Devaluation is the value of one nation's currency relative to the currencies of other countries.

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.

True

True or false: Many small businesses fail every year.

True

True or false: The difference between a firms revenues and the expenses needed to run the business, is called profit (or loss).

False

True or false: The term stakeholders refers only to those who own stock in a company.

your own culture is superior to other cultures

U.S. business people are often accused of ethnocentricity which is a belief that Blank______.

ethnocentricity or ethnocentrism

U.S. businesspeople are often accused of , an attitude that your own culture is superior to other cultures.

outsourcing to foreign countries

U.S. workers will see increased competition from other countries in the future due to:

North American Free Trade Agreement (NAFTA)

What agreement created a free-trade area among the United States, Canada, and Mexico?

the periodic rises and falls that occur in economies over time

What are business cycles?

monopolistic competition oligopolies perfect competition monopolies

What are the four different degrees of competition within free markets?

rogue states nuclear proliferation terrorism

What are three threats to the future of global trade?

You get to be your own boss. You have the opportunity to keep any profits from the business.

What are two advantages of being an entrepreneur?

recognizing that the service era is coming to a close learning about world quality standards

What are two challenges faced by new leaders as a result of the global information-based revolution?

the invisible hand

According to Adam Smith, as long as farmers, laborers, and businesspeople received economic reward for their efforts, they would work hard. As a result of this self-directed desire to gain, the economy would prosper and everyone would become wealthier. Smith called this process:

invible hand

According to Adam Smith, the process that turns self-directed gain into social and economic benefits for all is the

invisible hand

According to Adam Smith, the process that turns self-directed gain into social and economic benefits for all is the

freedom

Adam Smith believed Blank______ was essential to the survival of any economy.

the invisible hand.

Adam Smith believed that although businesspeople work to improve their own prosperity and not necessarily that of others, their efforts eventually provide social and economic benefits for all. He called this process

Americans feel their culture is superior to others.

Americans are often accused of ethnocentricity. This means

many goods and services are provided more cheaply by outsourcing their production to India or China.

An example of the effect of globalization on U.S. consumers is

those with fewer resources are able to compete with large companies through the internet.

An important effect of changed communication technology is that

with people worldwide instantly.

An important effect of changed communication technology is that we communicate

economic

An increase or decrease in government regulations has a(n) Blank______ effect on business success due to the costs of adhering to the regulations.

Goods

Any physical products offered by a business.

Yes

Are shareholders stakeholders?

exporting.

As a global company, Electra Bikes sells its products to other countries. This process is referred to as

the cost of producing and marketing the product in a foreign market is significantly reduced.

As a strategy for reaching global markets, licensing provides the licensor with several advantages. One advantage is

Outsourcing

Assigning business functions like accounting or production to outside organizations.

Embrace Technology

At Daisy's Gifts, Daisy and her assistant stocked the shelves, marked each item with a price, and kept a sales log so they would know when it was time to reorder. Daisy's unique merchandise attracted shoppers and her shop became quite popular. When Daisy found herself doing paperwork rather than serving her customers, she most likely decided to

They contain elements of more than one system. They exist when the distribution of resources involves elements from more than one economic system.

What are two characteristics of mixed economies?

Trade

Balance of is the total value of a nation's exports compared to its imports measured over a particular period.

paying taxes

Businesses improve the communities in which they operate by

importing.

Buying products produced in another country is known as

It seeks to provide goods and services. It seeks to earn a profit.

What are two characteristics that define a business?

To oversee cross-border trade issues To mediate trade disputes among nations

What are two functions of the World Trade Organization?

There are more people and countries in the world markets There are many potential customers in other countries

What are two important reasons to do business globally?

filling an educational need filling a societal need

What are two purposes that nonprofit organizations may seek to achieve?

Fewer defects means less material wasted doing it over. Their customers are happier with their products.

What are two reasons that many companies strive for high-quality products with "zero defects"?

through higher levels of taxation because government owns many of the basic businesses such as utilities

What are two ways that socialism affects businesses?

licensing

What entry strategy gives a firm the right to manufacture another firm's product or use its trademark for a royalty fee?

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?

Sociocultural differences

What is considered to be a major hurdle to successful global trade?

The use of government regulations to limit the import of goods and services

What is the definition of trade protectionism?

Stakeholders have a vested interest in the business' success, whereas shareholders have ownership in in the business.

What is the difference between a stakeholder and a shareholder?

Licensing

What is the global strategy in which firm allows a foreign company to produce the firm's product in exchange for a fee?

to make a contribution to the welfare of society

What is the goal of a nonprofit organization?

an increase in globalization

What is the most likely reason you see "made in China" stickers on products sold in the United States?

CAFTA

What is the name of the U.S. free trade agreement with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Nicaragua, and Honduras?

When the best and brightest individuals in a country leave to work in other countries

What is the phenomenon known as brain drain?

Communism

What is the political and economic system in which the government makes almost all economic decisions and owns almost all the major factors of production, as well as choosing religion, where to live, and jobs for its citizens?

Economics

What is the study of how resources are distributed for production of goods and services within a social system called?

Stakeholders

What is the term for all of the groups that stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address?

Gross domestic product

What is the total value of final goods and services produced in a country in a given year called?

Thomas Malthus

Carlyle called economics the "dismal science" after reading the early work of

cell phones the Internet computers

Changes in the technological environment include the emergence of Information Technology that includes such tools as

computers the Internet cell phones

Changes in the technological environment include the emergence of Information Technology that includes such tools as

Business

Commercial activity engaged in as a means of livelihood or profit.

it increases customer satisfaction

Companies strive for zero defects in making their products because

the human population's characteristics such as size, density, age, gender, and income

Demography is the statistical study of Blank______.

Physical and environmental forces

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?

There is likely to be less competition. The product may be used differently than in the U.S.

What might be two benefits of exporting goods such as snowplows and sand to the Middle East?

a foreign company produces private-label goods to which a domestic company then attaches its own brand name or trademark

What occurs in contract manufacturing?

minimize the interference with the free exchange of goods and services

What should governments of developing countries do to promote entrepreneurship?

Freedom to own land or property Freedom to keep a business's profits

What two principles did Adam Smith believe essential to the survival of an economy?

the market; the government

When Blank______ determines what goods and services get produced, it is a free-market economy. When Blank______ determines what goods and services get produced, it is a command economy.

regulatory

When Electra decided to produce its "pedal-assist" motor bike it had to adhere to speed regulations. The company found out, however, that safety regulations differ greatly among various countries and it opted to use the U.S. standard which calls for a lower speed motor. This is an example of how _______ forces can affect global trade.

Licensing, exporting, franchising

When it comes to getting involved in international business what are the three strategies that require the least amount of commitment and effort?

an increase in consumer spending

When the government spends money on such projects as roads and bridges, it is expected that the money will trickle down to the consumers eventually leading to:

favorable balance of trade.

When the value of exports from a country exceeds the value of imports into that country, there is a(n)

joint venture

When two or more companies, often from different countries, join together to take on a major project it is called a Blank______.

either a profit or a loss.

When you take a company's revenues and subtract the expenses needed to operate the business you end up with

Legal and regulatory forces Economic and financial forces

Which of the following are considered major hurdles to successful global trade?

Hands-on exporting assistance Trade-finance support

Which of the following are functions of export assistance centers (EACs)?

Costa Rica Guatemala Honduras Nicaragua

Which of the following countries are members of the Central American Free Trade Agreement (CAFTA)?

Most or all of the factors of production and distribution are privately owned and operated for a profit.

Which statement best describes a capitalistic nation?

Legal and illegal immigration has prompted local governments to change signs, brochures, and websites to include other languages.

Which statement is an example of effectively managing diversity?

Technology has improved productivity by reducing the number of workers needed.

Which statement regarding productivity in the United States is true?

the negotiation of trade agreements among nations the growth of global competition

Which two factors are key in making the global environment of business so important that it encompasses all the other environmental influences?

because the same or greater amounts are produced with fewer workers

Why are many of the improvements in productivity due to improved technology?

Fast population growth seemed to surpass the growth of the food supply.

Why did Thomas Malthus believe that population growth would surpass the available resources?

because the company assumes the risk if the business fails

Why might you choose to work for a company instead of being an entrepreneur?

A business should be concerned with stakeholders because stakeholders represent a broad group of people who stand to gain or lose by the actions of the business.

Why should a business be concerned with stakeholders?

Licensing

Of all the strategies for reaching global markets, which one offers the least amount of commitment, control, risk, and profit potential?

require innovation to succeed in global markets

One of the challenges for future leaders is that the information-based global revolution is moving the economy in new directions that:

a future problem for the Social Security system.

One of the results of the increase in the older population of the United States is

microfinancing.

Opportunity International helps people earn their way out of poverty through

Nonprofit organization

Organization that operates for the common good and not to generate individual wealth.

market price

Over time, as negotiation occurs between buyers demanding products and sellers supplying products, the Blank______ will be determined.

competition

Perfect, monopolistic, oligopoly, and monopoly are four different degrees of Blank______.

supply and demand

Prices in a free market economy are determined by Blank______.

Physical and environmental

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?

Legal and regulatory forces

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?

quality; quantity

Productivity in the service sector is difficult to measure because new technology adds to Blank______, but not necessarily the Blank______ of the service produced.

the WTO (World Trade Organization)

Recently, two nations experienced a trade dispute over copyright issues. Country "A" accused Country "B" of violating international copyright laws. Since both were members of __________, they appealed to this organization to mediate the dispute.

Sociocultural Forces

Religion is an important part of any society's culture and can have a significant impact on business.

agricultural

Since the 1800s, strong economic development and technological inventions in the Blank______ industry have reduced the number of farmers around the world.

can react quickly to opportunities

Small and medium-sized firms are often better prepared to leap into global markets because they Blank______.

exporting

Snowplow manufacturers in the U.S. can sell their products to many countries for different uses, such as to clear sand from driveways in Saudi Arabia. This is an example of Blank______.

higher taxes fewer incentives to work hard a brain drain

Socialism has several negative outcomes such as:

discourage the best from working as hard as they can.

Socialist systems tend to

socialism

You studied for two hours each day for an entire week before your first marketing exam. When you turned in the test, you felt confident that your efforts would pay off. At the next class meeting, your instructor said she was considering curving the grades because the class average was lower than she had anticipated. Suddenly, your 98 percent score did not have the same impact that it did when you first saw it! Now the guy next to you that got an 84 percent is likely to have an "A" grade too. As you analyze this situation, you realize that it parallels an economic system such as __________, where even if you work harder than another person, you are likely to realize the same benefits.

Mixed

__________ economies are economic systems where some allocation of resources is made by the market and some by the government.