Management Chapter 5- Dr. Loes (Belmont University)

What is a multinational corporation (MNC)?

A corporation, such as IBM, ExxonMobil, and Nestlé, that operates on a worldwide scale, without significant ties to any one nation or region

What is the World Trade Organization (WTO)?

A global association of member countries that promotes free trade

Which of the following characteristics relates to global business (globalization)?

A strategy in which organizations treat the entire world or major regions of it as the domain for conducting business

What term describes the agreement between ten Southeast Asian countries with the goal to promote economic growth and overall progress in the area via trade and security?

Association of Southeast Asian Nations

Which of the following characteristics relates to the North American Free Trade Agreement (NAFTA)?

Effectively merged Canada, the United States, and Mexico into one market of about 400 million consumers by eliminating most tariffs and trade restrictions on agricultural and manufactured products among the three countries

Which of the following characteristics relates to countertrade agreements?

Exporting that involves bartering products for other products instead of for currency

What is meant by importing?

The purchase of goods and services from a foreign source

What is an embargo?

The suspension of trade in a particular product by the government

Which of the following characteristics relates to a joint venture?

When a company that wants to do business in another country finds a local partner (occasionally, the host nation itself) to share the costs and operation of the business

The ______ loans money to countries throughout the world for reconstruction and development, and also makes loans to poorer countries for infrastructure and social services purposes.

World Bank

When a nation pays for imports with its own goods, it is using

a countertrade agreement

The fact that the American company 3M owns a film-manufacturing facility in Italy is an example of

a direct investment

You are the president of Henry Motor Corp., and you see the great potential markets in Eastern Europe for personal transportation. Your plan is to purchase an old Soviet tank plant and convert it into an auto factory. The Russian government welcomes your plan, which is an example of

a direct investment

If it wants to reduce the dollars flowing out of the country, the United States can limit the number of garments being imported from China and Vietnam by imposing

a quota

The United States' prohibition of the importing of Cuban cigars is an example of

an embargo

What term describes a group of firms or nations that agree to act as a monopoly and not compete with each other?

cartel

China's arrangement with the Congo to barter infrastructure in exchange for metals is an example of a

countertrade agreement

According to the text, a blueprint of acceptable behavior that is passed from one generation to the next is called

culture

What term describes the purchase of overseas production and marketing facilities, in which a company may control the facilities outright, or it may be the majority stockholder in the company that controls the facilities?

direct investment

By requiring products to be sold for not less than what it costs to produce them, the United States is attempting to prohibit

dumping

What name is given to the ratio at which one nation's currency can be exchanged for another nation's currency or for gold?

exchange rate

What name is given to the sale of goods and services to foreign markets?

exporting

What name is given to a form of licensing in which a company agrees to provide a name, logo, methods of operation, advertising, products, and other elements associated with the company's business, in return for a financial commitment and the agreement to conduct business in accordance with the company's standard of operations?

franchising

Which of the following refers to the market value of a nation's total output of goods

gross domestic product (GDP)

Which of the following refers to a tax levied by a nation on goods bought outside its borders and imported into the country?

import tariff

According to Hofstede's cultural dimensions theory, _____ tend to be self-reliant and place a high level of importance on freedom and ambition, while _____ place more value on the team than the individual.

individualists collectivists

What term describes the physical facilities that support a country's economic activities, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems?

infrastructure

Which of the following refers to the buying, selling, and trading of goods and services across national boundaries?

international business

When Weseeyu, Inc., of Rochester, New York, sells contact lenses to people in Moscow, Russia, the company

is exporting the lenses

Because many countries do not permit foreigners to purchase and operate facilities in their countries, a company wishing to do business in such a country may share the business costs with the host country by forming a

joint venture

Miller Beer allows a Canadian firm to use its name, formula, and brands in return for a royalty. This arrangement is known as

licensing

If companies do research to learn about cultural differences before engaging in trade in a particular country, then problems arising from these cultural differences can be

minimized

A corporation that operates in several countries without significant ties to any of them is a

multinational

What name is given the transfer of manufacturing or other functions (such as data processing) to countries where labor and supplies are less expensive?

outsourcing

What name is given to the maximum number of units of a particular product that may be imported into a country?

quota

The translation of product names can be a crucial factor in the success or failure of a foreign marketing effort because of

sociocultural differences

The agreement between Japan's Sony Corporation and the Swedish telecommunication company Ericsson to make mobile phones is an example of a

strategic alliance

Which of the following refers to a partnership formed to create competitive advantage on a worldwide basis?

strategic alliance

If Peru wants to purchase machine parts from a German company but lacks German marks, it will probably go to which of the following institutions to borrow the marks?

the International Monetary Fund

Which of the following refers to the acquisition of goods in one country and the selling of them to buyers in another country?

trading company

Which of the following characteristics relates to the World Bank?

Established and supported by the industrialized nations in 1946 to loan money to underdeveloped and developing countries

Which of the following refers to an economic and political union of 28 member nations that are located primarily in Europe?

European Union (EU)

What is meant by contract manufacturing?

Occurs when a company hires a foreign company to produce a specified volume of the firm's product to specification

Which of the following characteristics relates to dumping?

Occurs when a country or business firm sells products at less than what it costs to produce them

What term describes a trade arrangement in which one company--the licensor--allows another company--the licensee--to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee, or royalty?

licensing

You are the producer of Western Denim brand blue jeans. The pants are in high demand in Pangia; however, shipping costs, tariffs, and trade restrictions are insurmountable. As a last resort, you have entered into an agreement to let a local Pangian manufacturer use your name, materials, and trademark to produce the jeans in exchange for a royalty. This is a

licensing agreement

Most businesspeople engaged in international trade underestimate the importance of

social and cultural differences

You are the international marketing manager for Brides & Grooms, Inc., a designer and manufacturer of wedding apparel. This year's fashions are featuring white for the entire wedding party. You scheduled this year's Asian kick-off for next Monday in Tokyo, when you discover that white is the Japanese color of mourning. What did you overlook?

social and cultural differences