Business Ch 3

Rank the strategies for reaching global markets according to the level of risk and commitment.

1. Foreign Direct Investment 2. International Joint ventures and strategic alliances. 3. Contract manufacturing 4. Franchising 5. Exporting 6. Licensing

When a company contracts with another company, often in a different country, to perform some or all of its functions it is called:

outsourcing

A weak transportation infrastructure results in a ____ barrier to global business.

physical

For a firm to be considered a multinational corporation, it must have a(n)

physical presence in several different nations.

T or F: A quota is a tax placed on Imports.

False

T or F: The buying of permanent property and businesses in foreign nations is called strategic alliance.

False

___ trade is the movement of goods and services among nations without political or economic barriers.

Free

Which are likely benefits of exporting?

Increased sales and revenues. Increased number of potential customers.

The united states has had a trade deficit since 1975 because:

It bought more goods from other nations than it has sold.

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.

A licensor may complete by charging a fee known as a royalty for the right to manufacture its product or use its trademark to a foreign company, known as a ______.

Licensee

Exporting is:

selling products to another country.

The forms often better prepared to leap into global markets and react quickly to opportunities are:

small and medium businesses

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 ___ states; the difference between money coming into a country (from exports) and money leaving (from imports) plus money flows coming into or leaving a country from other factors such as tourism, foreign aid, military expenditures, and foreign investment.

balance of payments

A(n) ____ is a complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.

embargo

The ___ ___ is the value of one nation's currency relative to the other countries.

exchange rate

A trade surplus occurs when a country's:

exports are greater than imports.

The balance of trade is the total value of a nations ____ compared to its ____ over a particular period of time.

exports; imports

The definition of _____ states; a contractual agreement whereby someone with a good idea for a business sells others the rights to use business name and sell a product or service given territory in a specified manner.

franchising

A(n) ______ is a limit on the numbers of products in certain categories that a nation can import and is considered a form of trade protectionism.

import quota

Buying products from another country is the definition of ____

importing

____ is buying products from another country while ____ is selling products to another country.

importing; exporting

A disadvantage of an international ____ ____ is one partner can learn the other's technology and practices, then use what it learned to its own advantage.

joint venture

The definition of ___ ____ states; a partnership in which two or more companies, often from different countries, join to undertake a major project.

joint venture

Culture can include which of the following

language, religion, values and attitudes.

A(n) _____ corporation is an organization that manufactures and markets products in many different countries and has managers and stockholders from many countries.

multinational

An embargo:

Bans all trade of a certain product. Bans all trade with a particular;ar country.

Which of the following are benefits associated with offshore outsourcing?

Companies can create efficiencies. Companies can focus on business areas where they can expand and grow.

Daria's bicycle shop in th US is experiencing a slowdown in its growth. She knows the global market offers many opportunities. Which of the following are ways Darla's business could engage in the global market?

Create an online sales site that ships globally. Export bicycles to retailers in Australia. Import materials from Germany.

A widely debated issue of the early 1990's was the ratification of the ____ Agreement, which created a free-trade area among the United States, Mexico, and Canada.

North American Free Trade

Which of the following are important reasons to do business globally?

U.S consumers seek the best value whether in the U.S or other countries. There are many potential customers in other countries.

Export Assistance Centers provide hands on exporting assistance and trade finance support for ____ and ____-sized businesses.

Small and Medium

Which of the following are functions of the World Trade Organization?

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

What is the primary function of protective tariffs?

To raise the price of imported products so that domestic goods are more competitively priced.

T or F: A strategic alliance is a long-term partnership between two or more companies established to help each company build competitive market advantages.

True

T or F: Common markets are also called trading blocs.

True

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

a common external tariff.

When a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries it is said to have an ____ advantage.

absolute

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

The definition of ____ states; lowering the value of a nation's currency relative to other currencies.

devaluation

Selling products in a foreign country at a lower price than what it charged in the producing country is called:

dumping

when the value of a country's imports exceeds the value of its exports, the country exhibits a:

trade deficit

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

trade protectionism