Chapter 3 Study Guide

__________ involves selling the right to use a business system, including a firm's brand names, business processes, trade secrets, and other assets.

Franchising

Which of the following best describes sanctions?

They are politically motivated trade restrictions that revoke a country's normal trading status with another nation.

Which of the following is true of trading blocs?

They increase trade within the bloc

Which of the following is the goal of the World Trade Organization?

To help negotiate international trading disputes

Aero Inc. is a company that sells kitchenware to several countries across the world. Its products are basic in nature and are standardized so that they meet universal needs. The company does not customize its products for a particular market. Which of the following strategies of international business does Aero Inc. use?

A global strategy

Chickadee, a fast food restaurant chain that specializes in fried chicken, differentiates its food products by customizing them in order to meet the tastes and preferences of local customers. Which of the following strategies of international business does Chickadee use?

A multi domestic strategy

Which of the following is a difference between a tariff and an export subsidy?

A tariff is a tax imposed on an imported good or service, while an export subsidy consists of government financial assistance to domestic producers.

Which of the following is true of the global business environment?

Body language differs significantly from person to person and around the world.

In 1997, General Motors entered the Chinese market by partnering with Shanghai Automotive Industry Corp. (SAIC), a leading passenger car manufacturer in China, to form Shanghai General Motors Co. Ltd. In what way did General Motors enter the Chinese market in this case?

By using a joint ventures

__________ refers to the process of entering foreign markets by selling goods abroad produced in a company's home country.

Exporting

The country of Calibria has many factories producing plastic toys. A large volume of these goods is sold in the neighboring countries at a price below the price charged in the Calibrian market. The action of the factories in Calibria is known as __________.

Dumping

Which is not a major function of the International Monetary Fund (IMF)?

Equalizing exchange rates around the world

Which of the following best describes an embargo?

It is a total restriction on an import or an export

Which of the following arrangements for entering foreign markets entitles one company to use some or all of another firm's intellectual property (patents, trademarks, brand names, copyrights, or trade secrets) in return for a royalty payment?

Licensing

Aerocorp Inc. is a Canadian airplane manufacturing company that wants to sell airplanes to users in Mexico. To keep costs down, Aerocorp decides to set up an assembly unit in Mexico to which it can ship components with fewer tariffs and quotas. Which of the following trading blocs or agreements allows Aerocorp to do this?

NAFTA

The government of Leventia does not allow the import of more than 400,000 tons of sugar annually. This trade restriction is set in order to benefit the domestic sugarcane farms and factories. Which of the following terms best describes this protectionism measure?

Quota

Which of the following best describes anti-dumping measures?

They are designed to prevent firms from selling large quantities of a product at a price lower than the cost of production or below what the company would charge in its home market.

A(n) __________ is a limitation on the amount of an import allowed to enter a country.

quota

Ethnocentrism can be described as __________.

the tendency to judge all other groups according to one's own group's standards, behaviors, and customs