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Chapter 3            COMPETING IN THE GLOBAL MARKETPLACE     TRUE-FALSE QUESTIONS   1)

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Chapter 3            COMPETING IN THE GLOBAL MARKETPLACE

 

 

TRUE-FALSE QUESTIONS

 

1). Having a global vision simply means having a willingness to sell outside one’s national borders if, and when, the opportunity arises.

a. True

b. False

 

2. International trade-dependent jobs have grown at a rate three times the growth of U.S.-dependent jobs.

a. True

b. False

 

3. Mines in Colombia produce emeralds and sell them to jewelers in the United States.  To Colombia miners, emeralds are an export.

a. True

b. False

 

4. Telecommunications equipment manufacturers in the United States sell their products to people who live in Canada.  To Canadians, the telecommunications equipment is an export.

a. True

b. False

 

5. The difference in value between a country's imports and exports is called its balance of trade.

a. True

b. False

 

6. Armenia had a favorable balance of trade in 2018 when it exported $800 million in goods and services and imported $1.5 billion.

a. True

b. False

 

7. The exchange rate is the interest rate that foreign banks receive when borrowing money from the United States.

a. True

b. False

 

8. According to the principle of absolute advantage, each country should specialize in the products that it can produce most readily and cheaply and trade those products for products that foreign countries can produce most readily and cheaply.

a. True

b. False

 

9. The opposite of free trade is protectionism.

a. True

b. False

 

10. The tax that the United States imposes on imported carbon steel products is called a tariff.

a. True

b. False

 

11. Limitations on the quantity of certain types of goods that can be imported over a period of time are called import quotas.

a. True

b. False

 

12. When a country sells its products in a foreign country at a cheaper price than usual, and sometimes even at a loss, it is dumping products.

a. True

b. False

 

13. The Uruguay Round of trade negotiation is an agreement that only affects trade among Latin American countries.

a. True

b. False

 

14. The International Monetary Fund (IMF) was created to promote trade through financial cooperation by working to eliminate trade barriers.

a. True

b. False

 

15. If Syria gives Lebanon a tariff advantage over other countries, Lebanon has been given a biased tariff.

a. True

b. False

 

16. The signing of the Central America Free Trade Agreement by the United States will more than likely not result in a major increase of U.S. exports.

a. True

b. False

 

17. In international licensing, the licensor is the domestic firm that allows the licensee to use its trademark or brand.

a. True

b. False

 

18. When a domestic company allows a foreign firm to use its brand in exchange for royalty fees, it is called a joint venture.

a. True

b. False

 

19. When Coca-Cola sends cases of Coke to France and receives sparkling water as payment, a countertrade has taken place.

a. True

b. False

 

20. A countertrade in international terms pertains to the sale of retail goods that are usually sold "over the counter."

a. True

b. False

 

21. Expropriation is a political risk in which a country seizes the assets of a foreign firm and does not compensate the firm.

a. True

b. False

 

22. A well-designed product transcends cultural barriers.  It does not need to be changed to suit different countries or cultures.

a. True

b. False

 

23. Some multinational corporations are so large that they resemble small countries.

a. True

b. False

 

24. One of the advantages multinational corporations have over other companies is their ability to sidestep regulatory difficulties.

a. True

b. False

 

25. The need for businesses to expand their markets is one of the most fundamental reasons for the growth in world trade.

a. True

b. False

 

 

MULTIPLE-CHOICE QUESTIONS

 

1. A company that has a global vision:

A. recognizes and reacts to international business opportunities

B. is interested in nothing more complicated than exporting

C. follows its competition into foreign markets

D. has a very nationalistic view of the world

E. does not see competition from foreign marketers as a threat

 

2. How has terrorism affected global trade?

A. Terrorism has curtailed the liberal inflows of skilled and blue-collar workers.

B. Terrorism has led to tighter emigration policies.

C. Terrorism has resulted in merchandise be moved more quickly across nations.

D. Companies are stocking less inventory than ever before.

E. Terrorism has not affected global trade.

 

3. _____ are goods and services that are made in one country and sold to other countries.

A. Tangibles

B. Imports

C. Tariffs

D. Countertrades

E. Exports

 

4. Botswana produces diamonds, copper, nickel, soda ash, meat, and textiles, which it sells to the members of the European Union.  To Botswana, the diamonds, copper, nickel, soda ash, meat, and textiles it produces are examples of:

A. embargo

B. tariff

C. import

D. export

E. countertrade

 

5. _____ are products that are bought from one country for use in another just as the U.S. buys wood pulp and timber from Canada.

A. Imports

B. Tangibles

C. Tariffs

D. Exports

E. Countertrades

 

6. The U.S. has one of the very few areas in the world where kaolin can be mined.  Kaolin is a necessary ingredient in many products ranging from stomach medication to paper.  The U.S.-produced kaolin is sold all over the world.  Kaolin is a(n) _____ for the countries that purchase it.

A. embargo

B. tariff

C. import

D. export

E. countertrade

 

7. The United States buys copper from Chile’s Escondido copper mine.  The copper is used to make wiring for the U.S. telecommunications industry and for many other purposes.  For the U.S., the copper is an example of a(n):

A. embargo

B. tariff

C. import

D. export

E. countertrade

 

8. Canadian logging companies sell timber in the United States.  To the U.S., the timber is a(n)_____, and for Canadians, the timber is a(n) _____.

A. import; countertrade

B. import; export

C. export; exchange

D. export; import

E. countertrade; exchange

 

9. The Blue Bird Bus Company in Georgia sells buses to the South African government.  To South Africa, these buses are an example of:

A. intangibles

B. tariffs

C. countertrades

D. exports

E. imports

 

10. The _____ is defined as the difference in value of a country's exports and imports over a period of time.

A. balance of trade

B. federal deficit

C. federal surplus

D. balance of exchange

E. balance of payments

 

11. A country that exports more goods than it imports is said to have a(n):

A. favorable balance of payment

B. negative trade deficit

C. favorable balance of trade

D. unfavorable balance of trade

E. positive trade deficit

 

12. A country that imports more goods than it exports is said to have a(n):

A. positive trade surplus

B. positive balance of payment

C. favorable balance of trade

D. unfavorable balance of trade

E. positive trade deficit

 

13. In 2018, Austria exported $122.5 billion and imported products valued at $118.8 billion.  Austria had a(n):

A. favorable balance of trade

B. positive balance of payment

C. negative balance of trade

D. negative trade deficit

E. positive trade deficit

 

14. In 2018, Country A exported $84.9 billion and imported products valued at $74.69 billion.  The difference between the dollar value of its exports and imports represents a:

A. positive exchange rate

B. positive balance of payment

C. trade surplus

D. trade deficit

E. positive countertrade

 

15. In 2018, Rwanda exported $98 million and imported products valued at $243 million.  Rwanda has a(n):

A. unfavorable balance of trade

B. negative balance of payment

C. negative balance of trade

D. negative trade deficit

E. positive trade deficit

 

16. In 2018, Country A exported $1.237 billion and imported products valued at $5.552 billion. 

The difference between the dollar value of its exports and imports represents a:

A. positive exchange rate

B. positive balance of payment

C. trade surplus

D. trade deficit

E. positive countertrade

 

17. In 2018, if the country of Serbia had imports of $10.58 billion and had an unfavorable balance of trade.  This means that Serbia had:

A. less than $10.58 billion in exports

B. exactly $10.58 billion in exports

C. more than $10.58 billion in exports

D. low inflation

E. an unfavorable exchange rate

 

18. In 2018, the country of Brazil, had imports of $78.02 billion and had a favorable balance of trade.  This means that Brazil had:

A. less than $78.02 billion in exports

B. exactly $78.02 billion in exports

C. more than $78.02 billion in exports

D. low inflation

E. an unfavorable exchange rate

 

19. The difference between a country's total payments to other countries and its total receipts from other countries is called its:

A. balance of trade

B. financial surplus

C. financial deficit

D. balance of exchange

E. balance of payments

 

20. Since the balance of payments is the summary of a country's financial transactions with another country, a discussion of a nation’s balance of payments will need to include a discussion of:

A. its imports and exports

B. its long-term overseas business investments

C. its government loans

D. its gifts and foreign aid

E. all of the above

 

21. Imagine you are trying to gather the information needed to calculate the balance of payments for an Eastern European country.  To do your calculations, you would need to have information on all of the following EXCEPT:

A. foreign aid the country receives

B. military expenditures it makes in other countries

C. its imports and exports

D. its corporate tax rates

E. tourist spending in the country

 

22. The _____ is the total amount of money that flows in and out of a country.

A. balance of trade

B. federal deficit

C. balance of payments

D. balance of exchange

E. international exchange

 

23. The _____ is the value of one currency in terms of another.

A. balance of trade

B. exchange rate

C. balance of payments

D. investment exchange

E. favorable rate

 

24. When Ted Giovanni was preparing for his trip to Brazil, he found that he could go to his bank and trade his 10 U.S. dollars for 37.11 Brazilian real (the nation’s currency).  In this instance, the _____ was one U.S. dollar to 3.711 Brazilian real.

A. exchange rate

B. balance of payments

C. foreign trade rate

D. international trade rate

E. balance of trade rate

 

25. Currency markets operate under a system called _____.  This means that prices of currencies vary based upon demand and supply of that currency.

A. variable trade

B. variable costs

C. international trade rate

D. floating exchange rate

E. breakeven point

 

26. _____ is the reduction of a currency's value relative to another currency.

A. Evaluation

B. Devaluation

C. Currency leveling

D. Deregulation

E. Exchange depreciation

 

27. In 2006, the nation of Zimbabwe reduced the value of its currency by 60 percent to bring its value more in line with the relative value of most other world currencies.  This reduction of value is called:

A. deregulation

B. re-evaluation

C. devaluation

D. comparative disadvantage

E. exchange ratio

 

28. All of the following terms are associated with international trade EXCEPT:

A. absolute advantage

B. balance of payments

C. balance of trade

D. discount rate

E. comparative advantage

 

29. Venezuela can grow and sell cut flowers for floral bouquets more easily and more cheaply than most other countries can produce the same flowers.  When it comes to flowers, Venezuela has a(n):

A. total advantage

B. advantageous competency

C. absolute advantage

D. core strength

E. comparative advantage

 

30. Canada is currently the second largest producer of nickel in the world.  The reopening of the world famous Voisey's Bay mine, which has total resources estimated at 124 million tons of nickel-bearing ore, should give Canada a clear:

A. total advantage

B. advantageous competency

C. absolute advantage

D. core strength

E. comparative advantage

 

31. The karakul is a breed of Central Asian sheep that produces curly, glossy wool.  This wool is popular in some countries for the manufacturing of warm hats and coats.  Since the breed can only be grown in Central Asia, this region can be said to have a(n):

A. absolute advantage

B. advantageous distinction

C. comparative advantage

D. total advantage

E. economy of scale

 

32. If a country specializes in goods that it can produce most readily and cheaply and trades those goods for the goods that another country can produce most readily and cheaply, then both countries are exercising the principle of:

A. absolute advantage

B. economics of scale

C. distinctive advantage

D. parallel competencies

E. comparative advantage

 

33. A policy of permitting the people of a country to buy and sell where they please, without restrictions, is called:

A. comparative advantage

B. premium exchange

C. protectionism

D. specialization

E. free trade

 

34. Free trade:

A. allows companies to conduct business without licenses

B. permits people to buy and sell where they please

C. establishes artificial barriers to trade

D. is also called protectionism

E. relies on bartering as its primary means of exchange

 

35. Protectionism:

A. prohibits tariffs, embargoes, and import quotas

B. allows people to buy and sell where they please

C. is based on the concept of absolute advantage

D. uses artificial barriers to protect domestic industries

E. encourages free trade

 

36. The European Union (EU) bans the importation of hormone-fed U.S. beef and bioengineered corn and soybeans on safety grounds although Americans eat this food every day.  This ban is so consumers in the EU will buy domestic beef and products made from domestically produced corn and soybeans.  This ban is an example of:

A. free trade

B. ethnocentricity

C. dumping

D. countertrading

E. protectionism

 

37. Japan bans importation of rice to protect its domestic rice industry. This ban is an example of:

A. free trade

B. ethnocentricity

C. dumping

D. countertrading

E. protectionism

 

38. Why do many people fear trade and globalization?

A. Trade and globalization will increase per capita income.

B. An open economy spurs innovations with fresh ideas from abroad.

*C. Many fear trade and globalization will lead to massive job losses.

D. Free trade and globalization lead to increased productivity.

E. Export jobs often pay less than other jobs.

 

39. What are the benefits associated with free trade and globalization?

A. Prevents employers from using pay cuts to threaten employees

B. An open economy that spurs innovation

C. Higher probability that inflation will arrest economic growth

D. Decreased per capita income

E. All of the above

 

40. _____ refers to sending work functions to another country resulting in domestic workers losing their jobs.

A. Outsourcing

B. Repositioning

C. Downsizing

D. Restructuring

E. Worker mobility

 

41. Shell Oil Company used Intertek Caleb Brett, an Australian research laboratory, to provide all analytical services needed to support one of its full scale refinery.  With this _____, Shell replaced domestic employees at the site of the refinery with employees from the Australian firm.

A. outsourcing

B. repositioning

C. downsizing

D. restructuring

E. worker mobility

 

42. Which of the following is an example of a natural trade barrier?

A. Distance

B. Price

C. Product characteristic

D. Exchange controls

E. Custom regulations

 

43. A natural barrier that faces Argentina when it sells beef to Siberia is:

A. custom regulations

B. exchange controls

C. government controls

D. distance

E. taxes

 

44. The Caucasus Mountains along the northeastern border of Georgia (one of the former Soviet republics) makes it difficult for the nation to trade with other former Soviet republics that are to its north and east.  The mountain range acts as a(n):

A. natural embargo

B. infrastructure deterrent

C. marketing barrier

D. natural blockage

E. natural trade barrier

 

45. A(n) _____ is a tax levied by a nation on imported goods.

A. embargo

B. tariff

C. premium

D. boycott

E. subsidy

 

46. China imposes a 45 percent tax on the market value of all chickens that are imported from the U.S. into China.  Another name for this type of tax is a(n):

A. embargo

B. boycott

C. subsidy

D. quota system

E. tariff

 

47. The Royal Government of Bhutan imposes a 10 percent tax on all operating tables, examination tables, and dentist's chairs imported into Bhutan.  Another name for this type of tax is a(n):

A. embargo

B. boycott

C. subsidy

D. quota system

E. tariff

 

48. An argument in favor of protective tariffs is the "infant-industry argument," which states that:

A. any industry dealing with products for infants should be protected

B. infant-industries need government loans

C. infant-industries should be protected by tariffs from established foreign competition

D. infant-industries should be exempt from antitrust laws

E. infant-industries should be able to form monopolies

 

49. The _____ is a protectionist argument that says the U.S. should use tariffs to keep foreign labor from taking away U.S. jobs.

A. statement of job security

B. job-protection argument

C. minimum-job employment agreement

D. job equity principle

E. home protection agreement

 

50. Which of the following is NOT an argument for tariffs that protect domestic businesses and workers?

A. the infant-industry argument

B. the maintenance of improved quality of products to protect consumers

C. the protection of small businesses

D. the job-protection argument

E. the protection of industries and technology vital to defense preparedness

 

51. Besides tariffs, a government can use a number of other tools to restrict trade.  Which of the following is NOT a tool aimed at restricting trade?

A. import quota

B. embargo

C. subsidy

D. exchange control

E. custom regulation

 

52. _____ are limitations on the quantity of certain types of goods that can be imported over a period of time.

A. Export quotas

B. Subsidies

C. Import quotas

D. Embargo levels

E. Tariffs

 

53. A recent regulation enacted by the Commission for Protective Trade Measures in Russia limits the amount of poultry meat that can be brought into the country and sold in the country each year to 1.05 billion tons.  Russia is using a(n) _____ to protect its domestic poultry industry.

A. embargo

B. boycott

C. tariff

D. restrictive limit

E. import quota

 

54. A total prohibition against importing certain products is called a(n):

A. embargo

B. boycott

C. tariff

D. restrictive limit

E. import quota

 

55. In 1914, the United States prohibited the importation of Mexican avocados even though Mexico is the world’s largest producer of the fruit.  This prohibition remained in effect until 1996.  The ban on importing Mexican avocados is an example of a(n):

A. import quota

B. embargo

C. restrictive limit

D. boycott

E. tariff

 

56. _____ are government regulations that give special priority and privileges to domestic manufacturers.

A. Special purchase policies

B. Buy-national regulations

C. Restrictive purchase regulations

D. Content restrictive laws

E. Domestic-only laws

 

57. A German law that prohibited the use of hops grown outside of the country in the production of German-made beer was overturned in the late 1980s.  This law was an example of a(n):

A. controlled purchase policy

B. restrictive purchase regulation

C. domestic-only law

D. buy-national regulation

E. domestic-content law

 

58. A _____ regulation in the United States bans the use of foreign steel in constructing U.S. highways.

A. controlled purchase policy

B. restrictive purchase regulation

C. domestic-only law

D. buy-national regulation

E. domestic-content law

 

59. Laws relating to the alcoholic content of beer have required many imported brands of beer to be labeled malt liquor when it is sold in the United States.  In addition, all beer sold in the U.S. must contain an expiration date or a “best-buy” date.  These laws have made it difficult for small foreign breweries to enter the U.S. market.  These laws are an example of:

A. customs regulations

B. national trade laws

C. nonfinancial tariffs

D. export laws

E. buy-national regulations

 

60. _____ are laws that require a company earning foreign currency from its exports to sell the foreign currency to a control agency, usually a central bank.

A. Currency policies

B. Rates of exchange

C. Laws of balanced exchange

D. Favorable exchange regulations

E. Exchange controls

 

61. Which of the following statements about dumping is true?

A. Dumping is legal along as it is government subsidized.

B. The U.S has passed laws to make dumping illegal.

C. The United States has never been a victim of dumping.

D. Dumping is a form of export quota.

E. Dumping is a type of tariff

 

62. In 1997, Russia and Ukraine exported carbon steel plate into the U.S. at a price much lower than the countries were found guilty of charging the identical steel in their home markets.  Russia and Ukraine were engaged in:

A. export pricing

B. dumping

C. unloading

D. dunking

E. add-on pricing

 

63. In 1998, the Canadian Magazine Publisher’s Association (CMPA) predicted the demise of many Canadian magazines because the World Trade Organization (WTO) made it legal for U.S. publishers to introduce product into the Canadian market, without incurring the start-up costs involved in launching a new magazine.  By using split-run magazines (modifying the U.S. edition so they contain Canadian ads), U.S. magazine publishers could offer lower rates to advertiser and sell the magazines for less money than Canadian publishers could.  According to the CMPA, the U.S. magazine publishers would be engaged in:

A. export pricing

B. dumping

C. unloading

D. dunking

E. add-on pricing

 

64. The Uruguay Round of trade negotiations:

A. was an agreement to lower trade barriers that existed in the South American countries

B. actually increased tariffs by 10 percent worldwide

C. created the General Agreement on Tariffs and Trades (GATT)

D. had no effect on the entertainment industry

E. was the most ambitious global trade agreement ever negotiated

 

65. The _____ is an agreement that dramatically lowered trade barriers worldwide and created the new World Trade Organization (WTO).

A. Uruguay Round

B. North American Free Trade Agreement

C. Maastricht Treaty

D. Mercosur

E. International Monetary Fund

 

66. The World Trade Organization (WTO):

A. includes all of the same countries that signed the Uruguay Round

B. has emerged as the world’s most powerful institution for reducing trade barriers and opening markets

C. does not yet have an effective dispute settlement procedure but will before the year 2005

D. is controlled by the United States

E. includes China and Russia among its members

 

67. The original purpose of the _____ was to help build infrastructure in developing countries and to help relief the debt burden of these countries.

A. Federal Reserve Bank

B. Central Bank

C. World Bank

D. International Funding Bank

E. International Monetary Fund

 

68. The World Bank's emphasis has recently shifted from helping to build the infrastructure of developing countries to:

A. purchasing food for the population

B. building highways, schools, and hospitals

C. developing new agricultural techniques

D. offering loans to help to relieve their debt burden

E. expansion of local product lines for more exporting

 

69. The _____ is an international bank that normally provides short-term loans to countries that are unable to meet their budgetary expenses.

A. Financial Investment Fund

B. International Monetary Fund

C. North Atlantic Trade Bank

D. World International Federation

E. Federation of International Banks

 

70. A preferential tariff:

A. gives tariff advantages to one country over others

B. is the tax placed on countertrades

C. applies only to luxury items

D. limits the number of products that can be imported from particular countries

E. is used with import quotas to prevent dumping

 

71. When South Korea reduces the tariff that Japan (but only Japan) has to pay when it imports cameras into South Korea, it is called a:

A. differential duty

B. biased tariff

C. nontariff

D. preferential tariff

E. customary duty

Title: ANSWER: D

 

72. Singapore has granted a(n) _____ on the importation of beer and stout made in the Philippines.  This means that beer and stout made in the Philippines can sell for less in Singapore than beer and stout made by New Zealand or the United States.

A. differential duty

B. biased tariff

C. nontariff

D. preferential tariff

E. customary duty

 

73. Nations sometimes form free-trade associations and establish areas where there are few, if any, export and import duties or other regulations that would act as barriers to trade among partners.  These are called:

A. free trade zones

B. preferred tariff pacts

C. interaction zones

D. customary-duty areas

E. regulation-free zones

 

74. The _____ created the world’s largest free-trade zone.

A. International Monetary Fund

B. European Union

C. North American Free Trade Agreement

D. North Atlantic Treaty Organization

E. United Nations Security Council

 

75. The least costly and least risky method for selling a product on the global market is:

A. licensing

B. contract manufacturing

C. importing

D. franchising

E. exporting

 

76. The Northwest Cherry Growers (headquartered in the state of Washington) sells much of its locally grown produce to Taiwan.  _____ was the easiest and least expensive way for the growers’ association to sell to global markets.

A. Licensing

B. Contract manufacturing

C. Importing

D. Franchising

E. Exporting

 

77. When sales of cheese in the United States began to stagnate, the U.S. dairy industry looked for a quick and easy method to reach global markets.  From your understanding of how companies participate in the global marketplace, you should know that the dairy industry selected:

A. licensing

B. contract manufacturing

C. importing

D. franchising

E. exporting

 

78. U.S. plane manufacturer McDonnell-Douglas has authorized Mitsubishi Heavy Industries, a Japanese company, to use its trademarks, patents, and other proprietary knowledge to manufacture F-15 fighter planes.  Mitsubishi Heavy Industries pays McDonnell-Douglas.  This is an example of:

A. licensing

B. contract manufacturing

C. importing

D. franchising

E. exporting

 

79. CoolBrands International has entered an agreement with Binney & Smith to create a line of frozen novelties based on the Crayola brand, including pops, bars, sandwiches, cups, cones, sundaes and shakes.  CoolBrands will pay Binney & Smith a royalty for the right to use the Crayola trademark.  This is an example of:

A. contract manufacturing

B. joint venture

C. cooperative agreement

D. a licensing agreement

E. limited partnership

 

80. The Sara Lee Company sells the Hanes brand of hosiery in the United States.  The manufacturer of this hosiery brand in Great Britain sells it under the brand name of Pretty Polly.  The Sara Lee Company is using _____ to broaden its global marketing base without investing in overseas plants and equipment.

A. contract manufacturing

B. joint venture

C. cooperative agreement

D. a licensing agreement

E. limited partnership

 

81. A domestic firm may decide to contract for the production of its goods by an established foreign manufacturer.  Such private-label manufacturing by a foreign company is called:

A. contract manufacturing

B. franchising

C. duplicate labeling

D. international labeling

E. private label contracting

 

82. An enterprise in which two or more firms or investors (including governments) share ownership of a business and its property rights is called a(n):

A. cooperative

B. international partnership

C. joint venture

D. cartel

E. limited partnership

 

83. AT&T entered into a _____ with Compagnie General d’Electricite, a French company.  The French company brings its patents on digital telephone switches, and AT&T provides the marketing know-how to the relationship.

A. international partnership

B. joint venture

C. joint cooperative

D. oligopoly

E. international cartel

 

84. Capital Radio PLC, the United Kingdom’s biggest commercial radio firm announced in 2002 that it would cooperate with Walt Disney Co. to create a radio network for children under the age of 16.  The company will broadcast to a potential audience of 25 million under the name Capital Disney.  This new radio network will be created as the result of:

A. international partnership

B. joint venture

C. joint cooperative

D. oligopoly

E. international cartel

 

85. A _____ is a form of trading arrangement in which part or all of the payment for purchased goods or services is in the form of other goods and services.

A. counteroffer

B. counteraction

C. contra-deal

D. nonfinancial exchange

E. countertrade

 

86. Pierre Cardin gives technical advice on textile manufacturing to China and in exchange receives silk and cashmere.  This is an example of a(n):

A. joint venture

B. countertrade

C. contra-deal

D. counteroffer

E. international partnership

 

87. In a complicated negotiated, Minmetals in China agreed to purchase at least 24,000 tons of copper cathode for $35 million from Pasar in the Philippines. According to the terms of the sale, Pasar will provide at least $12 million worth of coal to a Chinese power company that will provide the electricity needed to operate Minmetals.  This is an example of a(n):

A. joint venture

B. countertrade

C. contra-deal

D. counteroffer

E. international partnership

 

88. Active ownership of a foreign company, with direct investors having either a controlling or a large minority interest in the firm, is called a(n):

A. direct foreign investment

B. limited partnership

C. international corporation

D. international cooperative

E. cooperative cartel

 

89. When Grand Metropolitan, a British company, purchased U.S.-based Pillsbury Co. in order to expand its product line and the market for its existing consumer products, it was an example of a(n):

A. direct foreign investment

B. limited partnership

C. international corporation

D. international cooperative

E. cooperative cartel

 

90. The Japanese automobile manufacturer Mazda produces the Premacy SUV in Haikou, China at a plant it built in the Chinese province.  Mazda is using _____ to engage in global trading.

A. direct foreign investment

B. limited partnership

C. international corporation

D. international cooperative

E. cooperative cartel

 

91. _____ is the sense of national consciousness that boosts the culture and interests of one country over those of all other countries.

A. Unionism

B. Nationalism

C. Federalism

D. Multinationalism

E. Domestic loyalty

 

92. French language purists on both sides of the Atlantic are on the warpath.  Fed up with the growing prevalence of English on the Web, a French state institution founded in the 17th century to maintain the purity of the language unveiled a dictionary of newly-coined French equivalents to English Internet terms in 2000.  This is symptomatic of the difficulties in doing business in France because in many situations, the business must be conducted in French.  Therefore, it is easy to assume that _____ is extremely important in France.

A. unionism

B. federalism

C. nationalism

D. multinationalism

E. domestic loyalty

 

93. A country’s _____ is the set of beliefs, values, and social norms shared by members of a society that determines what is socially acceptable.

A. regulations

B. traditions

C. laws

D. culture

E. standards

 

94. Bribery translates to kuroi kiri (black mist) in Japan, schmiergeld (grease money), and baksheesh (tip or gratuity) in the Middle East.  This differing way of looking at bribes is descriptive of differences in:

A. local laws

B. culture

C. trade regulations

D. nationalistic standards

E. free trade zones

 

95. Spanish customers view toothpaste as a cosmetic while consumers in the Netherlands view it as a necessary part of daily hygiene and use three times as much their Spanish counterparts.  This example of _____ shows how important it is for marketers to understand.

A. local content laws

B. cultural differences

C. nationalistic standards

D. expropriation laws

E. trade regulations

 

96. Which of the following is NOT part of a nation’s infrastructure?

A. its postal systems

B. its Internet sites

C. its mountain ranges

D. its railroads

E. its interstate roads

 

97. The _____ of Algeria includes 3,973 km of railroads, 104,000 km of roads, and 54 paved airports. It also has only five telephones for every 100 citizens and only two Internet service providers.

A. oligopoly

B. natural advantage

C. infrastructure

D. ethnocentrism

E. cultural environment

 

98. Jamaica has 35 airports, 18,700 kilometers of paved and unpaved road and a total of 272 kilometers of railroad track.  This is a partial description of the nation's:

A. oligopoly

B. natural advantage

C. infrastructure

D. ethnocentrism

E. cultural environment

 

99. _____ move resources, goods, services, and skills across national boundaries without regard to the country in which they are headquartered.

A. Multinational corporations

B. Borderless corporations

C. International monopolies

D. Cartels

E. Oligopolies

 

100. The Ford Motor Company has investing $6 billion to build a “world car,” the midsize Mondeo.  The car was designed in the U.S., Germany, and the United Kingdom to be adaptable to any market in the world.  Ford is a(n) _____ company.

A. intercultural

B. interpartnership

C. multinational

D. nationalistic

E. conglomerate

 

101. Which of the following is NOT one of the advantages associated with multinational corporations?

A. the capacity to tap into new technology from around the world

B. the ability to shift production from one plant to another as market conditions change

C. the ability to sidestep regulatory problems

D. a positive exchange rates

E. significant labor savings, even in highly unionized countries

 

102. The most fundamental reason for the growth in world trade is probably due to:

A. the creation of free trade areas

B. the need for businesses to expand their markets

C. fluctuating exchange rates

D. cultural differences

E. political unrest

 

103. Which of the following is NOT listed in the text as a reason why more and more companies are doing business in the global marketplace?

A. Companies enter the global marketplace to maintain their balance of trade.

B. Companies enter the global marketplace in order to stay competitive with companies that are marketing the same product as they market.

C. Companies enter the global marketplace to expand their market.

D. Companies enter the global marketplace to acquire the resources they need to operate.

E. Companies enter the global marketplace as a result of governments lowering their trade barriers.

 

 

FILL-IN-THE-BLANK QUESTIONS

 

1. South-Western College Publishing publishes business textbooks.  A percentage of the books it publishes are sold to students in Canada.  The textbooks are ____ to the Canada market.

 

2. Mariah Dover cashed her $100 traveler's check in Riga, the capital of Latvia.  At the current _____ rate, she received $61.82 in Latvian currency from the bank teller who took her traveler’s check.

 

3. Because the United States produces hospital surgical equipment more efficiently than any other country, the U.S. has a(n) _____ advantage in its production.

 

4. Japan has limited the number of pounds of citrus fruit that can be imported into the country.  This limitation is called a(n) _____.

 

5. The United States imposes a(n) _____, a tax, on all imported bicycles.

 

6. _____ is the act of charging a lower price for a product in foreign markets than in its home market in order to win customers or get rid of a surplus.

 

7. The _____, formerly the International Bank for Reconstruction and Development, is a bank that offers low-interest loans to developing nations.

 

8. The newest free trade agreement is the _____.  Participants in this agreement are the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Nicaragua, and Honduras.

 

9. _____ is a trade agreement among Argentina, Brazil, Paraguay, and Uruguay that eliminates most tariffs among the member nations.

 

10. Meter-Man Inc. manufactures agricultural measuring devices in a small town in Minnesota.  Meter-Man sells these devices to farmers in Brazil, Venezuela, and  Argentina.  Meter-Man is _____ measuring devices to South American nations.

 

11. _____ is a legal process whereby a domestic firm gives a foreign firm the right to use its patents, trademarks, brands, products, and company name.  The foreign firm will pay a royalty or fee agreed on by both parties.

 

12. _____ is a form of barter in which countries trade goods and services.

 

13. _____ is the sense of national consciousness that boosts the culture and interests of one country over those of other countries.

 

14. A country’s _____ is its set of shared beliefs, values, and social norms in a society.

 

15. _____ are corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located.

 

 

SHORT-ANSWER QUESTIONS

 

1. How would you describe the balance of trade in a country that exports more than it imports?

 

2. What happens when a country lowers the value of its currency relative to other countries?

 

3. There are certain types of wood that are only available from trees grown in the Brazilian rain forest.  What kind of advantage does this give Brazil over all other nations who might want to import these exotic woods?

 

4. What term has the opposite meaning from protectionism?

 

5. There are arguments for and against the use of tariffs.  What are the most likely reasons why a cattle-producing country like Argentina might have a tariff on the importation of beef?

 

6. The United States prohibits the importation of 43 styles of automatic rifles.  This is an example of which of the nontariff barriers to trade?

 

7. What new trade organization was created by the Uruguay Round to replace the old General Agreement on Tariffs and Trade (GATT)?

 

8. List the two international financial organizations that are instrumental in fostering global trade.

 

9. What other country besides Costa Rica, the Dominican Republic, El Salvador, Guatemala, Nicaragua, and Honduras signed the Central America Free Trade Agreement (CAFTA)?

 

10. Companies can use several methods to participate in the global marketplace.  To which of the methods is franchising is most closely related?

 

11. Briefly explain how an exchange of merchandise can occur without involving cash or any other form of financial consideration?

 

12. In order to show a commercial on South Korean television, a company like Gillette must film the commercial using South Korean actors.  What political consideration is most likely responsible for this legal requirement?

 

13. How does an infrastructure influence a country’s economic development?

 

14. What do you call companies that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located?

 

15. What is the most fundamental reason for the growth in world trade?

 

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