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Chapter 03 - Doing Business in Global Markets
3-81
A __________ is a partnership in which two or more companies (often from different
countries) join together and share the risk and costs in order to undertake a major project.
A. multinational cooperative
B. joint venture
C. franchisee transfer
D. recruit affiliation
244. A __________ represents a long-term partnership between two or more companies
established to help each firm build competitive market advantages, without sharing the
cost of risk.
A. multinational cooperative
B. shared venture
C. global franchise
D. strategic alliance
245. An advantage of forming a joint venture is:
A. no shared costs or risk.
B. a perpetual arrangement.
C. it's a good strategy for entering new markets where you have never had a presence.
D. it's a great way to enter new markets without divulging any marketing or management
strategy to the other member of the joint venture.
246.
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A form of foreign direct investment, where a domestic company purchases a company in a
foreign country to produce a similar product or service is a:
A. licensor.
B. joint venture.
C. foreign subsidiary.
D. host company.
247. When foreign firms build production facilities in the United States, they are engaging
in:
A. exporting.
B. foreign direct investment.
C. importing.
D. countertrading.
248. A risk unique to firms with direct investment in a foreign county is the potential
takeover of the firm's assets by the government of that country. This takeover is called
a(n):
A. hostile takeover.
B. political bias.
C. appropriation.
D. expropriation.
249.
Chapter 03 - Doing Business in Global Markets
The __________________ is a firm that has made sizeable investments and has a physical
presence in several foreign countries as a manufacturer and marketer of products and
services.
A. trade cartel
B. multinational corporation
C. host company
D. import trading company
250. A fast-growing form of foreign direct investment is ______________ which are
government controlled investments in foreign companies.
A. sovereign wealth funds
B. multinational wealth funds
C. government mutual funds
D. government wealth management derivatives
251. A specialized organization that assists businesses in creating relationships with foreign
customers and suppliers is known as a(n):
A. export trading company.
B. international brokerage house.
C. keiretsu.
D. global trade bank.
Feedback: Export trading companies specialize in matching buyers and sellers from different
countries.
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262. The Quinoa seed is in high demand in wealthier countries such as the U.S. and Japan.
Approximately 97% of all Quinoa production comes from small farmers in Bolivia and
Peru who farm at high elevations—8,000 feet or higher. The seed is considered highly
nutritious. Mostly grown and harvested in Bolivia and Peru, and sold to markets in other
countries, the seed is now considered an important __________ for these nations. The
governments of Bolivia and Peru are hopeful that this product will increase the quality of
life of their farmers.
A. foreign direct investment
B. quota
C. export
D. import
Feedback: Bolivian and Peruvian farmers cultivate and harvest the Quinoa seed in their
respective countries, and then sell it abroad to other markets. Exporting is the simplest form
of international trade..
263. Pepsi Cola entered into a long-term contract with a South African beverage company.
The contract calls for the South African firm to produce and market Pepsi Cola in South
Africa. Pepsi will receive royalties on each case of beverage sold. This is an example of:
A. licensing.
B. a joint venture.
C. a foreign subsidiary.
D. foreign direct investment.
Feedback: Pepsi and Coke often enter foreign markets by licensing the right to manufacture
its product or use its trademark to a foreign company for a fee (royalty).
264.
Chapter 03 - Doing Business in Global Markets
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McHugh Corporation of Ireland and Enomoto Enterprises based in Japan recently
produced a new electric car with rechargeable batteries that can be driven at high speeds
for long distances. They have shared the investment, each contributing important
technological expertise to the effort. These firms entered into a(n) ____ to build this car.
A. Joint venture
B. Multinational cartel
C. Industrial countertrade agreement
D. Multinational limited partnership
Feedback: A joint venture is a partnership in which two or more companies (often from
different countries) join to undertake a major project.
265. Boasting a $1.6 billion Ketchup brand, the H.J. Heinz Company is flying high with a
44% increase in its sales of Indonesian based ABC, a soy sauce company that it owns.
ABC is a _____________ of Heinz.
A. licensed venture
B. joint venture
C. export trading company
D. foreign subsidiary
Feedback: A foreign subsidiary is the most common form of foreign direct investment, where
a large corporation buys firms in other countries to produce and distribute its products locally.
Most business functions are under the control of the subsidiary's management.
266.
Chapter 03 - Doing Business in Global Markets
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Nike _________________ its products in foreign countries, where labor is cheap and
production sites are owned by other companies. This strategy allows Nike to experiment
in new markets without incurring large start-up costs involved with building their own
production facilities.
A. contract franchises
B. pays governments to market
C. globally licenses
D. contract manufactures
Feedback: Contract manufacturing involves the production of private-label goods by a foreign
company to which a domestic company then attaches its own brand name or trademark.
267. If a Swiss chocolate firm purchases an American ice cream manufacturer, the
American ice cream manufacturer becomes a:
A. global franchise.
B. a global joint venture.
C. foreign subsidiary.
D. contract manufacturer.
Feedback: A foreign subsidiary is a company that is owned and operated in a foreign nation
by another company called the parent company. The Swiss firm Nestlé's purchase of the U.S.
based Dreyer's Ice Cream is an example a Swiss owned foreign subsidiary operating in the
United States.
268.
Chapter 03 - Doing Business in Global Markets
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Which of the following statements is the most accurate observation regarding
multinational corporations?
A. Rather than manage manufacturing and marketing facilities overseas, most
multinational corporations attempt to enter global markets by exporting domestically
produced goods.
B. Most multinational corporations are small- to medium-sized firms.
C. Because of political and economic concerns, most multinational corporations choose to
ignore investment opportunities in China and Russia.
D. Only those firms with a physical presence in different nations qualify as multinational
corporations.
Feedback: Multinational corporations have multinational stock ownership, and management,
as well as a physical presence in different nations.
269. In 2008, Emerson, Inc. reported that it owns and operates 265 companies worldwide
with 23% of its sales coming from Europe, 18% from Asia, 46% from the U.S., and 13%
from other parts of the world. Clearly, Emerson exemplifies ________________.
A. a sovereign wealth fund
B. a multinational corporation
C. a foreign subsidiary
D. an expropriated organization
Feedback: Foreign direct investment is the buying of permanent property and businesses in
foreign nations. A multinational corporation has a physical presence and investments in
several countries.
270.
Chapter 03 - Doing Business in Global Markets
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Adam's Apple Corporation ships all of the apples from its orchards in Washington to a
single buyer in Japan. The firm's entire profits are derived from this international
transaction. Adam's Apple Corporation:
A. is an example of a multinational corporation.
B. is not a multinational corporation.
C. is contributing to the U.S. balance of trade deficit.
D. will benefit greatly from the establishment of NAFTA.
Feedback: A company may be exporting its entire product thus deriving 100 percent of its
sales and profits overseas, but that alone would not make it a multinational. A multinational
corporation is an organization that has manufacturing and marketing operations in many
different countries. It also has multinational stock ownership and multinational management.
271. ExxonMobil Corporation refines and markets its petroleum products in many different
nations. In addition, Exxon's stockholders and managers come from many different
nations. If some of the nations where it operates decided to take over the assets of the
company, this act would constitute:
A. patent infringement.
B. expropriation.
C. illegal activity.
D. hostile takeover.
Feedback: A multinational corporation is an organization that does manufacturing and
marketing in many different countries. It also has multinational stock ownership and
multinational management. If relationships with host nations should falter, the firm's assets
could be expropriated, a term used to describe a foreign government's take-over of a
multinational company's assets.
272.
Chapter 03 - Doing Business in Global Markets
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An article published in the journal of "Modern Healthcare" reported that in 2007, the
governments of the following nations held sizeable investments in U.S. companies,
(including U.S. healthcare providers):
These investments are called _____________ and some experts fear that the strategy
behind these governments sinking large amounts of capital in U.S. companies may have
____________________.
A. Government Funded Businesses (GFBs); terrorist implications
B. Government Bond Funds (GBFs); aggressive growth implications
C. Trade Agreement Funds (TAFs); strategic maneuvers to socialize medicine
D. Sovereign Wealth Funds (SWFs); geopolitical objectives
Feedback: Sovereign wealth funds are large pools of money that foreign governments invest
in products and services in the U.S. and in other nations. Some economic and political science
experts fear that these investments may have geopolitical repercussions in the future.
273. Which of the following terms describes the set of values, beliefs, rules, language, and
institutions held by a specific group of people?
A. Culture
B. Ethnocentricity
C. Institutional society
D. Social myopia
274.
Chapter 03 - Doing Business in Global Markets
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____________ describes an attitude held by some American business people that
American culture is superior to all others.
A. Primary culture
B. Ethnocentricity
C. Cultural institutionalism
D. Social myopia
275. Ethnocentricity means:
A. "When in Rome, do as the Romans!"
B. You believe your culture is superior to others.
C. Cultural awareness.
D. A trend toward accepting other cultures and trying various foods and religions to see if
they fit your lifestyle.
276. Which of the following sociocultural forces can have a significant impact on global
business operations?
A. Religion
B. Universal sales standards
C. Single-phase marketing
D. Global marketing
277.
Chapter 03 - Doing Business in Global Markets
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Which of the following represents the value of one nation's currency relative to the
currencies of another country?
A. Euro rate
B. Currency rate
C. Exchange rate
D. Standard of living
278. Global financial markets operate under a system of ___________, where the supply
and demand for various currencies dictate their value at any moment in time.
A. living rates
B. foreign good rates
C. floating exchange rates
D. live trading rates
279. __________ is the exchange of merchandise or services for other merchandise or
services without the exchange of money.
A. Exporting
B. Bartering
C. Importing
D. Factoring
280.
Chapter 03 - Doing Business in Global Markets
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Due to a nation's weak currency, people may have to fall back on ____________.
A. exporting
B. bartering
C. importing
D. factoring
281. __________ is lowering the value of a nation's currency relative to other currencies.
A. Revaluation
B. Deflation
C. Devaluation
D. Negative valuation
282. _______ is a complex form of bartering in which several countries may be involved,
each trading products and services, for the products and services of another country.
A. Venture bartering
B. Global monetarism
C. Countertrading
D. Global counter-exchange
283.
Chapter 03 - Doing Business in Global Markets
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Under the floating exchange rate system, the value of a country's currency is determined
by:
A. the monetary authorities of that country.
B. the United Nations Committee on Floating Currencies.
C. the currency's supply and demand in the global market.
D. countertrading.
284. The legislation that prohibits U.S. businesses from making "questionable" or
"dubious" payments to foreign officials, to secure business contracts is the
_____________.
A. Foreign Corrupt Practices Act
B. Foreign Anti-trust Act
C. Multinational Collusion Law
D. Global Good Conduct Law
285. Which of the following statements describes laws and regulations in global markets?
A. No central system of law exists.
B. The World Trade Organization reigns supreme and dictates law for all global markets.
C. Most trading partners will default to the laws that govern the seller's home country.
D. With the exception of labor relations, most laws are pretty standard across global
markets.
286.
Chapter 03 - Doing Business in Global Markets
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To understand legal and regulatory conditions and be successful in global markets it's
often useful to contact:
A. The local Better Business Bureau.
B. Local businesspeople in the host countries.
C. The Regional Economic Development Trading Desk (REDTD).
D. The Organization for Economic Cooperation and Development (OECD).
287. People from other nations sometimes comment on the ethnocentric attitudes of U.S.
business people. This indicates that American business people:
A. Follow the philosophy of "when in Rome, do as the Romans."
B. Quickly accept the suggestions and ideas of others.
C. Believe that American culture is superior to all others.
D. Celebrate the many ethnic groups that make-up American life.
Feedback: Ethnocentricity is the view that one's culture is superior to all others.
288.
Chapter 03 - Doing Business in Global Markets
A sociological challenge that must be overcome in order to be successful in the global
market is:
A. A lack of cultural understanding.
B. An overly anxious desire to please at all cost.
C. Inequality of global natural resources.
D. Wealth management.
Feedback: Understanding cultural differences is essential to succeed in global trade.
Americans have been accused of ethnocentricity, which is an attitude that one's own culture is
superior to all others. This type of attitude is a hurdle to be overcome in the global
marketplace.
289. _________________ differences such as insufficient electrical power and
transportation systems can present special problems for U.S. firms when attempting to
enter global markets.
A. Physical and environmental
B. Legal and regulatory
C. Economic
D. Governmental
Feedback: Technological and infrastructure differences and other physical environmental
challenges impact the type of products that can be successfully exported to various regions of
the world. Many less developed countries do not have adequate electricity, while other
countries do not use the U.S. standard of 110 volts. Inadequate transportation systems can
cause distribution problems for perishable food items.
290.
