40) John wants to expand into the foreign markets, but he can’t convince his partners. They feel
international markets are the domain of large corporations. John is facing which barrier to
international trade?
A) Financing
B) Political
C) Cultural
D) Attitude
Topic: Domestic Barriers
AACSB: Multicultural and Diversity
41) An entrepreneur wants to move into international markets but can’t quite figure out how to do
it. He’s not clear on his target market or how to approach it but he knows he needs to “go global.”
This entrepreneur is experiencing which barrier to international trade?
A) Financing
B) Information
C) Cultural
D) Attitude
Topic: Barriers to International Trade
AACSB: Multicultural and Diversity
42) A type of non-tariff barrier to trade that consists of selling large quantities of products in
foreign countries below cost is referred to as:
A) dumping.
B) clearance selling.
C) bartering.
D) exporting.
Topic: International Barriers
AACSB: Analytic Skills
43) Malcolm won a contract to provide nuts, bolts, and washers to a small African country’s
military. Unfortunately, neither his bankers nor venture capitalists would provide the loans
needed to buy the material to produce the order. The bank didn’t do international loans. Which
barrier to international trade is Malcolm experiencing?
A) Information
B) Cultural
C) Financing
D) Attitude
Topic: Barriers to International Trade
AACSB: Reflective Thinking
11
44) The tax that a government puts on products that are imported into a country is called a(n):
A) embargo.
B) tariff.
C) quota.
D) non-tariff barrier.
Topic: Tariff Barriers
AACSB: Analytic Skills
45) A quota is:
A) a duty, or tax, that a government puts on products that are imported into the country.
B) the maximum amount of a product that can be imported or exported.
C) a prohibition or suspension of foreign trade of specific imports or exports.
D) a law that a government uses to regulate products that are imported into the country.
Topic: Tariff Barriers
AACSB: Analytic Skills
46) An embargo is:
A) a duty, or tax, that a government puts on products that are imported into the country.
B) the maximum amount of a product that can be imported or exported.
C) a law that a government uses to regulate products that are imported into the country.
D) a prohibition or suspension of foreign trade of specific imports or exports.
Topic: Tariff Barriers
AACSB: Analytic Skills
47) The members of the European Community have limited the number of cars Japanese
automakers can export into the European market. This is an example of which type of trade
barrier?
A) Tariff
B) Quota
C) Embargo
D) Dumping
Topic: Tariff Barriers
AACSB: Analytic Skills
12
48) Political barriers that entrepreneurs face are:
A) government takeovers of private property.
B) attempts at coups to overthrow ruling parties.
C) violent acts against businesses and their employees such as kidnappings and bombings.
D) All of the above
Topic: Political Barriers
AACSB: Analytic Skills
49) An American executive went to a foreign country to sign a business contract. While there, he
found that there were numerous government regulations his company needed to meet before
closing the deal. This executive was experiencing which barrier to international trade?
A) Non-tariff
B) Political
C) Cultural
D) Domestic
Topic: Political Barriers
AACSB: Analytic Skills
50) Wanda is an American manager with a U.S. firm in Japan. Wanda is having difficulty
“conducting business.” When invited to play golf she attempts to talk business, but her Japanese
hosts gently refuse. When she meets a new corporate customer, she tries to get “right down to
business” to show respect for their time, but they insist on talking about non-business matters for
several meetings. Wanda is experiencing what international barrier to doing business?
A) Cultural
B) Political
C) Domestic
D) Non-tariff
Topic: Cultural Barriers
AACSB: Reflective Thinking
51) The North American Free Trade Agreement:
A) brought Chile, Mexico, the United States, and Canada together as one market.
B) eliminated all tariffs among member nations, effective immediately, and raised them to
nonmembers.
C) benefits the trading relationship between Canada and the United States most.
D) created a unified market of 478.5 million people and $19.2 trillion in goods and services.
Topic: NAFTA
AACSB: Analytic Skills
13
52) The North American Free Trade Agreement has which of the following provisions?
A) The immediate elimination of all tariff and quota barriers on all goods
B) The elimination of trade barriers among Canada, Mexico, and the United States
C) A lowering of safety and air quality standards
D) The formation of a North American Trade Organization
Topic: NAFTA
AACSB: Analytic Skills
53) The path to success requires businesses to become ________ who see the world as their
market rather than just ________.
A) “exporters”; “insiders”
B) “insiders”; “exporters”
C) “importers”; “insiders”
D) “outsiders”; “exporters”
Topic: Why Go Global?
AACSB: Multicultural and Diversity
54) Which of the following refers to demographic/physical environment when screening a
country?
A) Population size, growth and density
B) System of government
C) Economic growth
D) Balance of payment
Topic: A Country Screening Matrix
AACSB: Multicultural and Diversity
55) Which of the following refer to demographic / physical environment when screening a
country?
A) Urban and rural distribution
B) Climate and weather variations
C) Shipping distance & natural resources
D) All of the above
Topic: A Country Screening Matrix
AACSB: Multicultural and Diversity
14
56) Currency: inflation rate, availability, controls, stability of exchange rate; Balance of
payments; Per capita income and distribution; Disposable income and expenditure patterns are
components of:
A) demographic/physical environment.
B) social/cultural environment.
C) economic environment.
D) market access.
Topic: A Country Screening Matrix
AACSB: Analytic Skills
57) Understanding the customer needs and desires is a component of:
A) demographic/physical environment.
B) social/cultural environment.
C) product potential.
D) market access.
Topic: A Country Screening Matrix
AACSB: Analytic Skills
58) Issues to be addressed before entering into a joint venture include:
A) What contributions will each party make?
B) Who will be responsible for making which decisions?
C) Under what circumstances can the parties terminate the relationship?
D) All of the above
Topic: Joint Ventures
AACSB: Analytic Skills
59) Which type of international entry requires “prenuptial agreement”?
A) Foreign licensing
B) Foreign direct investment
C) Import/export
D) None of the above
Topic: Joint Ventures
AACSB: Analytic Skills
15
60) A ________ is an agreement between an exporter’s bank and the foreign buyer’s bank that
guarantees payment to the exporter for a specific shipment of goods.
A) bank draft
B) letter of credit
C) COD
D) line of equity
Topic: Exporting
AACSB: Analytic Skills
61) A ________ is a document the seller draws on the buyer, requiring the buyer to pay the face
amount (the purchase price of the goods) either on sight (a sight draft) or on a specified date (a
time draft) once the goods are shipped.
A) bank draft
B) letter of credit
C) COD
D) line of equity
Topic: Exporting
AACSB: Analytic Skills
62) Which of the following is correct?
A) A tariff is a tax, or duty, that a government imposes on goods and services imported into that
country.
B) A quota is a tax, or duty, that a government imposes on goods and services imported into that
country.
C) A quota is a limit on the amount of a product imported into a country.
D) Both A and C
Topic: Tariff Barriers
AACSB: Analytic Skills
63) George is planning to export fabrics to the Bahamas. After investigating the trade rules, he
found that he can only export limited yards of fabrics to the Bahamas. This is an example of:
A) a tariff.
B) a quota.
C) an embargo.
D) dumping.
Topic: Tariff Barriers
AACSB: Reflective Thinking
16
64) Martha has heard that Iranian caviar is in demand and is planning to start an importing
business. After further research, she found that she is not able to import such product from Iran
to the United States. This is an example of:
A) a tariff.
B) a quota.
C) an embargo.
D) dumping.
Topic: Tariff Barriers
AACSB: Reflective Thinking
65) A(n) ________ is a total ban on imports of certain products or all products from a particular
nation.
A) tariff
B) quota
C) embargo
D) dumping
Topic: Tariff Barriers
AACSB: Analytic Skills
66) The ________ of a nation includes the beliefs, values, views, and mores that its inhabitants
share.
A) political beliefs
B) business beliefs
C) personal beliefs
D) cultural beliefs
Topic: Cultural Barriers
AACSB: Analytic Skills
67) Even though large companies must view themselves as “global companies” if they are to
succeed, small companies cannot because they have a significant competitive disadvantage in the
global environment.
Topic: Introduction
AACSB: Analytic Skills
17
68) A recent study concluded that American firms with global operations grew faster and earned
more than purely domestic companies.
Topic: Introduction
AACSB: Analytic Skills
69) For many businesses across the world, “going global” is now a matter of survival, not
preference.
Topic: Why Go Global?
AACSB: Analytic Skills
70) Globalization is risky.
Topic: Introduction
AACSB: Analytic Skills
71) Going global tends to make companies more quality and customer conscious.
Topic: Why Go Global?
AACSB: Analytic Skills
72) Going global is risk-free.
Topic: Introduction
AACSB: Analytic Skills
73) An important question for the small business owner to ask before entering global markets is,
“If we go global, can we get back out?”
Topic: Why Go Global?
AACSB: Analytic Skills
74) Going global can lower manufacturing costs.
Topic: Why Go Global?
AACSB: Analytic Skills
18
75) Small companies can no longer consider themselves to be strictly domestic businesses in this
hotly competitive global environment.
Topic: Why Go Global?
AACSB: Analytic Skills
76) Going up against some of the toughest competition in the world forces a company to hone its
competitive skills.
Topic: Why Go Global?
AACSB: Analytic Skills
77) One of the issues an entrepreneur must address before going global is whether or not there is
a profitable market in which the firm has the potential to be successful for an extended period of
time.
Topic: Why Go Global?
AACSB: Analytic Skills
78) The least expensive way to enter international markets is by using a trade intermediary.
Topic: Creating a Presence on the Web
AACSB: Analytic Skills
79) Unlike an EMC or an ETC, manufacturer’s export agents are international sales
representatives who work on commission in a short-term relationship with the small domestic
company.
Topic: Export Trading Companies
AACSB: Analytic Skills
80) In order to grow their international business, Chong and Kelly’s Engineered Demolitions,
they have had to become more culturally sensitive.
Topic: Barriers to International Trade
AACSB: Analytic Skills
19
81) Export merchants represent a limited number of non-competing domestic companies.
Topic: Export Merchants
AACSB: Analytic Skills
82) Selling to a resident buying office is just like selling to domestic customers since the buying
office handles all of the details of exporting the products.
Topic: Resident Buying Offices
AACSB: Analytic Skills
83) Foreign distributors work in a close partnering relationship with a small business, providing
a wide range of services to a limited number of domestic companies.
Topic: Foreign Distributors
AACSB: Analytic Skills
84) The key to establishing a successful relationship with a trade intermediary is to thoroughly
screen in order to determine what type of intermediary the small company needs.
Topic: The Value of Using Trade Intermediaries
AACSB: Analytic Skills
85) In a domestic joint venture, a domestic company forms an alliance with a company in the
target nation.
Topic: Joint Ventures
AACSB: Analytic Skills
86) When two small businesses in the target nation form an alliance, they have formed a foreign
joint venture.
Topic: Joint Ventures
AACSB: Analytic Skills
87) Choosing the “right” joint venture partner is crucial to its ultimate success.
Topic: Joint Ventures
AACSB: Analytic Skills
20