Availability of energy is an important aspect of the business environment necessary for
facilities location planning.
Matching market needs to the company’s abilities is the first step in developing a
successful export strategy.
Direct exporters always sell directly to end users.
Advance payment made by an importer to an exporter normally takes the form of a
sight draft.
If a foreign company is taken over by the host-country government and some form of
compensation is paid, confiscation is said to have occurred.
Barter is an alternative for buyers who lack money needed to pay for imports.
Scenario: Not-So-Free Freeland
Freeland is a semi-closed economy whose government believes in protecting national
identity and building a self-sustained economy. The government’s priority is to protect
local jobs and provide opportunities to Freeland’s emerging industries to flourish
without the threat of external competition. The most common economic reason for
nations attempts to influence international trade is preserving national security.
Technology development is an example of a primary activity in the value chain of an
organization.
Cross licensing occurs when companies use licensing agreements to swap intangible
property with one another.
Scenario: Moonland Union
Twenty-six nations of Moonland region, have decided to cooperate with one another to
eliminate trade barriers among them and create the Moonland Union. They are not sure,
however, to what extent they want to cooperate.
A common market area is the greatest extent of national integration.
Expropriation is said to have occurred when a foreign national company dispossesses a
home-country company through uncompetitive practices.
Which of the following will add to the cost of an imported product by levying an
additional tax upon it?
A) tariffs
B) quotas
C) local content requirements
D) embargoes
When a U.S. company buys shares of stock in a French company on France’s stock
market, the U.S. balance of payments records the transaction as an ________.
A) outflow of capital with a plus sign
B) outflow of capital with a minus sign
C) inflow of capital with a plus sign
D) inflow of capital with a minus sign
Companies along a distribution channel that work together in delivering products to
customers are called ________.
A) subsidiaries
B) intermediaries
C) value chains
D) value networks
The ________ account within the United States’ current account includes financial
gains compensated to entities in other nations that is earned on assets they hold in the
United States.
A) income receipts
B) income payments
C) merchandise
D) services
Which of the following countries would a watchmaker most prefer to manufacture its
watches in, in order to capitalize on buyer perceptions of high quality?
A) China
B) Thailand
C) Mexico
D) Switzerland
Which of the following statements is incorrect with regard to the importance of colonies
for mercantilist nations?
A) They served as sources of inexpensive raw materials.
B) They served as markets for higher-priced finished goods.
C) They served as a source of military protection.
D) They served as a source of profits for mercantilist powers.
Rates that the world’s largest banks charge one another for loans are called ________.
A) interbank interest rates
B) London Interbank Bid Rates
C) exchange rates
D) official bank rates
Donna Bader, Globalization opponent
Donna Bader spent her final year at college studying the effect of various economic
factors on the economy of developing nations. Based on the results of her study, she
concluded that globalization does these countries more harm than good.
Her argument is vulnerable to criticism because it fails to ________.
A) quantify the disparity between high-income and low-income nations
B) show that political and cultural factors have been taken into account
C) demonstrate the importance of market flexibility
D) highlight the environmental effect of globalization
________ refers to the foreign direct investment in factories, equipment, and land that
cannot be pulled out of the market quickly.
A) Hot money
B) Patient money
C) Fiat money
D) Key money
Bob is a journalist who intends to spend the next five months exploring Konesia. In
order to be able to fit in with the locals, he studies their culture in detail. He familiarizes
himself with their tastes and preferences, takes note of their taboos, and memorizes
many of their sayings and phrases. Which of the following terms best describes his
actions?
A) material culture
B) popular culture
C) cultural imperialism
D) cultural literacy
The decentralization of production facilities is a typical policy for companies that
pursue ________.
A) a multinational strategy
B) a global strategy
C) mass customization
D) vertical integration
________ has one of the highest levels of macropolitical risk.
A) Saudi Arabia
B) Chile
C) Venezuela
D) Afghanistan
Scenario: Blickinstock at the Crossroads
Auto parts supplier, Blickinstock Ltd., would like to expand its presence in Latin
America. To that end, Blickinstock is trying to decide whether to purchase an existing
company in a remote region of Argentina or build its own subsidiary. Keith Moon,
Blickinstock’s vice president of global business development, will be making a
presentation to the board outlining the company’s options. If board members ask about
the maquiladora industry, Keith would explain that it refers to ________.
A) Mexico’s low-cost labor union
B) the cross-border drug trafficking problem that threatens to limit legitimate
production in Mexico
C) the low-wage, 130-mile-wide strip along the U.S.-Mexico border that comprises a
special economic region
D) Latin America’s new model for business that restricts foreign investors to take
advantage of government incentives
Country A implements a ban on trade in two products with Country B. This is an
example of a(n) ________.
A) embargo
B) tariff-quota
C) tariff
D) voluntary export restraint
Scenario: The French Government
The French Government has placed many restrictions upon the use of the English
language within their borders. They argue that the inflow of English movies, music, and
literature is responsible for the dilution of their rich culture.
Andy comes from a culture that emphasizes hard work and promotes the
entrepreneurial spirit within individuals. While he and his coworkers are encouraged to
achieve their personal goals, they are also held responsible for their actions. According
to Hofstede’s framework, which of the following dimensions does this culture illustrate?
A) feminity
B) individualism
C) high power distance
D) high uncertainty avoidance
Which of the following accounts of a country’s balance of payments records
transactions involving the export of services?
A) transactional account
B) capital account
C) savings account
D) current account
Offering the same products using the same marketing strategy in all national markets of
an organization is referred to as a ________ strategy.
A) global
B) retrenchment
C) multinational
D) blue ocean
Which of the following communication strategies expands the same product into new
target markets but alters its marketing promotion?
A) product/communications extension
B) product extension/communications adaptation
C) product adaptation/communications extension
D) product/communications adaptation
Scenario: Frankfurter Friday
Betty Cleveland is the vice president of Frankfurter Friday, a highly successful hot dog
joint in Oceania. Her company decides to expand to Asia and identifies China as the
ideal market. Before she leaves for China, she studies their culture extensively and
discovers that the number four is considered extremely unlucky, that not everybody is
fluent in China’s official language-Mandarin-and that punctuality is a highly valued trait
in the country.
A nuclear family comprises of one’s immediate family, along with grandparents, uncles,
aunts, and cousins.
As a result of globalization, Argonia finds that its national borders are becoming less
relevant. This indicates that Argonia is undergoing ________.
A) denationalization
B) standardization
C) reorganization
D) internationalization
How is process planning affected by a company’s business-level strategy? How can
outsourcing lower risk for firms?
Identify and explain the types of currency instruments used in the forward market.
Are the Kluckhohn-Strodtbeck and Hofstede frameworks useful for understanding
subcultures? Why or why not?
Explain the factor proportions theory and discuss why it is at odds with the new trade
theory.
Discuss the benefits and drawbacks of strategic trade policy. How are the drawbacks of
subsidies similar to the drawbacks of strategic trade policy?
Briefly describe the three main institutions of the foreign exchange market.
Explain how tariffs protect domestic producers, and describe how a foreign trade zone
might offset the effects of tariffs.
Explain the purpose of antitrust laws. How would the Friedman philosophy of corporate
social responsibility most likely support a decision by a company to expand
internationally into a country with weak antitrust laws? Include a description of the
Friedman philosophy in your answer.