Receiving financing from government agencies is often crucial to the success of small
businesses just beginning to export.
Franchising is primarily used in the manufacturing industries.
A company can improve its profits by selling in a country with a strong currency and
sourcing from a country with a weak currency.
The theories of comparative and absolute advantage assume that specialization in the
production of one particular good results in efficiency gains.
To speed up the process of getting government approval for local operations, companies
must hire home country nationals.
The cultural relativist view says that a company’s sole responsibility is to maximize
profits for its owners while operating within the law.
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.
The least amount of sovereignty that must be surrendered to a trading block occurs in a
political union.
________ are traded in Luxembourg and London and represent a specific number of
shares in an outside company.
A) Common stock
B) Bills of lading
C) Revocable letters of credit
D) Global Depository Receipts
Which of the following terms is used to refer to the positive or negative evaluations,
feelings, and tendencies that individuals harbor toward objects or concepts?
A) customs
B) attitudes
C) traditions
D) values
The ________ was a 1985 agreement among the G5 nations to act together in forcing
down the value of the U.S. dollar.
A) Bretton Woods Agreement
B) Smithsonian Agreement
C) Plaza Accord
D) Louvre Accord
A(n)________ policy would give the foreign units of a company a degree of autonomy
in decision-making.
A) centralized production
B) vertical integration
C) mass customization
D) polycentric staffing
When doing business with former communist countries, Trader’s Paradise insists on
getting paid in a currency that can be traded freely in the foreign exchange market. The
price of this currency is determined by the forces of supply and demand. Which of the
following is the mode of payment illustrated in this scenario?
A) community currency
B) private currency
C) local currency
D) convertible currency
A(n) ________ channel does not create strong barriers to channel entry for other
producers, nor does it provide much control over reseller decisions such as what
competing brands to sell.
A) one-level
B) zero-level
C) exclusive
D) intensive
The primary purpose of the Gulf Cooperation Council at its formation was to
________.
A) cooperate with the increasingly powerful trading blocs in Europe at the time
B) create the largest free trade area on the planet
C) increase members’ tariff rates from an average of 7.5 percent to 15 percent
D) introduce barriers to trade and investment
Political risk that affects all firms in a country is referred to as ________.
A) micropolitical risk
B) macropolitical risk
C) inclusive political risk
D) exclusive political risk
The absence of government regulation in the Eurobond market ________.
A) substantially reduces the cost of issuing a bond
B) lowers the risk level of the bond
C) makes Eurobonds less popular than foreign bonds
D) exists because of the difficulty of regulating a multi-country market
The senior manager argues that Hafstrom could reduce its costs significantly by
purchasing parts from companies located overseas rather than producing its own parts.
Which of the following is the senior manager advocating?
A) outsourcing
B) a greenfield investment
C) lean production
D) vertical integration
A company using just-in-time (JIT) manufacturing involves ________.
A) increased availability of components in large inventories
B) quicker detection of defective materials and components
C) easier training of sales staff regarding product descriptions
D) benefits stemming from combining several Japanese technologies
The purpose of the General Agreement on Tariffs and Trade (GATT) was to ________.
A) create an international currency
B) regulate exchange rates
C) create regional trade organizations
D) promote free trade
Scenario: Indy Bats LLC
Indy Bats LLC is looking for new markets for its products. Matt Johnson has been
appointed head of a special team that has been given the responsibility of identifying
new markets for the company’s products. The company is especially interested in
exploring emerging economies.
For several emerging markets, Matt has collected data on the number of telephones,
TVs, and fax machines per capita, and population per retail outlet, which assesses the
________.
A) economic freedom
B) commercial infrastructure
C) market growth rate
D) market size
Scenario: Markowitz Tools
Susan Markowitz is analyzing potential markets where Markowitz Tools can sell its
products, and she has narrowed her search to three markets. Country A is a developing
country with a low literacy rate, Country B has a group-oriented culture, and Country C
is a highly developed nation.
Which of the following methods would be most appropriate for conducting primary
market research in Country A?
A) Internet research
B) verbal questioning
C) written surveys
D) consumer panels
The theory of absolute advantage measures a nation’s wealth by determining the
________.
A) amount of gold it has on reserve
B) quantity of minerals it has on reserve
C) total trade volume in the country
D) living standards of its people
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.
Which of the following would the government of Zucoland most likely experience as a
benefit of joining the trading bloc?
A) trade diversion
B) increased national sovereignty
C) greater consensus
D) production shifts to low-wage nations
The importance of trade for a nation can be measured by ________.
A) examining the amount of wealth acquired by the national government through
restrictive trade policies
B) the living standards of people involved in only trade activities
C) the number of acquired territories the nation has that serves as sources of
inexpensive raw materials
D) examining the volume of its trade relative to its total output
Scenario: Gro-Tru Grows To Europe
Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential
in Central Europe. The company has received several inquiries from potential importers
in the region, but in most cases, the potential importers have expressed difficulty in
obtaining the hard currency to pay for Gro-Tru’s products. Alistair Green, vice-president
for business development, is exploring how Gro-Tru can meet the needs of the potential
market.
Alistair has identified an option that might help the firm deal with the importer’s
inability to pay with hard currency. The option involves selling goods or services that
are paid for in whole or part with other goods or services. Which of the following
methods is Alistair considering?
A) auction
B) bidding
C) countertrade
D) tendering
________ is the forced transfer of assets from a company to the government with
compensation.
A) Expropriation
B) Nationalization
C) Confiscation
D) Localization
Which of the following is an instrument that governments use to promote trade?
A) embargoes
B) tariffs
C) export financing
D) administrative delays