1. (p. 60) There are over 6 billion potential customers in the 193 countries that make up the global market.
2. (p. 60) Importing involves the selling of products to another country.
3. (p. 60) Exporting involves the selling of products to another country.
4. (p. 60) The United States is the largest importer in the world.
5. (p. 60) The United States is the largest exporter in the world.
6. (p. 60) While Japan is the largest exporter in the world, the U.S. is the largest importer.
7. (p. 60) Competition in exporting is very intense.
8. (p. 61; Dealing with Change) According to the “Dealing with Change” box in Chapter 3, one out of every six people on
9. (p. 61) One reason countries trade with other countries is that even technologically advanced nations cannot
produce all the products their people want and need.
10. (p. 61) Free trade is the movement of goods and services among nations without political or economic
barriers.
11. (p. 61) Global trade includes the exchange of goods and services between countries.
12. (p. 61) Global trade includes the exchange of art, sports, and cultural events.
13. (p. 62) Absolute advantage is the basis for most global trade.
14. (p. 62) Comparative advantage theory states that a country should sell to other countries those products that it
produces most efficiently and buy from other countries those products it cannot produce as efficiently.
15. (p. 62) The U.S. has a comparative advantage in coffee and shoes.
16. (p. 62) A country has an absolute advantage if it has a monopoly in the production of a specific product or is
able to produce it more efficiently than all other nations.
17. (p. 62) There are many examples of absolute advantage in global markets.
18. (p. 60) Countries with a high standard of living are referred to as developing countries.
19. (p. 61) Free trade results in a mutually beneficial exchange for the countries involved.
20. (p. 60) When a U.S. company buys oil from Saudi Arabia, this is an example of a U.S. import.
21. (p. 62) According to the theory of comparative advantage, a country should buy from other countries those
goods it produces most efficiently.
22. (p. 62) The comparative advantage theory states that all nations should strive to become self-sufficient in order
to enjoy the highest standard of living.
23. (p. 62) Small businesses are less involved in global trade today than in the past.
24. (p. 63) Many foreign students in U.S. colleges and universities have discovered profitable opportunities by
importing goods from their home countries into the United States.
25. (p. 63) Just about anything that can be sold in the United States can also be sold to buyers in other countries.
26. (p. 62) Foreign travel can help in identifying global business opportunities.
27. (p. 63) If your business has an outstanding product, exporting offers an easy way to improve your
profitability.
28. (p. 63) Exporting from the U.S. to the world is a terrific boost to the U.S. economy.
29. (p. 63) Every $1 billion in U.S. exports generates 25,000 jobs in the U.S.
30. (p. 64) A favorable balance of trade occurs when the value of a country’s imports exceeds the value of its
exports.
31. (p. 64) A favorable balance of trade occurs when the value of a country’s exports exceeds the value of its
exports.
32. (p. 64) The balance of payments measures the inflows and outflows of money from tourism, foreign aid,
military expenditures and foreign investments as well as flows resulting from exports and imports.
33. (p. 64–65) The United States enjoys a trade surplus in the global market.
35. (p. 65) While the U.S. exports the largest volume of goods globally, it exports a much lower percentage of its
products than other countries do.
36. (p. 65) Dumping is the practice of selling products in foreign markets at lower prices than those charged in the
producing country.
37. (p. 65) The United States has specific laws requiring foreign firms selling goods in the United States to price
their products to include 10% overhead costs and an 8% profit margin to prevent dumping.
38. (p. 64) When trading in global markets, most countries prefer to import more than they export.
39. (p. 65) Compared to many other industrialized countries, the United States has historically exported a much
lower percentage of its products than other countries do.
40. (p. 65) Compared to many other industrialized countries, the United States has historically exported a much
higher percentage of its products than other countries do.
41. (p. 65) The United States currently enjoys a favorable balance of trade with the rest of the world.
42. (p. 65) The United States owes more money to other nations than other nations owe the United States.
43. (p. 64–65) The country of Nelly exports $250 of goods and services and imports $170 of goods and services.
Nelly has an unfavorable balance of trade of $80.
44. (p. 64–65) The spending of a German family visiting Disney World in Florida will add to the unfavorable
balance of payments of the United States.
45. (p. 65) Some firms will practice “dumping” in order to gain a foothold in a new market.
46. (p. 65) Foreign firms find it difficult to sell goods in the United States because most goods produced by
foreigners are already produced more efficiently by American firms.
47. (p. 65) A Chinese steel manufacturer is selling certain types of steel in the United States at a price significantly
lower than it sells the same steel in its home market. This practice may be a violation of U.S. law.
48. (p. 64–65) A favorable balance of trade occurs when the value of a nation’s exports exceeds its imports.
49. (p. 64) Japanese auto manufacturers, such as Toyota and Nissan, have invested billions of dollars in the United
States by building new factories, warehouses, and offices. These investments are inflows to the balance of
payments for the United States.
50. (p. 65) As the most powerful economy in the world, the United States can avoid having an unfavorable
balance of payments.
51. (p. 64) When the U.S. provides foreign aid to Israel and Egypt, a balance of payments outflow occurs.
52. (p. 65) The value of Chinese exports to the United States is greater than the value of the goods they buy from
the United States. This results in a U.S. trade deficit.
53. (p. 65) Slow growth in the U.S. economy during the late 1980s and early 1990s caused American firms to
reduce their efforts to sell in global markets.
54. (p. 65) Flynn Graphics is a small U.S. firm that began selling its products in the global market a few years ago.
Flynn’s global approach is unusual, since the trend has been for small firms to focus on domestic markets,
leaving global markets to larger firms.
55. (p. 66) Granting another firm the right to manufacture your product or use your trademark for a fee is called
licensing.
56. (p. 66; figure 3.4) Of the strategies available to reach global markets, licensing offers the firm the greatest
opportunity for profit potential.
57. (p. 67) Franchising is popular both domestically and internationally.
58. (p. 66) Tokyo Disneyland is an example of an export trading company.
59. (p. 66) When competing in global markets, business organizations can choose among a variety of strategies to
reach foreign buyers.
60. (p. 67) The purpose of Export Assistance Centers is to help major U.S. corporations develop better relations
with foreign governments.
61. (p. 67) Export trading companies assist businesses in getting paid for export transactions.
62. (p. 67) Export trading companies help to match buyers and sellers from different countries.
63. (p. 66–67) One advantage of foreign licensing is the relatively low cost of entering a foreign market.
64. (p. 67) One advantage of foreign licensing as a strategy to enter the global market is the sharing of trade
secrets.
65. (p. 67) While franchising is popular in United States, it is not an accepted strategy for firms in the global
market.
66. (p. 69) One way to satisfy an unexpected increase in sales is through contract manufacturing.
67. (p. 69) Contract manufacturing involves the production of private-label goods by a foreign company to which
a domestic company then attaches its brand name or trademark.
68. (p. 69) A joint venture is a partnership in which two or more companies join to undertake a major project.
69. (p. 69) According to current U.S. laws, American firms are prohibited from participating in joint ventures with
foreign firms.
70. (p. 70) A disadvantage of the use of a foreign subsidiary is the loss of control over technology and expertise
used in the production of the product.
71. (p. 70) Foreign direct investment refers to the buying of goods produced in another country.
72. (p. 70) Expropriation occurs when a host government takes over the assets of a foreign company.
73. (p. 70) Any corporation that exports at least 50% of its total output can be classified as a multinational
corporation.
74. (p. 70; figure 3.5) General Motors is one of the largest multinational corporations in the world.
75. (p. 70) Only a firm with a physical presence in different nations can be truly called a multinational
corporation.
76. (p. 70; figure 3.5) Wal-Mart is the largest multinational company in the world.
77. (p. 68; Reaching Beyond Our Borders box) According to the “Reaching Beyond Our Borders” box in Chapter 3, the term
McDonaldization symbolizes the spread of franchising and the weaving of American pop culture into the world
fabric.
78. (p. 66) The Tsingtao Brewing company pays a fee to Anheuser-Busch for the right to brew and distribute
79. (p. 66) An example of foreign direct investment would be Pepsi granting a Japanese firm the use of its formula
and trademark for a fee.
80. (p. 69) One benefit of an international joint venture is sharing the risk of a major project.
81. (p. 66) A firm desiring to enter a foreign market with a limited investment should consider foreign licensing.
82. (p. 70) When Nestlé, a Swiss company, purchased Carnation, a U.S. company, the result was that Carnation
became a foreign licensee.
83. (p. 70) A firm may export everything it produces overseas and yet not be considered a multinational.
84. (p. 69) Contract manufacturing allows Nike to utilize a German firm to produce their shoes in Europe.
85. (p. 69) Lashandra Enterprises wants to sell its products in the centrally planned economy of Vietnam, but the
Vietnamese government will allow Lashandra entry into its markets only if it enters into a major partnership
with Vietnamese producers. The Vietnamese government is requiring Lashandra to enter into a joint venture
arrangement.
86. (p. 69) Strategic alliances are primarily driven by the political interests of the firms involved.
87. (p. 70) Foreign investment in the United States can be viewed as a sign of strength in the U.S. economy.
88. (p. 70) The Nissan automobile assembly plant in Tennessee is an example of foreign direct investment in the
United States.
89. (p. 69) Kodak contracts with a firm in Taiwan to manufacture Kodak digital cameras. This is an example of a
joint venture.
90. (p. 71) American businesspeople are guilty of ethnocentricity if they act as if the U.S. culture is superior to all
others.
91. (p. 71) Successful multinational corporations disregard cultural differences between countries in which they
operate.
92. (p. 71) Socio-cultural forces that affect global businesses include customs, language, and religion.
93. (p. 71) Foreign businesspeople usually adapt to culture differences more easily than U.S. businesspeople.
94. (p. 72) Effective human resource management styles are transferable from one culture to another.