180. (p. 62) Climate and terrain in several South American countries are conducive to growing coffee efficiently.
While other countries can grow coffee, they are not as productive or efficient. This fact would lead you to
believe that the South American countries have a (n) __________ advantage in the production of coffee.
D. progressive
181. (p. 62) The only deposits of a rare mineral known as shiznit are found in the nation of Swanland. Since no
other nation has deposits of shiznit, Swanland has a(n)__________ in the production of this mineral.
D. relative internal benefit
182. (p. 62) Which of the following statements best describes the theory of comparative advantage?
A. The best way for a nation to ensure full employment is to be totally self-sufficient rather than relying on
other nations to obtain goods and services.
183. (p. 60) First Engineering, a large U.S. based mechanical engineering firm, is considering entering the global
market. Upon careful analysis of the global market, they will find that global trade:
A. opportunities are diminishing.
184. (p. 64; Spotlight on Small Business) According to the “Spotlight on Small Business” box in Chapter 3, Build-A-Bear
Workshop is selling __________ around the globe.
D. only toys
185. (p. 63) The Department of Commerce estimates that every $1 billion of U.S. exports:
A. replaces 250 service sector jobs with 25 manufacturing jobs in the U.S.
186. (p. 64) A favorable balance of trade occurs when the value of:
A. imports equals the value of exports.
187. (p. 64) An unfavorable balance of trade occurs when the value of:
D. exports exceed the value of imports.
188. (p. 64) Which of the following are considered when calculating a country’s balance of payments?
D. foreign inflation rates
189. (p. 64) Which of the following are considered when calculating a country’s balance of payments?
D. foreign inflation rates
190. (p. 64) Which of the following are considered when calculating a country’s balance of payments?
D. foreign inflation rates
191. (p. 65) Recently the U.S. ran its highest trade deficits with:
D. Japan.
192. (p. 65) __________ is the practice of selling a product in foreign countries for a lower price than the good is
sold in the producing country.
A. Deflating
193. (p. 63) When Anheuser-Busch sells Budweiser beer made in America to Germany, the sales of its product
would be classified as a U.S. ____________
D. foreign aid shipment.
194. (p. 64) The difference between money coming into a country (from exports) and money leaving the country
(for imports) plus money flows from other factors such as tourism, foreign aid, and military expenditures is
D. exchange rate.
195. (p. 65) While the United State exports the largest __________ of goods globally, it exports a much lower
__________ of its products than many other countries do.
A. percentage; amount
196. (p. 62–63) An important principle for firms desiring to export is:
197. (p. 65) As a business strategy, dumping can be used to:
D. achieve eligibility for foreign aid.
198. (p. 64) The value of goods imported into France exceeds the value of French exports. This indicates that
France:
A. will experience an exchange rate decrease.
199. (p. 65) An American firm recently criticized a Chinese steel producer for charging a lower price for their
products in the United States than they charge in China. If proven to be true, the Chinese firm has engaged in:
A. industrial protectionism.
200. (p. 64) Current trade data indicates that the nation of Bogusland exports more to other nations than they
import. Bogusland has:
D. a low balance of trade.
201. (p. 60) Japanese automobile producers sold more of their Japanese production overseas than they sold in
Japan. Their business strategy emphasizes:
A. importing.
202. (p. 60) Monique’s Unique Tile Boutique offers decorative tile from around the world. The owner regularly
travels overseas to locate the best and most unusual tile that foreign producers have to offer. Monique
practices:
D. exporting.
203. (p. 64) Last year, the nation of Tigerland imported goods totaling $500 million and exported products totaling
$386 million. Tigerland experienced a(n):
D. benefit from membership in a free trade zone.
204. (p. 64) Last year, the nation of Kwansai reported that it had a favorable balance of trade even though it
imported $11 billion worth of goods. This indicates that Kwansai:
D. exported less than $11 billion worth of goods.
205. (p. 65) Reviewing the recent experience of the United States in global markets reveals that the U.S has:
D. attracted very little foreign direct investment.
206. (p. 64) The nation of Redland reported that its imports for the previous year were $4 billion greater than its
exports. During the same period, Redland reported a favorable balance of payments. This information suggests:
A. Redland has made an error in their reporting. The nation must have had a balance of payments deficit since
more money flowed out of Redland for imports than flowed into the country for its exports.
207. (p. 68) According to the material in the “Reaching Beyond Our Borders” box in Chapter 3, which of the
following statements best describes McDonald’s current involvement in global markets?
A. McDonald’s focus is on the U.S. market, and it currently has no plans to participate in global markets.
208. (p. 65) The amount of U.S. exports helps explain why:
A. foreign direct investment in the United States has grown steadily.
209. (p. 65) The president of the Auto Parts of America Corporation recently testified before Congress, urging
them to limit the flow of imported automobile parts into the United States. She contended that these imports
were priced lower than the foreign producers were charging in their own countries. She believes these foreign
producers are:
D. exhibiting ethnocentricity.
210. (p. 65) The president of the Nikkei Auto Parts testified before Congress defending the company against an
accusation that it was dumping auto parts in the U.S. Her testimony included the following and Congress
D. Nikkei sells more auto parts in Europe than it does in the U.S.
211. (p. 66) Granting a foreign company the right to manufacture your product or to use your firm’s trademark in
return for a fee is called:
A. a joint venture.
212. (p. 66) The fee paid to a firm in a licensing agreement that gives another firm the right to manufacture their
product or use its trademark is called:
D. an outsource agreement.
213. (p. 66; figure 3.4) Which of the following strategies for reaching global markets involves the lowest risk and
offers the lowest profit potential?
A. a joint venture
214. (p. 67) The federal government created ___________ to help small and medium sized businesses get
involved in exporting.
A. the World Trade Organization
215. (p. 67) _______________ are specialists that match buyers and sellers from different countries and provide
services to ease the process of entering global markets.
D. Keiretsu
216. (p. 67) Which of the following helps exporters receive payment for their global market transactions?
A. a joint venture
217. (p. 67) __________ is an arrangement whereby someone with a good idea for a business sells the rights to
use the business name and sell a product or service to others in a given territory in a specified manner.
D. Export trading
218. (p. 69) __________ involves the production of private-label goods by a foreign company to which a domestic
company then attaches its own brand name or trademark.
A. Franchising
219. (p. 69) A __________ is a partnership in which two or more companies (often from different countries) join
to undertake a major project.
D. recruit affiliation
220. (p. 69) A __________ represents a long-term partnership between two or more companies established to help
each firm build competitive market advantages.
A. multinational cooperative
221. (p. 69) Which of the following terms describes a long-term partnership between two or more companies
intended to help each firm build competitive market advantages? This arrangement does not call for the firms to
share costs, risks, or management.
222. (p. 70) A business that is owned by a parent company located in a foreign country is referred to as a foreign:
A. licensee.
223. (p. 70) When foreign firms build production facilities in the United States, they are engaging in:
A. exporting.
224. (p. 70) 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.
225. (p. 70) A key feature of a(n) __________ is that it has manufacturing capacity or some other physical
presence in different nations.
A. trade cartel
226. (p. 67) A specialized organization that assists businesses in creating relationships with foreign customers and
suppliers is known as a(n):
D. global trade bank.
227. (p. 67) One of the purposes of Export Assistance Centers is to:
A. help multinational corporations reach agreements with foreign governments.
228. (p. 66) When entering a foreign market, Anheuser-Busch will contract with a local firm to brew and market
the Anheuser-Busch product Budweiser. This is an example of:
D. foreign subsidiaries.
229. (p. 66–67) Which of the following is an advantage of a global licensing agreement?
D. A firm must grant licensing rights to its product for an extended period, maybe 20 years or longer.
230. (p. 67) Firms such as McDonald’s, Pizza Hut, and KFC, have entered the global market by offering investors
the opportunity to set up:
A. licensed trade offices.
231. (p. 69) Using contract manufacturing as a strategy to reach global markets offers firms the advantage of:
D. currency stability.
232. (p. 70) Ralston-Purina is a firm that operates throughout the United States, even though it is wholly owned by
a Swiss-based company, Nestlé. Ralston-Purina an example of a:
A. licensed venture.
233. (p. 70) For a firm to be considered a multinational corporation, which of the following conditions must be
D. All transactions must be financed by the International Monetary Fund.
234. (p. 67) The Dabble Corporation is a medium-sized firm that has decided to begin exporting its products. The
company needs advice about how to get started as well as trade-finance support. The federal government has
established _____________ to help companies in Dabble’s position.
D. Federal Reserve Banks
235. (p. 66) Pepsi Cola has entered into a long-term contract with a South African beverage business. The contract
calls for the South African firm to produce and market Pepsi Cola in South Africa. Pepsi will receive a royalty
on each case of soda sold. This is an example of:
D. foreign direct investment.
236. (p. 69) McHugh Corporation of Ireland and Enomoto Enterprises based in Japan have undertaken the
production of a new electric car with rechargeable batteries that can be driven at high speeds for long distances.
They have shared the investment, and each has contributed important technological expertise to the effort.
D. multinational limited partnership.
237. (p. 69) Nike will often enter a foreign market through an agreement with a foreign firm. The agreement calls
for the foreign firm to manufacture products to Nike’s standards and attach the Nike name and trademark. This
technique allows Nike to experiment in a new market without incurring the large start-up costs involved with
building their own production facilities. This is an example of:
A. contract franchising.
LG: 3
LL: 3
Nickels – Chapter 03 #237
238. (p. 70) If a Swiss chocolate firm purchases an American ice cream manufacturer, the American ice cream
manufacturer becomes a:
A. global franchise.
239. (p. 70) 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
240. (p. 70) To provide better service for their customers, America Online purchased office space in India for their
online customer service representatives. This is an example of:
A. dumping.
241. (p. 70) 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.
242. (p. 70) ExxonMobil Corporation refines and markets its petroleum products in many different nations. In
addition, Exxon’s stockholders and managers come from many different nations. ExxonMobil is an example of
a true:
D. international bureaucracy.
243. (p. 71) Which of the following terms describes the set of values, beliefs, rules, language, and institutions held
by a specific group of people?
D. social myopia
244. (p. 71) ____________ describes an attitude held by some American business people that the American
culture is superior to all others.
D. Social myopia
245. (p. 72) Which of the following sociocultural forces can have a significant impact on business operations?
D. global marketing
246. (p. 73) Which of the following represents the value of one nation’s currency relative to the currencies of
another country?
A. euro rate