127. The United States joined with Mexico and Canada to promote the movement of resources and products; it formed
a(n)
a. WTO.
b. economic community.
c. cartel.
d. multinational.
e. orderly marketing agreement.
128. Several European countries have banded together to reduce the trade barriers between them and encourage trading
among themselves. This is known as
a. a GATT.
b. the European Union.
c. a cartel.
d. a multinational.
e. an orderly marketing agreement.
129. Which of the following statements is true about NAFTA?
a. It is a free trade agreement between Canada and the United States.
b. It was initiated by the United States.
c. It is built on the Canadian Free Trade Agreement (FTA).
d. It immediately eliminated tariffs among the United States, Mexico, and Canada.
e. It was enacted in 2002 and encourages free trade.
130. In 1967, several Asian countries banded together to reduce the trade barriers between them and encourage trading
among themselves. This is known as
a. a GATT.
b. the European Union.
c. the Association of Southeast Asian Nations.
d. a multinational.
e. an orderly marketing agreement.
131. The United States joined with Mexico and Canada to promote the movement of resources and products; it formed
a(n)
a. WTO.
b. economic community.
c. cartel.
d. multinational.
e. orderly marketing agreement.
132. Eleven republics of the former Soviet Union are members of the
a. Former Soviet Republics Trade Agreement.
b. Organization of Petroleum Exporting Countries.
c. Association of Asian Nations.
d. European and Asian Economic Union.
e. Commonwealth of Independent States.
133. The four largest gold–producing countries in the world want to form a collective-bargaining unit to provide gold-
producing nations with some control of gold prices. These nations will most likely model the unit after
a. EU.
b. OPEC.
c. NAFTA.
d. ASEAN.
e. GATT.
134. The Organization of Petroleum Exporting Countries (OPEC)
a. was founded in 1975.
b. was conceived as a collective-bargaining unit.
c. was organized in response to the formation of the European Community.
d. was effective in increasing the supply of oil.
e. has as its objective completely free trade among its members.
135. Suppose Gillette is seeking a manufacturer in Bangladesh that will produce and market Gillette razors in that
country. Gillette expects a royalty from its partner in Bangladesh. Which arrangement will be the best choice for
Gillette?
a. Export/import merchant agreement
b. Export/import agent agreement
c. Joint venture
d. Licensing
e. Multinational agreement
136. Foreign licensing is similar to
a. starting from scratch.
b. franchising.
c. wholesaling.
d. establishing a subsidiary in another country.
e. establishing a sales office in a foreign country.
137. All of the following are ways to export a product to a foreign market except
a. using an export–import merchant.
b. using an export-import agent.
c. establishing a foreign sales office.
d. establishing a foreign sales branch.
e. all of the above are ways to export a product to a foreign market.
138. is a contractual agreement where one firm gives another permission to produce and market its product and
brand name in exchange for a fee.
a. Licensing
b. Exporting
c. Joint venture
d. Countertrade
e. Strategic alliance
139. Soccer to the Masses is interested in global expansion but does not want to make a large financial commitment.
Therefore, it decides to allow a Japanese company to manufacture and distribute products under the Soccer to the
Masses name. This is a(n) agreement.
a. exporting
b. strategic alliance
c. licensing
d. countertrade
e. bill of lading
140. Which of the following is a potential drawback of licensing?
a. If quality is compromised, it may reflect poorly on the company providing the license.
b. Licensing will provide the original producer with much foreign marketing experience.
c. It is a relatively inexpensive way to market your product internationally.
d. It is an extremely expensive and highly involved method of international expansion.
e. It provides no compensation for the original company.
141. Ben Schumpert decides his company will start exporting and he wants to start at the most basic level. What action
should Ben take to meet his objectives?
a. License the company’s brand name and products to foreign manufacturers.
b. Contact Sears World Trade to find foreign consumers.
c. Open new facilities around the world.
d. Form a joint venture with a complementary company in a foreign country.
e. Sell the company’s products to an export-import merchant.
142. Which of the following best compares licensing and exporting as tools for entering foreign markets?
a. Licensing and exporting are both low-risk methods, but licensing is not as simple as exporting.
b. Licensing is riskier and more complicated than exporting.
c. Exporting is much riskier and more complicated than licensing.
d. Licensing and exporting are both low–risk, but exporting is more complicated.
e. Licensing and exporting are both complicated and expensive methods.
143. Miller Beer allows a Canadian firm to use its name, formula, and brands in return for a royalty. This is known as
a. exporting.
b. licensing.
c. direct investment.
d. manufacturing in foreign countries.
e. none of the above.
144. A is issued by the transport carrier to the exporter to prove merchandise has been shipped.
a. license
b. letter of credit
c. bill of lading
d. draft
e. voucher
145. A
is issued by a bank upon request of an importer stating that the bank will pay an amount of money to a
stated beneficiary.
a. license
b. letter of credit
c. bill of lading
d. draft
e. voucher
146. A is issued by the exporter’s bank, ordering the importer’s bank to pay for the merchandise.
a. license
b. letter of credit
c. bill of lading
d. draft
e. voucher
147. Janet hires an export merchant to help expand her business internationally. After signing contracts with a foreign
purchaser outlining the terms of sale and delivery, the exporter will send Janet’s merchandise when
a. Janet’s bank receives a letter of credit from the importer’s bank.
b. it receives a letter of credit from Janet’s bank.
c. its bank receives a draft from the importer’s bank.
d. Janet receives a bill of lading.
e. the ultimate consumer sends a bill of lading to the exporter’s bank.
148. A(n) will, for a commission or fee, arrange the sale of a company’s products to foreign intermediaries.
a. export-import merchant
b. international bank
c. joint venture
d. export-import agent
e. trading broker
149. A medium-sized hardware manufacturer wants to become deeply involved in exporting, but it does not yet wish to
actually manufacture any of its products overseas. The company wants to maintain control over its sales while
gaining experience in foreign markets. Which option would be best for this company?
a. Licensing its products for sale in foreign countries
b. Selling its products outright to an export/import merchant
c. Establishing its own sales offices in foreign countries
d. Developing totally owned facilities in a foreign market
e. Hiring an export/import agent to assist with foreign sales
150. Ford Motor Company, Mazda Motor Corporation, and Matsushita Electrical Industrial Company formed a to
make heating and cooling units in Japan for Mazda cars beginning in 1988. The new company’s heating and cooling
units may also be used in Ford’s cars.
a. sales branch
b. joint venture
c. subsidiary
d. licensing agreement
e. sole proprietorship
151. A is a partnership formed to achieve a specific goal or to operate for a specific period of time.
a. trading company
b. strategic alliance
c. licensing company
d. countertrade agreement
e. joint venture
152. If Procter & Gamble and Reckitt & Colman, makers of Lysol, form a partnership to develop and distribute a
disinfectant line of laundry detergent, the partnership would be a(n)
a. corporation.
b. joint venture.
c. monopoly.
d. licensing agreement.
e. international alliance.
153. When it built production lines in the United States, BMW engaged in what type of international expansion?
a. Totally owned facilities
b. Joint venture
c. Strategic alliance
d. Indirect investment
e. Exporting
154. Forming a joint venture with an existing foreign company offers all of the following advantages except
a. joining an established firm.
b. requiring less commitment from all parties involved in the joint venture.
c. providing immediate marketing knowledge.
d. providing reduced risk.
e. providing control over product attributes.
155. ABC Company wants to be prepared for the ASEAN free trade area. The company plans to develop its own
production and marketing facilities in one or more ASEAN countries. The best choice for ABC Company is
a. a joint venture.
b. a licensing agreement.
c. totally owned facilities.
d. exporting.
e. sales offices.
156. Totally owned facilities overseas are an example of
a. indirect investment.
b. direct investment.
c. roundabout investment.
d. licensing.
e. joint venture.
157. The best method of learning from experience in international business is to
a. enter into a licensing agreement.
b. start exporting through an export merchant.
c. start exporting through an export agent.
d. invest directly in a foreign country.
e. form a joint venture.
158. When Sony Corporation of Japan purchased Columbia Pictures Entertainment, Inc. of the United States, Sony
made a(n)
a. countertrade with Columbia Pictures.
b. indirect investment in the United States.
c. direct investment in the United States.
d. strategic alliance with Columbia Pictures.
e. exporting agreement with the United States.
159. The newest forms of international business structure developed to create competitive advantage on a worldwide
basis are called
a. licensees.
b. export agents.
c. strategic alliances.
d. trading companies.
e. countertraders.
160. The New United Motor Manufacturing, Inc., formed by Toyota and General Motors to make cars, is an example of
a(n)
a. strategic alliance.
b. licensing agreement.
c. exporting agency.
d. trading company.
e. countertrade.
161. When a business has plants located in several foreign countries without ties to any specific nation or region, it is
called a(n)
a. multinational enterprise.
b. joint venture.
c. exporting business.
d. licensing firm.
e. none of the above.
162. Strategic alliances and are very similar.
a. trading companies
b. most-favored-nation status
c. licensing agreements
d. joint ventures
e. corporate mergers
163. Which of the following functions is not performed by a trading company?
a. Taking title to products
b. Manufacturing products for foreign trading
c. Linking buyers and sellers in different countries
d. Buying products at the lowest price consistent with quality
e. Performing activities necessary to move goods to the foreign country
164. If South Africa were to trade diamonds to the United States in exchange for heavy machinery, these countries
would execute a(n)
a. auction agreement.
b. countertrade.
c. strategic transaction.
d. licensing agreement.
e. free-trade agreement.
165. A trading company
a. is involved in manufacturing.
b. owns assets related to manufacturing.
c. does not take title to products.
d. provides a link between buyers and sellers in different countries.
e. does not perform activities necessary to move the products.
166. Countertrade is an international barter transaction in which
a. goods and services are exchanged for different goods and services.
b. one company sells goods and services under the counter.
c. the buyers and sellers trade illegally.
d. one company manufactures and the other company owns the assets.
e. none of the above is correct.