64) Martha has heard that Iranian caviar is in demand and is planning to start an importing
business. After further research, she found that she is not able to import such product from Iran
to the United States. This is an example of:
A) a tariff.
B) a quota.
C) an embargo.
D) dumping.
65) A(n) ________ is a total ban on imports of certain products or all products from a particular
nation.
A) tariff
B) quota
C) embargo
D) dumping
66) The ________ of a nation includes the beliefs, values, views, and mores that its inhabitants
share.
A) political beliefs
B) business beliefs
C) personal beliefs
D) cultural beliefs
67) Even though large companies must view themselves as “global companies” if they are to
succeed, small companies cannot because they have a significant competitive disadvantage in the
global environment.
68) A recent study concluded that American firms with global operations grew faster and earned
more than purely domestic companies.
69) For many businesses across the world, “going global” is now a matter of survival, not
preference.
70) Globalization is risky.
71) Going global tends to make companies more quality and customer conscious.
72) Going global is risk-free.
73) An important question for the small business owner to ask before entering global markets is,
“If we go global, can we get back out?”
74) Going global can lower manufacturing costs.
75) Small companies can no longer consider themselves to be strictly domestic businesses in this
hotly competitive global environment.
76) Going up against some of the toughest competition in the world forces a company to hone its
competitive skills.
77) One of the issues an entrepreneur must address before going global is whether or not there is
a profitable market in which the firm has the potential to be successful for an extended period of
time.
78) The least expensive way to enter international markets is by using a trade intermediary.
79) Unlike an EMC or an ETC, manufacturer’s export agents are international sales
representatives who work on commission in a short-term relationship with the small domestic
company.
80) In order to grow their international business, Chong and Kelly’s Engineered Demolitions,
they have had to become more culturally sensitive.
81) Export merchants represent a limited number of non-competing domestic companies.
82) Selling to a resident buying office is just like selling to domestic customers since the buying
office handles all of the details of exporting the products.
83) Foreign distributors work in a close partnering relationship with a small business, providing
a wide range of services to a limited number of domestic companies.
84) The key to establishing a successful relationship with a trade intermediary is to thoroughly
screen in order to determine what type of intermediary the small company needs.
85) In a domestic joint venture, a domestic company forms an alliance with a company in the
target nation.
86) When two small businesses in the target nation form an alliance, they have formed a foreign
joint venture.
87) Choosing the “right” joint venture partner is crucial to its ultimate success.
88) The Commercial Service International Contacts List (CSIC) and the Country Directories of
International Contacts (CDIC) provide the same information but organized in different ways.
89) One way to avoid the failure of a joint venture is to not use any kind of an agreement that
details what to do if the business fails, as this just predestines the joint venture’s failure.
90) Foreign licensing is when a business buys and sells products in many countries, either in its
own name, or as an agent for its buyer-seller clients.
91) The licensing potential for intangibles, such as technology, trademarks, etc., is often greater
than the licensing opportunities for products.
92) While franchise outlets are throughout the world, Africa is the primary market for U.S.
franchisers.
93) A small business exporting to Hungary would likely have to engage in barter or countertrade
since Hungarian currency is not convertible into any other currency.
94) Successful bartering is easier than countertrade but requires finding a business with
complementary needs.
95) Most Export Management Companies (EMCs) are merchant intermediaries, working on a
buy-and-sell arrangement with domestic small companies.
96) ETCs usually perform both import and export trades across many countries’ borders.
97) Most products sold in the United States require major modifications before they can be sold
in foreign markets.
98) An important management issue to consider before going international is to decide who will
be responsible for the export entity’s organization and staff.
99) Lack of export financing remains a significant barrier to small businesses selling in foreign
markets.
100) The best way for Specialty Building Supplies to move into international markets, given
their expertise and their Autovent product, would be direct exporting.
101) The key to successfully establishing an international location is properly screening for the
right partner company with compatible goals and products/services.
102) Usually, the first step a small business takes when getting its products into international
markets is setting up permanent offices in foreign countries.
103) An advantage to establishing an international location is lower start-up costs in the foreign
country.
104) Small companies often find that competing in foreign markets and selling to foreign
customers makes them tougher competitors at home.
105) Very few nations interfere with free international trade by erecting trade barriers with
tariffs, quotas, and embargoes.
106) The three biggest domestic barriers to exporting facing small businesses are the
appropriateness of the product, political and cultural information, and finding a suitable foreign
agent to assist them.
107) When a government imposes a quota on a particular imported good, the effect is to raise the
price customers must pay for that good.
108) American small business owners are often astounded at how much less government
regulation there is in foreign countries.
109) In most other countries, American business owners and managers find human resource laws
to be very similar, if not more stringent, than they are in the United States.
110) Cultural differences among countries have little impact on international trade.
111) Fortunately for U.S. business owners, American customs and habits have become the
standard for proper business behavior around the world.
112) The World Trade Organization was formed as a consequence of the growth of the European
Community.
113) GATT will probably bring 2 million jobs and as much as $1 trillion to the U.S. economy
over the next decade.
114) In Spain, patience is a must for conducting business; Spaniards like to get to know business
associates before working with them.
115) An American business owner greeting a Japanese executive should use both a handshake
and a bow.
116) NAFTA is an agreement between the United States, Canada, Mexico, Argentina, and Chile,
forming a free trade arena among these countries.
117) NAFTA includes provisions reducing tariff and non-tariff barriers and toughening health
and safety standards.
118) In a domestic joint venture, the businesses share the responsibility and the costs of getting
export licenses and permits, and they split the venture’s profits.
119) The most important ingredient in the recipe for a successful joint venture is choosing the
right country or region.
120) The goal of countertrading is to help offset the capital drain from the foreign country’s
purchases.
121) The first step on how to establish an exporting program is to analyze the product or service.
122) Simply duplicating the practices companies have adopted (and have used successfully) in
the domestic market and using them in foreign markets is an effective strategy for entrepreneurs.
123) Understanding cultural differences is one of the most important keys to international
business success.
124) A free trade area is a region in which there are no tariffs or taxes on imports and exports.
125) Export / import, the exchange of goods and services for other goods and services, is another
way of trading with countries lacking convertible currency.
126) In a barter exchange, a company that manufactures electronics components might trade its
products for the coffee that a business in a foreign country processes, which it then sells to a
third company.
127) A letter of credit reduces the financial risk for the exporter by substituting a bank’s
creditworthiness for that of the purchaser.
128) A letter of credit is a document the seller draws on the buyer, requiring the buyer to pay the
face amount (the purchase price of the goods) either on sight (a sight draft) or on a specified date
(a time draft) once the goods are shipped.
129) Companies should be flexible and willing to make adjustments to their products and
services, promotional campaigns, packaging, and sales techniques when selling abroad.
130) A tax, or duty, that a government imposes on goods and services imported into that country
is considered to be a tariff.
131) Embargo is when there is a limit on the amount of a product imported into a country.
132) An embargo is a total ban on imports of certain products or all products from a particular
nation.
133) The culture of a nation includes the beliefs, values, views, and mores that its inhabitants
share.
134) Why it is important for small businesses to “go global?”
135) What questions should an entrepreneur ask before venturing into the global marketplace?
136) How can a small business use the Web to go global?
137) One of the seven ways a small business owner can “go global” is through trade
intermediaries. Identify the six types of trade intermediaries and explain why a small
businessperson might use each one.
138) Discuss joint ventures, identifying the two primary types, and why a small business might
consider using a joint venture to go global.
139) How do foreign licensing and international franchising differ? Why would a small business
owner choose one over the other in going global?
140) Explain the concepts of countertrade and barter and what role they play in international
business.
141) Describe how culture can be a barrier to “going global” and offer examples from three
different countries.
142) For the small business owner there are two major trade agreements, GATT and NAFTA.
Explain each one and its impact on the small business “going global.”