Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of
twelve. The company has operations in Switzerland and would like to expand its
foreign operations with a new facility in China.
The company’s financial advisors recommend that ABC Software conduct most of its
business in a vehicle currency. Which of the following is true of vehicle currencies?
A) A vehicle currency is a contract that requires the exchange of an agreed-upon
amount of a currency on an agreed-upon date at a specific exchange rate.
B) The U.S. dollar, Australian dollar, Japanese yen, and British pound are all examples
of vehicle currencies.
C) The U.S. dollar became a vehicle currency after World War II when all of the world’s
major currencies were tied indirectly to the dollar because it was the most stable
currency.
D) The Chinese yuan is expected to become a vehicle currency in the near future as
China’s position in world trade continues to grow.
Which of the following philosophies asserts that ownership of the means of production
belongs in the hands of individuals and private businesses?
A) capitalism
B) communism
C) tribalism
D) socialism
In ________, operations outside the home country are managed by individuals from the
host country.
A) vertical integration
B) horizontal integration
C) ethnocentric staffing
D) polycentric staffing
Which of the following is a major purpose of the international capital market?
A) to reduce entrepreneurial initiatives
B) to increase the cost of borrowing
C) to reduce risk for lenders
D) to reduce the money supply for borrowers
The danger of trade dependency is that ________.
A) it often leads to the exploitation of developed countries
B) political turmoils in a country might affect all dependent countries
C) the countries involved in trade often get into rivalry over trade tariff issues
D) it is difficult to end trade activities with current trade partners and find new trade
partners
The sale of goods and services to a country by a company that promises to buy a
specific product from that country in the future is called a(n) ________.
A) counterpurchase
B) offset
C) joint venture
D) barter
Donna Bader, Globalization opponent
Donna Bader spent her final year at college studying the effect of various economic
factors on the economy of developing nations. Based on the results of her study, she
concluded that globalization does these countries more harm than good.
Globalization tends to foster two important values, tolerance and ________.
A) nationalization
B) diversity
C) authoritarianism
D) heterogeneity
Which of the following steps of the strategy development process for exports involves
establishing relationships with potential local distributors?
A) identification of a potential market
B) match market needs to the company’s abilities
C) initiation of meetings
D) commitment of resources
Which of the following materialized the EU’s goals of removing trade barriers,
increasing harmonization, and enhancing the competitiveness of European companies?
A) the Maastricht Treaty
B) the European monetary union
C) the Single European Act
D) the Copenhagen Criteria
When developing a market-potential indicator for an emerging market, the ________
factor attempts to assess channels of distribution and communication.
A) market size
B) market intensity
C) commercial infrastructure
D) economic freedom
Selling goods or services that are paid for, in whole or part, with other goods or services
is called ________.
A) indirect exporting
B) countertrade
C) licensing
D) a joint venture
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.
If all countries in the bloc are asked to give up the greatest amount of sovereignty, they
would most likely be joining a(n) ________.
A) economic union
B) free trade area
C) customs union
D) political union
Which of the following strategies is appropriate for companies in industries where
buyer preferences do not converge across national borders?
A) retrenchment strategy
B) global strategy
C) multidomestic strategy
D) mass customization strategy