56. Through licensing, domestic firms give foreign manufacturers/producers the right to
produce their product and use their trademark in exchange for royalties.
57. When a firm agrees to license its product, it gains notoriety but gives up all revenues.
58. Franchising is popular both domestically and internationally.
59. An advantage of licensing is that licensors spend little or no money to produce and market
their products. These costs are born by the licensees.
60. The U.S. government is reducing Export Assistance Centers due to businesses’ lack of
interest in their support.
61. Export trading companies assist businesses in reaching buyers, and dealing with customs,
documentation, and payment.
62. One advantage of licensing is the relatively low cost of entering a foreign market.
63. One advantage of licensing as a strategy to enter the global market is the sharing of trade
secrets.
64. While franchising is popular in the United States, it is not an accepted strategy for firms in
the global market.
65. One advantage of franchising is that the parent corporation does not need to concern
itself with adapting to the culture of another country.
66. Contract manufacturing is when a firm pays foreign manufacturers to produce its product.
The foreign manufacturer places the domestic company’s label on the products.
67. Contract manufacturing requires heavy start-up costs by the domestic company.
68. Contract manufacturing is a form of outsourcing.
69. A joint venture is a partnership in which two or more companies join to undertake a major
project. All parties commit financing and risk to the project.
70. According to current U.S. laws, American firms are prohibited from participating in joint
ventures with foreign firms.
71. The purpose of forming strategic alliances is to share the costs of marketing new products
and services to several countries.
72. A disadvantage of creating a foreign subsidiary is the loss of control over technology and
expertise used in the production of the product.
73. Foreign direct investment refers to the buying of goods produced in another country.
74. Expropriation occurs when a host government takes over the assets of a foreign company.
75. Any corporation that exports at least 50% of its total output can be classified as a
multinational corporation.
76. Firms with a physical presence in several different nations are considered multinational
corporations.
77. Sovereign wealth funds (a form of foreign direct investment) are investment funds
controlled by governments that hold large stakes in foreign companies.
78. As a form of franchising, sovereign wealth funds are getting very little attention as a
strategy for doing business in foreign markets.
79. One characteristic of an international joint venture is all parties sharing the risk of a
major project.
80. A firm desiring to enter a foreign market with a limited investment should consider
licensing.
81. When Nestlé, a Swiss company, purchased Ralston Purina, a U.S. company, Ralston
Purina became a foreign licensee.
82. A firm may export everything it produces overseas and yet not be considered a
multinational.
83. Contract manufacturing is a low-cost way for GAP to outsource the production of its
clothing designs.
84. Strategic alliances almost always result in one company taking over the financial
interests of another company.
85. Governments directly participate in global markets through sovereign wealth funds.
86. The appeal of global marketing strategies is that they all involve the same amount of
risk.
87. Leigh has created a technique for drying flowers that retains the vibrant color of certain
flowering plants. Although out of style in the U.S., dried flower arrangements are still highly
sought after in several European and Asian nations. It is difficult to preserve the ingredients that
go into her formula for more than a month. She decides to partner with firms in other nations to
make and sell the formula, but you suggest she license the formula to foreign companies and
agree to royalties when they create the formula and sell it. Your advice makes better sense.
88. The Nissan automobile assembly plant in Tennessee is an example of foreign direct
investment in the United States.
89. Kodak contracts with a firm in Taiwan to manufacture Kodak digital cameras. This is an
example of a joint venture.
90. The All-Sports Gaming Company has avoided contract manufacturing abroad due to the
significant start-up costs in buying land and setting up its own manufacturing plants.
91. The Tsingtao Brewing company pays a fee to AB–InBev for the right to brew and
distribute Budweiser in China. Tsingtao is the licensor and the fee paid is a royalty.
92. The purchase of U.S.-based Anheuser-Busch by Belgian brewer InBev is an example of
foreign direct investment.
93. An example of foreign direct investment would be Pepsi granting a Japanese firm the use
of its formula and trademark, for a fee.
94. General Electric’s (GE) website noted, “Russia has been one European country in which
GE has made significant investments. GE is one of the largest foreign companies in Russia,
operating multiple businesses including an equipment fleet with more than 1,500 large units.”
With physical presence in Russia, Argentina, Australia, Belgium, Greece, Kenya, Canada and
other countries, GE is an example of a multinational company.
95. Ozark Bikes, Inc., has information that its bicycles will sell in Vietnam. In order to sell its
products in Vietnam, the Vietnamese government requires Ozark Bikes to enter into a partnership
(also known as a joint venture) with a domestic firm. Both firms will assume costs and risk in the
venture.
96. In recent years, the government of Saudi Arabia has invested over $900 billion in foreign
companies, including several U.S. companies. This move constitutes the creation of a sovereign
wealth fund, an emerging type of foreign direct investment.
97. Sociocultural, economic, and legal/regulatory hurdles cause significant challenges in
global trade.
98. From a sociocultural perspective, U.S. businesspeople are often accused of
ethnocentricity.
99. Successful multinational corporations disregard cultural differences between countries
where they own property and perform business transactions.
100. Sociocultural differences that affect global businesses include customs, language, and
religion.
101. In the past, foreign companies have adapted to U.S. culture more easily than U.S. firms
have adapted to foreign cultures.
102. Effective human resource management styles are transferable from one culture to
another.
103. Effective marketing strategies focus on the product and ignore the sociocultural
differences in the global environment.
104. Many U.S. companies fail to think globally.
105. In global markets, no central system of law exists.
106. The Foreign Corrupt Practices Act of 1978 created an advantage for American
businesspeople to compete in global markets.
107. An exchange rate is the value of one nation’s currency relative to the currencies of other
nations.
108. Global markets rely on the U.S. dollar as the universal currency.
109. Under a system of floating exchange rates, the value of a country’s currency is determined
by government regulation.