The open account method of export/import financing is used when the two parties are
unfamiliar with each other.
One of the key obstacles faced by countries in economic transition is the lack of
managerial expertise.
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.
A political union makes it mandatory for nations to accept a common stance on all
economic and political policies within their territories.
The product adaptation/communications extension method adapts both the product and
its marketing communication to suit the target market.
Service providers do not need distribution channels because they market intangible
goods.
Companies make products rather than buy them in order to reduce total costs.
The theory of absolute advantage destroys the mercantilist idea that international trade
is a zero-sum game.
Using a distributor increases an exporter’s risk.
Scenario: Better Mousetrap Inc.
Better Mousetrap Inc. is a manufacturing company that sells pest control products.
Recently the company launched an innovative mousetrap with a unique design that has
been selling well in the U.S. market. Senior Vice President Marc Wallace, even
recommended expanding sales overseas in order to increase company revenues.
International trade is the purchase, sale, or exchange of goods and services across
national borders.
The possibility that a company will create a future competitor by charging another
company for access to its knowledge is a market imperfection that can encourage
foreign direct investment.
Resistance to worldwide trade agreements has resulted in some nations placing greater
emphasis on regional pacts.
Core competencies are developed by organizations over long periods of time.
Companies can achieve economies of scale by expanding into international markets.
The European Free Trade Association focuses on trade in consumer goods.
Which of the following statements is true of Kirawi, a democratic nation whose legal
system is based on common law?
A) The law is based on religious teachings and is enforced by the country’s religious
leaders.
B) The law is inflexible and is applied the same way in all situations.
C) The law is based on a detailed set of written rules that constitute a legal code.
D) The law is interpreted on the basis of tradition, precedent and usage.
Konesia is a country with a number of offshore islands. Its landscape is characterized
by deep valleys, rocky plains, and impassable mountains. Which of the following
statements about the country is true, keeping its topography in mind?
A) Konesia is the ideal place to set up production facilities for multinational companies.
B) Konesia experiences a slow rate of cultural change.
C) Konesia is a receptive market for foreign automobile companies.
D) Konesia is greatly susceptible to cultural imperialism.
Which of the following refers to a contract between the exporter and shipper that
specifies merchandise destination and shipping costs?
A) sight draft
B) bill of lading
C) letter of credit
D) bill of exchange
Which of the following is true about the theory of absolute advantage?
A) The theory accepts the mercantilist idea that international trade is a zero-sum game.
B) The theory approves the objective of national governments to acquire wealth through
restrictive trade policies.
C) The theory emphasizes that nations should open their doors to trade so that people
can obtain more goods at cheaper rates.
D) The theory measures a nation’s wealth by how much gold and silver it has on
reserve.
The Verandas U.S. subsidiary was turned down when it tried to borrow from a U.S.
bank. The bank manager suggested that the parent firm deposit money with the U.S.
bank’s Dutch branch, and then the U.S. bank’s home office would lend the money to the
U.S. subsidiary. This type of arrangement is known as a(n) ________.
A) mortgage loan
B) title loan
C) back-to-back loan
D) syndicated loan
Which of the following stages of the market or site screening process involves an
assessment of potential threat from substitute products?
A) identification of basic appeal of a product
B) measurement of market or site potential
C) assessment of the national business environment
D) selection of the market or site
Companies involved in more than one line of business must first formulate a ________
strategy.
A) business-level
B) department-level
C) corporate-level
D) global-level
Scenario: Stephanie Wong
Stephanie Wong, a Chinese-American, owns a consultancy that advises clients on
strategies for business expansions into China. Wong is to lead a symposium for small
and mid-sized exporters who are planning on expanding their businesses in China.
Therefore, she is preparing answers in advance for questions that symposium
participants would most likely ask. Stephanie also expects participants to ask: “Are the
Chinese as formal and business-oriented as Americans are?” Which of the following
would most likely be Stephanie’s response?
A) The Chinese operate very much like Americans, for them business is more important
than pleasure.
B) The Chinese dislike guessing games; give them your sales pitch right away and let
the meeting develop.
C) Don’t overlook the importance of personal relationships; friendship comes before
business.
D) The Chinese are very flexible and will easily adapt to your culture’s way of doing
business.
Which of the following is the correct order of the different methods of cultural training
from the least advanced to the most advanced?
A) environmental briefings; language training; cultural orientations
B) cultural orientations; field experience; language training
C) cultural assimilation; language training; field experience
D) sensitivity training; cultural orientations; field experience
________ in the foreign exchange market specialize in currency futures and options
transactions.
A) Securities exchanges
B) Eurocurrency markets
C) Interbank markets
D) Over-the-counter markets
________ are words or symbols that distinguish a product and its manufacturer from
competitors.
A) Patents
B) Trademarks
C) Watermarks
D) Copyrights
If ABC Software holds a currency option to purchase Swiss francs at SF 1.67/$ in 30
days, at the end of which the exchange rate is SF1.70/$, then ABC Software ________.
A) is required to follow through on a currency exchange
B) has succeeded in hedging against exchange rate risk
C) would exercise its currency option
D) would not exercise its currency option
Exports and imports of computer software, electronic components, and apparel are
included in the ________ account of a country’s balance of payments.
A) services
B) capital
C) merchandise
D) savings
Explain how political cooperation is a benefit of regional integration. How has the Gulf
Cooperation Council (GCC) evolved towards political cooperation?
Explain the three types of property seizure. Why might property seizure be a risk for a
business operating in a totalitarian nation?
Describe the three main types of economic systems.
Explain how a global strategy complements a corporate growth strategy.
Identify the strategic factors that influence a company’s international entry mode
selection. Explain any three of them.
Discuss the importance of cultural factors when assessing a national business
environment, and explain why cultural differences between markets create difficulties
when conducting international research.