In any exchange rate, the quoted currency is always the numerator.
Translating subsidiary earnings from a strong host currency into a weak home currency
increases stated earnings in the home currency.
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.
The greatest benefit of regional integration is trade diversion.
The more intermediaries there are in a distribution channel, the less costly the channel
becomes.
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.
The value of trade passing through the borders of all countries exceeds the amount of
goods and services they produce.
Support activities assist companies in performing their primary activities.
The General Agreement on Tariffs and Trade (GATT) was designed to promote free
trade by reducing both tariffs and nontariff barriers to international trade.
Nationalization describes government seizure of an entire industry, with or without
compensation.
A confirmed letter of credit is guaranteed by both the exporter’s bank in the country of
export and the importer’s bank in the country of import.
Consumer products such as toothpaste and soft drinks undergo extensive adaptation to
suit local preferences.
The rules of the international monetary system are enforced by the World Bank.
Pro-globalization economists believe globalization increases wealth in both developed
and developing nations.
Scenario: Cleanshot USA in Russia
When Cleanshot USA, a photography products company, decided to enter the
international arena, it chose Russia as its main market. Although Russia has been in
transition for years, Cleanshot managers believe their company has tremendous
opportunities there.
The Foreign Corrupt Practices Act forbids U.S. companies from bribing government
officials or political candidates in other nations.
When creating a market-potential indicator for an emerging market, market
consumption capacity is often estimated from the ________.
A) growth in gross domestic product
B) percentage of a market’s population in the middle class
C) gross domestic product at purchasing power parity
D) amount of energy the total population produces
Money earned from the sale of goods and services is known as ________.
A) revenue
B) dividend
C) depreciation
D) book value
A firm’s subsidiary built abroad from the ground up is called a(n) ________.
A) greenfield investment
B) portfolio investment
C) distributive channel
D) shell corporation
The segment of the economic environment comprising independently owned firms that
seek to earn profits is called the ________.
A) political sector
B) private sector
C) democratic sector
D) public sector
The Uruguay Round of Negotiations created the TRIPS Agreement to ________.
A) help standardize the intellectual property rules around the world
B) increase the exposure of national agricultural sectors to market forces
C) drastically reduce tariffs and nontariff barriers in agricultural trade
D) include international trade in services for the first time
Upper or lower limits placed on the prices of products sold within a country are known
as ________.
A) price controls
B) transfer prices
C) price escalators
D) arm’s length prices
An individual from a country with a low degree of political risk would most likely be
from ________.
A) Venezuela
B) Canada
C) Zimbabwe
D) Iraq
Which of the following occurs when an idea to be communicated is translated into
images, words, and symbols?
A) compiling
B) encoding
C) parsing
D) processing
A ________ is used for a product’s promotion when there are many levels of
intermediaries in its distribution channel.
A) push strategy
B) pull strategy
C) retrenchment strategy
D) stability strategy
During which of the following stages of the international product life cycle theory does
high purchasing power and buyer demand in an industrialized nation encourage a
company to design and introduce a product concept?
A) product decline stage
B) new product stage
C) maturing product stage
D) standardized product stage
Which of the following refers to planning, implementing, and controlling the physical
flow of a product from its point of origin to its point of consumption?
A) customization
B) distribution
C) communication
D) promotion
Which of the following is a characteristic based on which products are typically
differentiated?
A) brand loyalty
B) brand equity
C) product design
D) product cost
Which of the following terms is defined as the process of identifying and attracting a
qualified pool of applicants for vacant positions?
A) orientation
B) outsourcing
C) recruitment
D) selection
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.
Jack has always handled product returns on a case-by-case basis, but he is often
unprepared to deal with too many cases of returns. Which of the following would most
likely help Jack increase his repeat business?
A) continuing with the current system, since it is already well-established
B) accepting returns but crediting customer accounts slowly to discourage future returns
C) planning for returns and giving prompt credits to customers
D) avoiding receiving returns when possible to discourage the loss of revenue
Citizens of one country who are living and working in another are called ________.
A) local employees
B) domicile residents
C) repatriates
D) expatriates
When there are gains to be had by both countries that are party to an exchange,
international trade is considered a(n) ________.
A) positive-sum game
B) equal-sum game
C) negative-sum game
D) zero-sum game
What is the foreign exchange market? Explain why investors use this market.
Explain each of the four means of incorporating risk into business strategies when
companies employ an adaptation strategy.
Differentiate among the five levels of economic and political integration.
Explain the Single European Act and how it helped to integrate Europe. How did the
Single European Act help prompt the creation of NAFTA?
Differentiate between efficient and inefficient market views and discuss the
implications of the two schools of thought for companies.
Briefly discuss the effects of globalization on international marketing activities and
explain how a dual adaption method works as a promotional strategy.