Worker productivity tends to be lower in most developing nations than in developed
nations.
Scenario: Learning the Americas’ Way
The newly-formed countries that emerged after the break up of the United Frontier
States (UFS) are interested in learning more about integration in the Americas. Because
the former UFS nations have many similarities with the countries of North and South
America, they believe they can learn from the integration experience in the Americas.
To that end, they pose the following questions. Today, the Southern Common Market
acts as a political union.
A pull strategy is most appropriate when buyers display a great deal of brand loyalty
toward one particular brand name.
Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to
set up production facilities in other countries and has been advised to assess the
political system of each country before she does so.
Pluralism is the belief that only individuals and private groups should control a nation’s
political activities.
Scenario: Global Manufacturing Inc. (GMI)
Global Manufacturing Inc., a fast-growing U.S. company, plans for a production system
in which two components of its product will be manufactured in locations where the
cost of production is lowest. The components will then be taken to maquiladoras for
final assembly. GMI plans to purchase an existing company in Brazil to produce
component A and build a subsidiary in Thailand to produce component B.
A potential problem with a rationalized production model is that a work stoppage in one
country can bring the entire production process to a standstill.
One reason to buy a product instead of making it in-house is the greater flexibility to
respond to market conditions.
Trade barriers and specialized knowledge are examples of market imperfections.
Technical analysis employs charts of past trends in currency prices and other factors to
forecast exchange rates.
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.
International companies often must customize products to comply with local standards
if they are to do business in a particular country.
Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to
set up production facilities in other countries and has been advised to assess the
political system of each country before she does so.
The bureaucracy is the part of government that implements the rules and laws passed by
elected representatives.
All company and product brand names are made up of morphemes.
By ignoring important cultural nuances, companies can inadvertently decrease the
potential for noise that can cloud the audience’s understanding of their promotional
message.
Food and utilities are examples of income-inelastic products.
Forward rates represent the expectations of currency traders and bankers regarding a
currency’s future spot rate.
While designating an exchange rate, the numerator indicates the ________.
A) base currency
B) transaction currency
C) quoted currency
D) cross currency
Firms engage in FDI when the firms they supply have already invested abroad. This
practice of “following clients” is observed in industries having ________.
A) a huge number of clients
B) only large companies as clients
C) suppliers who are geographically scattered around the world
D) suppliers who have close working relationships with producers
Which of the following refers to the process by which cultural traits spread from one
culture to another?
A) cultural heterogeneity
B) cultural imperialism
C) cultural diffusion
D) cultural literacy
The new trade theory is mainly at odds with the ________ theory.
A) international product life cycle
B) comparative advantage
C) national competitive advantage
D) factor proportions
Scenario: Audio Component Outsourcing
Echo Corporation manufactures high-quality audio components, such as speakers,
amplifiers, and receivers, for home entertainment systems. Echo has been losing market
share in recent years due to the competitive pricing of other audio component
manufacturers that engage in outsourcing. Echo managers are attempting to convince
Nathan Douglas, the firm’s founder and CEO, that outsourcing would enable the firm to
be more competitive without sacrificing quality.
Which of the following is most likely a potential benefit for Echo if it outsources some
of its manufacturing activities?
A) heightened communications awareness
B) increased activity in e-commerce sales
C) strong intellectual property protection
D) eliminating the exposure of assets to political risk
A ________ is a right granted to the inventor of a product or process that excludes
others from making, using, or selling the invention.
A) patent
B) trademark
C) watertight
D) copyright
CADE Enterprises, a U.S. manufacturer, received assistance from the Overseas Private
Investment Corporation when it expanded operations into Saudi Arabia. Which of the
following types of support did CADE most likely receive from OPIC?
A) financial capital
B) cultural training
C) legal guidance
D) political risk insurance
________ in the computer industry is the outsourcing of the actual assembly of
computers plus the job of shipping them to distributors and other intermediaries.
A) Agile manufacturing
B) Just in time manufacturing
C) Lean manufacturing
D) Stealth manufacturing
In a market economy, access to alternative purchase options is known as ________.
A) price-sensitivity
B) economic transition
C) laissez-faire
D) free choice
Opponents argue that globalization ________.
A) eliminates manufacturing jobs in developed nations
B) generates labor market flexibility in developed nations
C) brings an end to practices like outsourcing
D) slows down the employment rate in developing nations
A group of nations in a geographic area undergoing economic integration is called a
________.
A) born global firm
B) maquiladora
C) regional trading bloc
D) Eurocurrency market
Which of the following is an argument offered by the new trade theory?
A) It is in line with the factor proportions theory.
B) There are gains to be made from specialization and increasing economies of scale.
C) The companies first to market forgo the opportunities to create barriers to entry.
D) Market forces alone play a role in assisting the home companies in a country.
Which of the following statements is true of developing countries that have embraced
globalization?
A) The countries have experienced an increase in life expectancy.
B) As a result of extensive commercialism, there has been a decline in personal income.
C) Relying upon developed countries for technology has rendered their talent pool
stagnant.
D) Their rich cultural diversity hasn’t been affected by exposure to new cultures.
Which of the following is implied by a product with a low value density?
A) the distribution system is more localized
B) the product is more valuable
C) the cost of shipping the product is negligible
D) the product is processed in areas away from their original locations
Who proposed the theory of absolute advantage?
A) David Ricardo
B) Adam Smith
C) Bertil Ohlin
D) Raymond Vernon
Which of the following is the final step in the screening process for potential markets
and sites?
A) assessment of the national business environment
B) measurement of market or site potential
C) selection of the market or site
D) assessment of climate suitability
Differentiate between a multinational and a global strategy. Identify the main benefits
and the main drawbacks of each.
Explain each of the following terms, giving examples of each: patent, trademark, and
copyright.
Discuss the factors that contributed to the collapse of centrally planned economies.
Summarize each benefit a company might obtain from the globalization of markets.
Discuss the limitations of the international product life cycle theory. How well does the
theory explain current trade patterns?
Explain why the availability of data is a challenge when conducting international
research. How do interviews and focus groups help in the availability of data?
Explain the primary concerns of managers when establishing distribution policies.