Currency speculation is the purchase or sale of a currency with the expectation that its
value will remain constant.
The Council of the European Union is the executive body of the EU.
The first step in the identification of potential markets is an assessment of the basic
demand for a product.
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. The Southern Common Market is also
referred to as MERCOSUR.
The rapid pace of technological innovation today extends the life cycles of products.
Scenario: Excelsior’s Limited
Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence
in several countries around the world. Excelsior’s president is surprised at some of the
responses the company is receiving from other countries.
Products that are of use in both industrial and military applications are designated as
dual-use products.
Trade missions are advantageous to small businesses as they are the most inexpensive
method of getting introduced to important business contacts.
Mercantilism views competition for the world’s wealth as a positive-sum game.
Which of the following terms refers to an economic system in which the government
owns and controls all types of economic activity?
A) socialism
B) sovereign nationalism
C) political bureaucracy
D) pluralism
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.
Susan thinks that it would be easiest setting up production facilities in a country whose
government leaders are elected directly by the wide participation of the people or by
their representatives. Which of the following political systems should the country have?
A) anarchist
B) democratic
C) theocratic
D) facist
Scenario: Hafstrom Motors
Based in Kentucky, Hafstrom Motors has always used spare parts made in America for
its automobiles. However, sales and profits have slumped over the past three years. A
senior manager at the company comes up with new strategies for improving the firm’s
production activities.
The top management of the company contends that Hafstrom would benefit most from
manufacturing its own parts, rather than sourcing it from elsewhere, even if they are
made at another location overseas. Which of the following is being recommended in
this approach?
A) just-in-time manufacturing
B) location economies
C) vertical integration
D) outsourcing
Which of the following is a reason behind intervention by a host country on matters
related to FDI?
A) to keep their balance of payments under control
B) to protect their outdated technology and management skills
C) to strictly encourage the establishment of sunset industries
D) to decrease the country’s competitiveness in the global market
According to the theory of ________, trade is beneficial even if one country is less
efficient in the production of two goods, as long as it is less inefficient in the production
of one of the goods.
A) absolute advantage
B) mercantilism
C) comparative advantage
D) factor proportions
Scenario: Wang’s Techno Toys
Ann Wang has been successfully running Wang’s Techno Toys that sells high-tech toys
in the domestic market. Continually increasing and stiff competition at home has now
forced Wang’s Techno Toys to enter international markets through direct exports. Which
of the following will most likely help Techno Toys sell its toys directly to buyers in the
target market?
A) agents
B) sales representatives
C) export management companies
D) export trading companies
Which of the following strategies is designed to increase the scale or scope of a
corporation’s operations?
A) differentiation strategy
B) growth strategy
C) stability strategy
D) retrenchment strategy
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.
Which element of national competitive advantage theory divides resources into two
groups: basic and advanced?
A) demand conditions
B) factor conditions
C) related and supporting industries
D) firm, strategy, structure, and rivalry
Which of the following statements is true of NAFTA?
A) It introduced a common currency for trade between the U.S., Mexico and Canada.
B) It overrode the local content requirements and rules of origin for products
manufactured in the member nations.
C) It eliminated all tariffs and nontariff trade barriers on goods originating from within
North America.
D) It called for stringent rules regarding government procurement practices and the
imposition of countervailing duties.
Which of the following factors has the least effect on facilities layout planning?
A) supply of land in a nation
B) cost of land in a nation
C) a firm’s production process
D) age of the company
Which of the following lowers the price of a country’s exports on world markets and
increases the price of its imports?
A) revaluation
B) devaluation
C) currency hedging
D) currency arbitrage
Exports and imports of tangible goods are included in the ________ account of a
country’s balance of payments.
A) savings
B) capital
C) merchandise
D) services
Compare and contrast the business environments in China and Russia.