Chapter 03 - Business in a Borderless World Chapter 03 Business in a Borderless World Multiple Choice Questions 7. When Solar Tech, Inc., of Taos, New Mexico, sells thin film solar panels to a firm in Tokyo, Japan, Solar Tech A. is importing the panels. B. is exporting the panels. C. has an absolute advantage. D. is increasing the trade deficit. E. is making a big mistake. 8. A favorable balance of trade exists when a country A. imports more than it exports. B. exports more than it imports. C. sends out more cash than it takes in. D. spends more than it saves. E. saves more than it spends. 9. The U.S. has a trade deficit because A. American companies sell more goods to other countries than foreign companies sell here. B. China stopped exporting goods to the United States. C. America imports more products than it exports. D. American consumers stopped buying Chinese goods and services. E. American consumers buy far more domestic goods and services than foreign goods and services. 10. The balance of payments includes all the following except A. a country's balance of trade. B. foreign investments. C. domestic investments. D. tourist expenditures. E. foreign aid and military expenditures. 11. When Madison flies to Italy from the United States on a British airline, stays in Italian hotels, and buys clothing in Milan to bring home after her trip, she A. decreases the trade deficit. B. is disloyal and unpatriotic. C. contributes to the negative balance of payments. D. buys American-made goods. E. does all of the above. 12. The primary problem with a trade deficit is A. that a country is exporting more than it is importing. B. that more cash is leaving the country than is entering. C. that a country is spending more than saving. D. that a country is saving more than spending. E. export taxes. 13. The difference between the flow of money into and out of a country is called its A. balance of trade. B. imbalance of trade. C. balance of payments. D. trade payment balance. E. exchange rate. 14. Because Colombia can produce coffee so much more efficiently than other items produced there, it has which of the following advantages? A. Absolute B. Positive C. Negative D. Marginal E. Comparative 15. Because it virtually controls the world's deposits of gem-quality diamonds, DeBeers Consolidated Mines, Ltd. has a(n) A. absolute advantage. B. comparative advantage. C. advantage based on efficient production. D. trade deficit. E. balance of payment. 16. A trade advantage with the best chance of surviving is one based on A. worker know-how. B. technology. C. a monopoly of a resource. D. production efficiency. E. lack of a resource. Multiple Choice Questions 25. When a company decides to do business outside its own country, it must research several factors, including potential barriers to international trade. Which of the following is not a potential barrier cited in your text? A. Legal B. Political C. Cultural D. Economic E. Scientific 26. When a country devalues its currency, this encourages the sale of its A. imports. B. Domestic goods to foreign countries. C. international goods. D. international services. E. debts. 27. The law that allows selected American firms desiring international trade to form monopolies to compete with foreign cartels is the A. Webb-Pomerene Export Trade Act. B. Bretton Woods Agreement. C. GATT. D. Foreign Corrupt Practices Act. E. Sherman Antitrust Act. 28. A specific amount of money levied on each unit of a product brought into the country is a(n) A. ad valorem tariff. B. value-added tariff. C. fixed tariff. D. protective tariff. E. duty-free tariff. 29. To reduce dollars flowing out of the country, the United States can take measures like limit the number of foreign cars from Japan that are imported by imposing a(n) A. quota. B. exchange control. C. trade deficit. D. embargo. E. free trade zone. 30. A group of nations or companies that band together to act as a monopoly is known as a A. conglomerate. B. licensor. C. cartel. D. multinational. E. licensee. 31. A change in administration in a foreign government that is hostile to foreign trade is an example of a A. political barrier. B. cultural barrier. C. exchange barrier. D. export quota. E. body language. 32. Not all countries trading in international markets package goods in the same units. Unlike the United States, most countries rely on A. currency. B. gold. C. the metric system. D. daylight savings. E. color coding. 33. Understanding that Arab businessmen tend to stand face to face when holding a conversation reveals the importance of knowing another culture's use of A. language. B. dialect. C. religious practices. D. manners. E. body language. 34. The translation of product names can be crucial in the success of a foreign marketing effort because of A. political barriers. B. cultural barriers. C. legal barriers. D. export quotas. E. body language. Multiple Choice Questions 43. A forum to discuss trade problems and negotiate a reduction of trade barriers was first provided by A. the General Agreement on Tariffs and Trade. B. a free trade zone. C. the World Bank. D. the Eximbank. E. the International Monetary Fund. 44. Which countries were merged into one market by NAFTA? A. Canada, the U.S., and Mexico B. North America and South America C. Mexico, the U.S., and Brazil D. Canada and the U.S. E. Canada and Mexico 45. To facilitate free trade among members, the European Union is working toward all of the following except A. the standardization of business regulations. B. the standardization of import duties. C. the elimination of customs checks. D. the creation of opportunities to trade with countries in South America. E. the creation of a standardized currency. 46. Which trade alliance/agreement, which represents 54 percent of world GDP, allows businesses to participate in a wide range of its activities? A. General Agreement on Tariffs and Trade B. Asia-Pacific Economic Cooperation C. North American Free Trade Agreement D. European Union E. Free Trade Area of the Americas 47. Which of the following countries was an original member nation of APEC? A. Belgium B. Mexico C. China D. Japan E. Chile 48. Which of the following makes short-term loans to member countries with trade deficits and provides foreign currencies to member nations? A. Foreign Credit Insurance Association B. General Agreement on Tariffs and Trade C. World Bank D. Eximbank E. International Monetary Fund 49. If Peru wants to purchase machine parts from a German company but does not have any euros, it will probably borrow the euros from which of the following institutions? A. International Monetary Fund B. World Bank C. Citicorp Bank D. International Bank E. Eximbank 50. Which of the following is formally called the International Bank for Reconstruction and Development? A. World Bank B. International Monetary Fund C. European Union D. North American Free Trade Agreement E. World Trade Organization 51. Which of the following is not something that the International Monetary Fund does? A. Provides short-term loans to member countries B. Functions as a world central bank C. Eliminates trade barriers between nations D. Fosters international financial cooperation E. Provides individual home and auto loans 52. Why was the World Bank formed? A. Because developed nations realized that developing nations do not have any banks B. Because national banks do not have large enough cash reserves sometimes C. To act as a global policing service D. To loan money to underdeveloped and developing countries E. To help developed nations obtain money to start businesses Multiple Choice Questions 61. An intermediary, or middleman, who markets goods in another country is acting as a(n) A. licensing agent. B. franchising agent. C. export agent. D. contract manufacturer. E. direct investor. 62. A major advantage of utilizing an export agent is that the company does not have to deal with A. a middleman. B. raising prices. C. foreign currencies and red tape. D. discounts. E. increasing volume. 63. Trading companies offer all of the following services except A. consulting. B. advertising. C. manufacturing. D. warehousing. E. foreign exchange. 64. Coca-Cola allows a Mexican firm to use its name, formula, and brands in return for a royalty. This arrangement is known as A. exporting. B. licensing. C. direct investment. D. contract manufacturing. E. a joint venture. 65. When Nike has its athletic shoes produced by companies in Asia, the Nike name still appears on the shoes. This illustrates A. contract manufacturing. B. licensing. C. direct investment. D. exporting. E. importing. 66. The purchase of overseas production and marketing facilities is A. licensing. B. contract manufacturing. C. using an export agent. D. a direct investment. E. exporting. 67. The fact that the American company 3M owns a film-manufacturing facility in Italy is an example of A. contract manufacturing. B. a direct investment. C. a trading company. D. licensing. E. exporting. 68. Because many countries do not permit foreign companies to purchase and operate facilities in their countries, a company wishing to do business in such a country may share the business costs with the host country by forming a A. direct investment. B. contract manufacturing arrangement. C. corporation. D. joint venture. E. sole proprietorship. 69. When two computer companies joined together in hopes of obtaining a competitive advantage on a worldwide basis, this exemplifies a A. direct investment. B. contract manufacturing deal. C. cartel. D. joint venture. E. strategic alliance. 70. A corporation that operates in several countries but without significant ties to any of them is a(n) A. joint venture. B. exporter. C. cartel. D. multinational. E. strategic alliance. Multiple Choice Questions 79. More companies are moving away from _______ strategy to globalization. A. personalization B. customization C. standardization D. tailored E. individualized 80. An understanding of which of the following realities is not required for businesspeople to plan in a global economy? A. Personal B. Economic C. Legal D. Political E. Sociocultural 81. McDonald's had to adapt its menus to reflect local preferences in India because A. Indians do not like hamburgers. B. all Indians are vegetarians. C. Indians only like to eat diet food. D. cows are sacred to many Indians and many are vegetarians. E. McDonald's had a bad reputation before opening franchises in India. 82. Even when products are standardized, _____ often has to be modified internationally. A. formulas B. fragrances C. advertising D. key ingredients E. products can never be standardized 83. As political barriers to trade fall internationally, new ______ are created for international business. A. opportunities B. threats C. strengths D. weaknesses E. competition 84. Companies should conduct environmental analyses before beginning to do business internationally in order to evaluate potential for problems associated with different markets and to develop a _______ for those markets. A. SWOT matrix B. plan C. strategy D. market E. product 85. Customizing products, promotion, and distribution according to cultural, technological, and national differences indicates a A. globalization strategy. B. multinational strategy. C. strategic alliance. D. multinational corporation. E. joint venture. 86. When Lever Brothers changes the formula of its bar soap to match different countries' water conditions and washing habits, this is an example of a A. globalization strategy. B. marketing strategy. C. strategic alliance. D. multinational strategy. E. joint venture. 87. When a firm's products are standardized in all countries, A. advertising cannot be used. B. only publicity can be used for promotion. C. different ads are illegal. D. distribution is more expensive. E. advertising may have to be modified. 88. Standardizing products for the whole world as if it were a single entity is a characteristic of which strategy? A. Global strategy B. Multilevel strategy C. Standardization strategy D. Marketing strategy E. National strategy 3- PAGE 3
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