Exam 5: The Global Context of Business

The comparative advantage form of competitive advantage means that a country does not belong to any free trade agreements. that a country is the sole supplier of a product or service. that a country can produce everything better or more cheaply than any other country. that a country can produce some products better or more cheaply than it can other products. that a country can produce something better or more cheaply than any other country.

Algoma Treasures, a gift-wrap manufacturer, is considering expanding its business into the international market. What key question must have a positive answer before a company begins international operations? Is there a demand for its products abroad? Is there a favourable balance of trade? What is the currency exchange rate? Is there a favourable balance of payments? Is local culture compatible?

List and briefly describe the three basic barriers to international trade. Give examples of each.

Which of the following is correct with regard to Canada's balance of trade? Canada has had a favourable balance of trade for many years, with 2012 seeing the largest ever recorded. The U.K. is Canada's largest trading partner. Canada's generally favourable trade balance over the years has occurred because our unfavourable balance of trade with the U.S. is offset by our favourable balance of trade with most other countries. Canada's unfavourable balance of trade in 2012 was due partly to the increase in the value of the U.S. dollar. None of these are accurate.

Derrido is an American firm that has produced several successful animated TV series in the United States. It is considering contracting with one or more international companies as a way to market its products overseas. One of Derrido's sales executives suggests that Derrido's particular type of business enables a contractual relationship to be an especially suitable way for the company to market its products internationally. Which of the following, if true, would strengthen this position? Contractual relationships allow an originating firm to make the most use of local talent. Contractual relationships cannot capture unpredictable future contingencies. Contractual relationships are often cross-culturally contentious. Derrido would not be undertaking large-scale production or shipping operations. Derrido is a large company with ample staff and resources at its disposal.

Free trade agreements are not restricted to the Americas.

Social and cultural barriers have been shown to be the biggest barriers to international trade.

The World Bank, an agency of the United Nations, uses per capita income as a measure to divide countries into one of four groups. Distinguish among the four groups and identify the countries in each group.

Which of the following is correct with respect to exchange rates? The value of one country's currency relative to another varies with changes in GDP, but not as a response to market conditions. The value of the Canadian dollar falls as the foreign demand for Canadian goods rises. Exchange rates typically fluctuate by very small amounts on a daily basis. Fluctuation in exchange rates have little impact on the balance of trade. All of these are correct.

________ is a trade agreement that removes tariffs and other trade barriers among the United States, Canada, and Mexico. NAFTA ASEAN The World Bank The European Union GATT

Lite Foods is a producer of breakfast cereals such as oatmeal and cornflakes, and its products can be found in nearly all supermarkets across Canada. Lite Foods now has its sights set on international shores, specifically the large Chinese consumer market. Company executives are currently debating the optimal route for the firm to enter the market. Which of the following, if true, would most weaken the argument for venturing into the Chinese market? The Chinese government provides subsidies and tax incentives to local manufacturers who export their products. The Chinese breakfast menu is typically made up of steamed dough, noodles, fruits, and eggs. It would take a few months to establish operations in China because of regulatory hurdles. Several international companies have failed in China because of their inability to understand local requirements. Penetrating the Chinese market requires extensive use of local employees.

Increased demand for a nation's products will tend to make its currency stronger while driving down the price of foreign goods.

International trade improves peoples' standard of living, yet countries often put up trade barriers? Why is this? Goods that are imported compete with domestic products and put pressure on domestic businesses. The quality of imported products is usually lower than the quality of domestically produced products. Generating government revenue is often more economically valuable than free trade. It is an effort to keep a country's currency strong. International trade causes political tensions to develop.

Canada ranks ____among the G8 countries in the proportion of production that is exported. first second third fourth fifth

If there is a favourable balance of payments, it means that a country exports manufactured goods and imports raw materials. a country imports more than it exports for each country with which it trades. a country exports more than it imports for each country with which it trades. the country has more money flowing into it than out as a result of trade and other transactions. a country exports raw materials and imports manufactured goods.

In marketing its new product in a foreign nation, Mega Computer was surprised to see the very low prices on its local competitor's models. Subsequent investigation revealed that the domestic businesses had received money from the government. Mega now knows what a(n) ________ is. subsidy tariff embargo local content law quota

For any given country, the balance of trade and the balance of payments must both be both positive or both be negative.

In 2012‒13, Canada ranked in the top 10 in terms of international competitiveness, as reported by the World Economic Forum.

What is a cartel?

During the last few years, the benefits of NAFTA have been slowly eroded by the ups and downs of the Canadian dollar. the reluctance of U.S. producers to sell goods to Canadian companies. delays at border crossings between the U.S. and Canada. higher inflation rates in the U.S. than in Canada. objections from Mexico about unfair deals between the U.S. and Canada that shut Mexico out of export possibilities.