Exam 5: The Global Context of Business

Explain why foreign direct investment is often the riskiest, most complex, and most involved of the various types of international involvement.

KFC's dishes in China come with a side order of rice and soy milk. This is an example of over-expansion without support for repairing the product. adapting to customer needs. misreading demand for the product. overpricing caused by exchange rate changes. a poor business environment for foreign goods.

The results for Canada from the North American Free Trade Agreement include all of the following except Canada has become an exporting powerhouse. direct foreign investment increased. Canada now exports 40 percent of its GDP. U.S. imports from (and exports) to Mexico increased. Canada is the least trade-intensive country in the G7 group.

The major reasons why Mexico has recently become a major manufacturing centre are cheap labour and low transportation costs. elimination of quotas and tariffs and low tax rates. low tax rates and cheap labour. cheap labour and elimination of quotas and tariffs. low transportation costs and low tax rates.

Herald Inc., a French newsprint manufacturer, is geared towards international markets but does not have specific domestic and international divisions. This firm is a(n) multinational firm. exporter. independent agent. purely domestic firm. customs broker.

Examples of true absolute advantage are rare.

What is the implication for a manufacturer of electrically powered equipment contemplating international operation upon learning of the wide variety of electric outlets around the world? Modify the product to meet the standards of different countries Deal with independent agents Delay international operations until the currency exchange rate is favourable Drop the idea of international operation None of these

A firm that produces goods in one country and distributes and sells them in other countries is a multinational firm. an exporter. an international firm. a joint venture. an importer.

Dumping involves selling products at less than fair value. less than what domestic producers charge. less than what is reasonable. a lower price than competitors. less in one country than another.

When Manulife Financial entered the Chinese market, it made an agreement with Sinochem, a state-owned trading company. This is an example of a strategic alliance. world product mandating. a licensing arrangement. a branch office. an independent agent.

Why would two companies, both earning large profits and expanding into Japan, form a strategic alliance?

A nation's balance of trade is the relative difference between money flowing into and out of a country. the difference in value between a country's total exports and its total imports. the relative difference in value between a country's total exports and its total imports. the difference between money flowing into and out of a country. the difference in exchange rates between two countries.

What are the three basic levels of involvement in international business?