Exam 5: The Global Context of Business

Mega Computers has decided to expand operations overseas. In order to give foreign customers a sense of security, Mega has chosen to send several of its own managers and technicians to the country as part of the start-up operations. In addition, this will give Mega more control over making sure that top quality service is given to the new customers. Mega has chosen the organizational strategy known as independent agent. strategic alliance. direct investment. branch office. licensing arrangement.

Merritt Corp. is interested in doing business internationally. They have already determined that there is international demand for their product. What should they do next? Determine if the company has the skills necessary to do business abroad Contact a local business to form a joint venture Assess the business climate for reaction to foreign products Determine if the product needs to be modified to fit the foreign market Conduct market research to determine potential sales

Which of the following constitutes the best evidence for globalization? Diamonds that are mined in Country X are sold on the diamond market in Country Y and the money is used to fund a rebel group trying to overthrow the government in Country X. A flood in country X causes factories to shut down temporarily and they cannot deliver computer chips to foreign buyers. Company Y (in another country) has to reduce its output, and it also raises the price of its products. Farmers in Country X lose most of their wheat crops because of a drought. The price of wheat triples and the government of country X reimburses farmers for some of their losses. Country X has almost exhausted all of its available natural energy sources. The government has been investing in alternative energy research for many years and has developed an efficient synthetic energy source. Country X has raised the tax on gasoline and, as a result, more of its citizens are taking public transportation and cutting back on car travel.

The first decision in determining whether a company should go international or not, is to determine if there is international demand for its products.

What is protectionism?

Which of the following types of firms have planning and decision-making functions that are geared to international markets? Exporting firms International firms Multinational firms Domestic firms None of these

A foreign individual or organization that agrees to represent an exporter's interest in foreign markets is called a(n) headquarters arrangement. licensing arrangement. independent agent. strategic alliance. branch office.

Farmer Sal grows strawberries. The berries are shipped to a local manufacturing plant where they are made into jam, labeled "Country Recipe Strawberry Jam," and boxed for shipment overseas. This product of Ontario is also referred to as a(n) export. import. trade product. absolute product. competitive advantage.

Fembooks Bookstore sells books only over the internet. It has established an excellent reputation for finding out-of-print and hard-to-find books of interest to women. The CEO of Fembooks is considering going global with the business, since it is already established on the internet. The vice president of Fembooks argues that they will encounter too many difficulties in taking the business global via the internet. The president argues that the benefits would be worth the problems encountered. Which of the following statements, if true, would support the argument of the vice president against going global? While English is the dominant language of the internet, more local traffic would be generated by Web pages in the local language. Being a niche business, going global over the internet would not put a huge strain on existing personnel. Shipping books overseas could easily be handled by UPS, FedEx, or air mail. Sales predictions for overseas expansion anticipate an initial 30 percent increase, then tapering off to a 20 percent increase annually. Increased internet advertising costs would be a fairly inexpensive investment to increase business on a global basis.

The successor to GATT is the European Union. the WTO. the ASEAN Free Trade Area. NAFTA. the WHO.

Describe the impact of exports and imports on a country's balance of trade and its balance of payments.

According to the World Bank, high income countries include all of the following except Japan. U.S. Canada. South Korea. South Africa.

All of the following are included in the balance of payments except money paid for imports. money paid by domestic corporations for taxes. money spent by tourists. money spent on foreign aid. money paid for exports.

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. Another marketing executive points out that a contractual agreement will allow Derrido to blend in with the local market and goes on to argue that this will be advantageous to the company. Which of the following, if true, would strengthen this argument? Consumers in many countries have limited resources with which they can purchase entertainment. Consumers in many countries are wary of what they perceive as American cultural imperialism. Contractual agreements usually require the foreign partner to display the originating firm's brand as prominently as possible. Contractual agreements initiated by an American company often make for contentious relationships with the foreign partner. Foreign consumers briefly resist cultural imperialism but then quickly embrace American cultural products.

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 strengthen the argument for venturing into the Chinese market? The affluent Chinese middle class is large and is quick to adopt western lifestyles and product preferences. Growth in the United States cereal market continues to be strong. The Chinese fixed exchange rate regime may change, which could mean a stronger Yuan that would affect Chinese exports. Chinese food preferences are very slow to evolve. China recently signed a free-trade agreement with the Association of Southeast Asian Nations (ASEAN).

The balance of payments that Canada has experienced has been unfavourable for many years. favourable since Confederation. changing between favourable and unfavourable with about a seven year cycle. favourable for the last thirty years. unfavourable since Confederation.

What are the three major marketplaces in the contemporary world economy?

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. An executive at Derrido suggests that a contractual relationship will provide the company with a fair amount of control over how the foreign partner markets Derrido's product. Which of the following, if true, would strengthen this case? Contractual relationships typically include limits and stipulations on the foreign partner. Contractual relationships typically limit the responsibility of the originating firm. Contractual relationships can be complicated by international law. Foreign companies often have considerable familiarity with American culture. Foreign companies usually expect to be given latitude with how they market U.S.-made products.

When Walmart was forced to stop refunding price differences on items sold for less by other stores because the practice is illegal in Germany, Walmart discovered the effect of revenue tariffs. embargoes. business practice laws. protectionist tariffs. world product mandating.

Why have the number of strategic alliances among major companies increased significantly over the last decade?