Deck 17: Global Business

Question 1

The Smoot-Hawley Act of 1930 was passed in the hope of keeping foreign-made products out of US markets.

Answer 1

True

Question 2

Currently tariff rates are below the 4 percent level, which the World Trade Organization established as a goal in the early 1990s.

Answer 2

True

Question 3

While the United States has the largest population in the world, it represents only 5 percent of the world's commerce.

Answer 3

False

Question 4

The goal of the North American Free Trade Agreement (NAFTA) is to make trade between the United States, Canada, and Mexico easier.

Question 5

Since the early 1970s the United States has had balance of trade surpluses.

Question 6

In deciding whether to export a product it is important to remember that having export potential is not the same thing as being export ready.

Question 7

Both Mexico and Canada are currently small buyers of U.S. exports, but they are growing.

Question 8

One way to determine what price to use in overseas markets is to let the costs of doing business internationally drive the process.

Question 9

An export management company will function like the international marketing department of a firm.

Question 10

The major advantage of using a letter of credit is that no banks will then get involved in the process of transacting the money.

Question 11

The Smoot-Hawley Act of 1930

A) established the Small Business Administration.
B) opened up the U.S. markets to foreign producers.
C) established the International Trade Commission.
D) resulted in the North American Free Trade Agreement.
E) none of the above.

Question 12

Tariff rates in 1950 were commonly in the ______ range.

A) 2-3 percent
B) 15-25 percent
C) 50-60 percent
D) 100 percent or more

Question 13

The goal of the World Trade Organization for tariff levels for the year 2000 was

A) below 4 percent.
B) 45-50 percent.
C) 12 percent.
D) 4.3 percent.

Question 14

The increase in world trade since World War II is the result of

A) changes in the political climate.
B) improvements in transportation.
C) improvements in communication technology.
D) all of the above.

Question 15

During the period 1980-1994 world output rose 40 percent and world trade

A) declined slightly.
B) increased 10 percent.
C) increased 40 percent.
D) increased 80 percent.

Question 16

Our country's share of the world population is about 25 percent; our share of world exports is

A) 5-7%.
B) 12%.
C) 25%.
D) 50%.

Question 17

In comparison to the United States, the growth rates of developing nations such as China and India are

A) remarkably close.
B) considerably higher.
C) lower, but improving.
D) lower, and getting worse.

Question 18

Among the reasons for small firms to consider exporting are the following:

A) to put excess capacity to use.
B) to take advantage of different seasons in the southern hemisphere.
C) to lengthen the life cycle of a product that is in decline in the US market.
D) all of the above.

Question 19

With all of the good reasons for firms to export,

A) practically all businesses, regardless of size, export regularly.
B) only slightly over half of our country's firms export regularly.
C) the only industry actively engaged in it is agriculture.
D) none of the above.

Question 20

Among the reasons why small firms do not enter world markets are the following:

A) there is no assistance available for researching overseas markets.
B) most entrepreneurs feel that until they have fully exploited domestic market opportunities there is no point in exporting.
C) with all of its rules and procedures, exporting is just too complex an undertaking for most small companies to consider.
D) all of the above.

Question 21

The adjustments that a company will have to make upon entry into exporting are made necessary by

A) factors which complicate the market research.
B) difficulties inherent in the payment process.
C) issues concerning distribution.
D) all of the above

Question 22

Perhaps the best advice for an entrepreneur who is deciding whether to export a product is

A) choose a product that is not doing well in the U.S. market anyway and let the cultural differences give sales a boost.
B) choose only new products because international markets are becoming increasingly sophisticated.
C) product choice doesn't matter much because the cultural factors that will determine the success or failure of the product are too hard to figure out anyway.
D) choose products that have succeeded here in the U.S. market.

Question 23

Levi Jeans, Coca-Cola, and McDonald's fast food are examples of products that

A) seem to have appeal in all cultures.
B) represent an era that is ending rapidly.
C) show improper United States behavior in international competition.
D) none of the above.

Question 24

Among the management issues in the export decision are

A) experience.
B) management objectives.
C) production capacity.
D) all of the above.

Question 25

An American company exploring the European Union as a market for the radios it produces will find

A) no revisions of its United States model are required because a radio is the same no matter where it is played.
B) other than changing voltage, no modifications are required.
C) the German market may need something different from what works well in the French market.
D) none of the above.

Question 26

For companies just entering exporting

A) it only makes sense to enter a number of markets at the outset to spread the costs of entering.
B) it is usually best to start with one market to hold down the costs of the mistakes that are often made.
C) going into different parts of the world is advisable in order to spread the risks.
D) none of the above

Question 27

For the latest year for which figures were reported in the text (2003), Canada had the following status as a trading partner with the United States

A) it was the largest by a considerable margin.
B) it was the largest by a slim margin.
C) it was second only to Japan.
D) none of the above.

Question 28

The text's description of Japanese customs inspection procedures used for tulip bulbs from the Netherlands was an example of

A) voluntary import restrictions.
B) world agricultural policy anomalies.
C) a nontariff trade barrier.
D) excessively high tariff rates.

Question 29

The price that a company selects for its products as it enters a new international market will be determined in part by the company objectives. Which of the following are examples of such objectives?

A) Getting established for the long run
B) Developing a favorable image
C) Gaining a large market share
D) All of the above

Question 30

There are two approaches to getting established in international markets. What are they?

A) Traditional and modern
B) Industrial and third-world
C) Goods-oriented and service-oriented
D) None of the above

Question 31

Which of the following provides support for companies going into exporting?

A) Export management companies
B) Finders of overseas buyers
C) Export merchants
D) All of the above

Question 32

Which of the following are distribution channels used by firms engaged in direct exporting?

A) Sales representatives
B) Distributors
C) Direct contact with end users
D) All of the above

Question 33

Getting paid after exporting a shipment to a foreign buyer is complicated by what issues?

A) The buyer and seller are from different countries.
B) There are no third parties to assist in the transaction.
C) No one knows the terms of the deal.
D) All of the above

Question 34

The document at the heart of almost all international sales transactions is the

A) letter of credit.
B) letter of intent.
C) open account.
D) none of the above.

Question 35

An exporter will ship goods

A) after she has seen the letter of credit.
B) after the importer has promised to pay.
C) as the first step in getting a letter of credit issued.
D) none of the above.

Question 36

The assistance provided by the Federal government consists of which of the following types?

A) General export counseling
B) Industry-specific counseling
C) Country-specific export counseling
D) All of the above

Question 37

Some of the advantages that imported goods may have over domestic goods include

A) lower cost.
B) superior design.
C) better quality.
D) all of the above.

Question 38

Clearing U.S. Customs is a process involving which of the following steps?

A) Declaration
B) Petitioning
C) Liquidation
D) Counter-appeal

Question 39

For goods to be granted entry into the country, the following documents must be presented:

A) a bill of lading, airway bill, or carrier's certificate.
B) a commercial invoice.
C) an entry manifest.
D) all of the above.

Question 40

Importers will often place goods in a retail outlet with the understanding that the shop will pay the importer only after the goods have been sold. This arrangement is known as

A) abeyance.
B) consignment.
C) factoring.
D) channeling.

Question 41

The Harmonized Tariff Schedule of the United States is a means of classifying goods and thereby establishing

A) the duty to be charged as goods enter the country.
B) the quotas to be allocated to various trading partners.
C) future trading rights.
D) roles of trading partners.