Deck 4: Competing in World Markets

Question 1

Why have U.S. firms become increasingly focused on international business?

Answer 1

In the past, most American firms felt that the huge U.S. domestic market was all they needed. Today, the domestic market is open to foreign firms, and American consumers seem to favor imported goods over domestic goods in many markets. On the other side, many American firms have found that foreign markets represent a major opportunity for expanding their markets. Many well-known American firms derive more than half their sales and/or profits from foreign markets. Another benefit of these expanded markets is the possibility of enjoying economies of scale in production and marketing.

Question 2

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
_____ are foreign-made products purchased by domestic consumers.

Answer 2

e

Question 3

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A(n) _____ allows a company to share risks, costs, profits, and management responsibilities with another company.

Answer 3

c

Question 4

Distinguish between absolute advantage and comparative advantage. Provide an example of each.

Question 5

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A nation can have a(n) _____ in a product if it can supply it more efficiently and at a lower price.

Question 6

Explain how population size or a country's status of developed versus developing do not always indicate economic prosperity.

Question 7

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
_____ describes the fall of currency's value relative to other currencies.

Question 8

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A country's _____ is the difference between its exports and imports.

Question 9

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
Relocation of business processes to a lower-cost location overseas is known as ________.

Question 10

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A country's _____ is the overall flow of money into and out of a country.

Question 11

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
_____monitors agreements among member nations, mediates disputes, and works to reduce trade barriers throughout the world.

Question 12

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A(n) _____ uses a standardized product and marketing strategy worldwide.

Question 13

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A(n) _____ develops and markets products to serve different needs and tastes of separate national markets.

Question 14

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A limit on the amount of a particular product that a country can import during a specified time period is a(n) _____.

Question 15

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
The _____ was created to promote trade through financial cooperation, while eliminating barriers in the process.

Question 16

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
Countries establish a(n) ______where they can trade among themselves without trade barriers.

Question 17

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A nation's _____ is the rate at which currency can be exchanged for the currency of another nation.

Question 18

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A(n) _____ is a tax levied on imported products.

Question 19

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
_____ refers to selling goods abroad at a price lower than that charged in the domestic market.

Question 20

MATCHING
Complete the following using the terms listed.
a.offshoring
b.balance of trade
c.joint venture
d.Dumping
e.Imports
f.tariff
g.International Monetary Fund
h.World Trade Organization
i.free trade area
j.Devaluation
k.exchange rate
l.absolute advantage
m.global business strategy
n.quota
o.multidomestic strategy
p.balance of payments
q.comparative advantage
A country has _____ in the marketing of a product if it has a monopolistic position or it produces the product at the lowest cost.

Question 21

Define countertrade, and explain why this form of international trade is a viable option for certain nations.

Question 22

Identify three important decisions a business must make before deciding to go global.

Question 23

Describe the role of the European Union (EU).

Question 24

Define offset agreement and describe how it might be beneficial to a small firm.

Question 25

Explain exchange control.

Question 26

Describe three contractual agreements firms can enter into when going global.

Question 27

During the past decade, the value of U.S. imports and exports has _____.

A) decreased
B) remained about the same
C) more than doubled
D) risen slightly

Question 28

When a company operates in other countries, it _____ risk.

A) has no impact on
B) eliminates
C) controls
D) spreads out

Question 29

Computers that are manufactured in the United States and sold in Norway are categorized as U.S. _____.

A) exports
B) countertrades
C) imports
D) outsourcing

Question 30

Identify and describe the major types of obstacles confronting international trade.

Question 31

Explain the advantages and disadvantages of imposing trade restrictions.

Question 32

Describe the Chinese term guanxi. What are some advantages and disadvantages of foreign business people to practice guanxi when conducting business in China?

Question 33

Explain the differences between the World Bank and the International Monetary Fund.

Question 34

U.S. _____ make up about a quarter of the U.S. gross domestic product (GDP).

A) petroleum exports
B) computer technology
C) exports and imports of goods and services
D) production of consumer electronic products

Question 35

Explain the concept of floating exchange rates. Identify factors that influence foreign exchange rates.

Question 36

Los Angeles-based PMI Telecom purchases cell phones manufactured in Asia and sells them in the United States. PMI is engaging in the international business activity known as _____.

A) exporting
B) importing
C) countertrade
D) dumping

Question 37

Discuss why the World Trade Organization (WTO) has been the object of controversy in recent years. What concerns have been expressed?

Question 38

Distinguish between a global strategy and a multidomestic strategy for marketing goods in other nations.

Question 39

Define balance of trade and its relation to trade surplus and trade deficit.

Question 40

AusterTech, a U.S. company, produces computer parts and sells them to South American countries. AusterTech is engaging in the international business activity known as _____.

A) importing
B) dumping
C) countertrade
D) exporting

Question 41

An absolute advantage occurs when a country can maintain _____.

A) a monopoly by outlawing foreign imports
B) a monopoly by levying high taxes on imports
C) a monopoly by being the lowest-cost producer of a good or service
D) its advantage by producing a good or service more efficiently

Question 42

A balance of payments deficit occurs when _____.

A) the net inflow of money from abroad exceeds the net outflows of money to other countries
B) imports exceed exports
C) the net outflow of money from a country exceeds the net inflow of money from abroad
D) exports exceed imports

Question 43

Which of the following groups is likely to be hurt economically if the value of the U.S. dollar rises relative to the euro?

A) American firms with euro-dominated loans
B) American farmers exporting goods to Europe
C) European firms exporting goods to the United States
D) American tourists visiting Europe

Question 44

Many developing nations have lower per capita incomes than highly developed countries. This fact _____.

A) indicates that they represent an insignificant market for most products
B) means that the developing nations are unlikely to experience much economic growth
C) does not mean there is little opportunity for sales. Their sheer numbers may still represent significant and growing markets.
D) means that they are only likely to purchase low-tech merchandise

Question 45

A Japanese insurance company purchases U.S. government securities. From the perspective of the United States, the balance of trade with Japan will _____ and the balance of payments with Japan will _____.

A) not change; improve
B) not change; get worse
C) improve; improve
D) improve; get worse

Question 46

The United States has a trade surplus in which of the following items?

A) Oil
B) Textiles
C) technology products
D) services

Question 47

Which of the following would result from devaluation of the U.S. dollar?

A) Foreign goods would be less expensive for American consumers.
B) Foreign firms would have to pay more to purchase U.S. assets.
C) The cost of foreign vacations for U.S. citizens would be reduced.
D) U.S. goods would sell for less abroad.

Question 48

During the past decade, which of the following countries has experienced the greatest annual rate of GDP growth?

A) United States
B) China
C) Canada
D) Japan

Question 49

The country Artesia exported products totaling $86 billion last year. During the same year, Artesia imported products valued at $43 billion. Artesia has a(n) _____.

A) exchange rate of 2 to 1
B) trade deficit of $43 billion
C) trade surplus of $43 billion
D) unfavorable balance of payments

Question 50

A trade deficit occurs when _____.

A) imports are sold at low profits
B) foreign-aid payments exceed exports
C) imports exceed exports
D) there is a net flow of money into a country

Question 51

A country with a balance of payments surplus means _____.

A) monetary inflow exceeds monetary outflow
B) monetary outflow exceeds monetary inflow
C) imports exceed exports
D) exports exceed imports

Question 52

A country has a good chance of selling more of its goods abroad if it _____.

A) increases the value of its currency
B) more tourists decide to travel abroad
C) devalues its currency
D) sets high tariffs on imported goods

Question 53

Although people in developing nations have lower per capita incomes than more highly developed nations, their ______represents a lucrative market for global trade.

A) technology
B) political stability
C) huge populations
D) infrastructure

Question 54

Even though the United States manufactures textiles, China is able to produce them more efficiently. Thus, China has a _____ in manufacturing textiles.

A) tariff
B) quota
C) trade restriction
D) comparative advantage

Question 55

Which of the following statements is true regarding comparative advantage?

A) Comparative advantage is becoming rare these days.
B) Ensuring that its people are well educated is another way a nation can develop a comparative advantage in skilled human resources.
C) Developing countries possess no comparative advantage.
D) A nation must first possess an absolute advantage in a particular area before it can gain a comparative advantage.

Question 56

Which of the following statements is true regarding absolute advantage?

A) Absolute advantages are rare these days.
B) Every country possesses an absolute advantage.
C) Developing countries possess no absolute advantage.
D) A nation must first possess a comparative advantage before it can possess an absolute advantage.

Question 57

Allison, a U.S. citizen, travels to Europe and spends $2,000 on souvenirs. She is contributing to the _____.

A) U.S. trade surplus
B) growing exchange rate
C) U.S. balance of payments surplus
D) U.S. balance of payments deficit

Question 58

All of the following are included in the top five nations the United States trades with EXCEPT _____.

A) China
B) Spain
C) Mexico
D) Canada

Question 59

A country's exchange rate is based on _____.

A) the rate at which its currency can be exchanged for currencies of other countries
B) the number of foreign banks it has
C) tariffs and related trade restrictions
D) the relationship between its imports and exports

Question 60

Last year, the United States imported less from Switzerland than it exported to Switzerland. Which of the following statements is true?

A) The United States has a balance of payments deficit with Switzerland.
B) The United States has a trade surplus with Switzerland.
C) The United States has a trade deficit with Switzerland.
D) The United States has a negative balance of trade with Switzerland.

Question 61

The Foreign Corrupt Practices Act:

A) forbids U.S. companies from bribing foreign officials, political candidates, or government representatives.
B) funds projects that build or expand a nation's infrastructure.
C) mediates trade disputes among trade agreement member nations.
D) promotes trade through financial cooperation.

Question 62

The objective of quotas is to _____.

A) prevent dumping
B) raise revenue for the government
C) ban the importation of certain goods
D) protect domestic industries

Question 63

Assume a nation has a comparative advantage in the production of clothing. If the value of this country's currency rises, _____.

A) its comparative advantage will decrease
B) its comparative advantage will stay the same
C) its comparative advantage will increase
D) an absolute advantage will be created

Question 64

The hypothetical country of Rhodia requires foreign companies that buy and sell Austrica products to use only Rhodia currency in these transactions. Austrica is using _____ as a means of controlling international trade.

A) governmentally granted rights
B) exchange control
C) international currency trading
D) local banks

Question 65

All of the following constitute a country's infrastructure EXCEPT _____.

A) political climate
B) communication
C) energy facilities
D) Transportation

Question 66

Tyra spent a two-week vacation in Italy and purchased more than $1,000 worth of Venetian glass. Upon returning to the United States, she was required to pay a _____ on the items.

A) protective tariff
B) revenue tariff
C) service tax
D) exchange rate tax

Question 67

All of the following are social and cultural barriers EXCEPT _____.

A) language
B) currency shifts
C) religious attitudes
D) gift-giving traditions

Question 68

In recent years, the value of the dollar relative to the euro has declined. What does this mean for European businesses exporting to the United States?

A) European countries are more likely to import U.S. goods or services.
B) The U.S. trade deficit will most likely become greater.
C) The United States is more likely to increase imports from European countries.
D) European countries are more likely to avoid trade with the United States.

Question 69

A foreign-made household appliance is popular and is highly competitive with the same product manufactured domestically. To give the domestic industry a better chance to operate profitably, the government restricts the number of these appliances that can be imported by applying a(n) _____.

A) quota
B) embargo
C) protective tariff
D) revenue tariff

Question 70

If a foreign company offers steel in the United States below the company's cost of production, the company might be accused of _____.

A) protective tariffs
B) dumping
C) a managed trade agreement
D) quota

Question 71

Patents, trademarks, and intellectual property are important concerns in the _______environment.

A) economic
B) political
C) cultural
D) legal

Question 72

The purpose of ______is to make imports more expensive for domestic buyers.

A) exchange controls
B) embargo
C) dumping
D) tariffs

Question 73

A country raises the tariff on imported cheese in order to increase its price above the price of domestically produced cheese. This is an example of _____.

A) an exchange control
B) a quota
C) a protective tariff
D) dumping

Question 74

Dumping _____domestic consumers and _____domestic producers in an importing market.

A) harms, benefits
B) harms, harms
C) benefits, harms
D) benefits, benefits

Question 75

Goto, Inc., a U.S. based company, is trying to establish a supplier relationship with a parts manufacturer in a small Asian country. Filipe, the purchasing manager, is attempting to get to know the general manager and staff of the company to help finalize the agreement. Filipe is attempting to overcome what type of barrier?

A) Physical barrier
B) Tariff restriction
C) Exchange controls
D) Cultural barrier

Question 76

Which of the following statements is true regarding hard currencies?

A) Countries with hard currency typically use the barter system when exporting goods.
B) The U.S. dollar is an example of hard currency, which is easily converted into other currencies.
C) Hard currency is difficult to convert into other currency.
D) A country with hard currency is likely to have a trade deficit.

Question 77

An understanding of religious holidays is essential in order to overcome _____ international trade barriers.

A) political
B) physical
C) cultural
D) legal

Question 78

Maria is the Middle Eastern sales manager for a large company. She avoids giving pork products and wine to Arab customers as gifts. Maria is being sensitive to _____.

A) religious differences
B) language differences
C) differences in consumer habits
D) differences in business practices

Question 79

The hypothetical country of Eurica is experiencing severe competition to its domestic auto industry in the form of foreign imports. Many jobs are threatened. Eurica places a 25 percent tariff on the price of imported cars. This type of tariff is known as a(n) _____ tariff.

A) revenue
B) quota
C) infant industry
D) protective

Question 80

_____limit the amounts of particular products that countries can import during specified time periods.

A) Exchange controls devaluation
B) Embargo
C) Quotas
D) Foreign trade zone