Deck 9: Business in a Global Environment

Question 1

According to the principle of _____,a country that decides to specialize in the production of a particular product must sacrifice the production of another product.

A)comparative advantage
B)absolute advantage
C)cross-production
D)opportunity cost

Answer 1

opportunity cost

Question 2

Basically,nations trade:

A)because most nations tend to have yearly surpluses of goods.
B)because no nation's economy can produce all of the goods and services that it needs.
C)in order to maintain peaceful relationships with neighboring countries.
D)in order to stockpile goods in case of national disaster or emergency.

Answer 2

B

Question 3

U.S.exports are greater than U.S.imports.

Answer 3

False

Question 4

The largest factors in a country's balance of payments consist of revenues from tourism and welfare benefits paid to citizens and immigrants.

Question 5

By the year 2015,international trade in merchandise and services had topped _____.

A)$11 billion
B)$100 billion
C)$11 trillion
D)$21 trillion

Question 6

The principle of _____ explains why France can produce white wine at a lower opportunity cost than the neighboring country of Germany.

A)comparative advantage
B)absolute advantage
C)capital ferment
D)opportunity-cost replacement

Question 7

Unless a country's absolute advantage is based on some limited natural resource,it seldom lasts.

Question 8

According to the concept of opportunity cost,a country that decides to specialize in the production of a particular product may sacrifice the production of another.

Question 9

Entrée Specialités,which produces food products and ships them to several independent buyers throughout Western Europe,is in the _____ business.

A)importing
B)comestible-trade
C)exporting
D)licensing

Question 10

Japan's production and exporting expertise lies in the areas of electronics and automobiles.

Question 11

The United States is currently experiencing an international trade _____.

A)balance
B)surplus
C)equilibrium
D)deficit

Question 12

In economic terms,"balance of payments" refers to the difference between a country's total outflows and inflows of money over a period of time.

Question 13

The West European buyers who purchase and resell Entrée Specialités' food products in their home countries are in the _____ business.

A)importing
B)exporting
C)licensing
D)domestic-investment

Question 14

When nations continue to run large and ever-growing trade deficits over extended periods of time,creditor nations will eventually stop taking IOUs and trade will cease.

Question 15

Generally speaking,nations don't exploit production and trade advantages because they prefer to protect their international images.

Question 16

The United States currently enjoys an international trade equilibrium.

Question 17

Nations engage in trade primarily because no nation can produce all of the goods and services that it needs.

Question 18

While importing is widely practiced throughout the world,exporting is not.

Question 19

The largest factor in a country's balance of payments is its _____.

A)defense budget
B)welfare bill
C)import-export balance
D)credit-card debt

Question 20

If a country is the only source of a particular product or it can make more of a product using the same amount of or fewer resources than other countries we say that the country has an absolute advantage in economic terms.

Question 21

A strategic alliance is a working partnership between companies in different countries who pool resources to achieve goals and benefits for both firms.

Question 22

Centralized decision making allows Wentworth Productions,a multinational film production company,to be more sensitive to local market conditions in other nations.

Question 23

Most U.S.companies are attracted to international contract manufacturing,or outsourcing,because of high shipping,material,and marketing costs in the United States.

Question 24

Foreign direct investment,which is generally the most expensive commitment that a company can make to an overseas market,is usually driven by the size and attractiveness of the market.

Question 25

A strategic alliance between a U.S.firm and a German firm can result in enhanced marketing efforts,improved products,and the reduction of production and distribution costs.

Question 26

If a country buys more goods and services than it sells over a specified period of time,it has a _____.

A)trade surplus
B)trade deficit
C)unfavorable balance of payments
D)favorable balance of trade

Question 27

When nations continue to experience large and ever-growing trade deficits:

A)they will ultimately produce so much output that other countries will lose domestic jobs.
B)creditor nations will eventually stop taking IOUs and trade will cease.
C)their economy will automatically go bankrupt.
D)their currencies will eventually be worthless.

Question 28

Under a franchising agreement between a U.S.
based company and a foreign firm,in return for the rights to use its brand name and sell its products,the U.S.franchiser requires the foreign company to adhere to an established business model.

Question 29

Because the small Mideastern country of Asiana has experienced an unfavorable balance of payments for the past 22 years,the stability of its _____ may be in jeopardy.

A)government
B)economy
C)currency
D)international relations

Question 30

The country of East Anglia exports domestically made products and imports products that aren't available locally.When exports are compared to imports,the resulting _____,which shows that more dollar value is exported than imported,reveals a(n)_____.

A)balance of payments / trade deficit
B)balance of trade / trade deficit
C)balance of trade / trade surplus
D)balance of payments / accounting crisis

Question 31

Generally speaking,nations tend to _____.

A)exploit their production and trade advantages
B)benefit from specialization
C)trade their output based on what they do best
D)do all of these things

Question 32

Under an international licensing agreement,a foreign company pays a royalty fee to manufacture or sell your U.S.?
made products in its own country,using your name and your processes and perhaps your intellectual property.

Question 33

It is parents' weekend and your parents will arrive at your dorm in an hour.There are two tasks left to be done: washing the dishes and vacuuming.You and your roommate have agreed to divide up the work.In the past,you have been able to do the dishes in 30 minutes and vacuum in 15 minutes.Your roommate takes 40 minutes to do the dishes and 60 minutes to vacuum.Based on this scenario:

A)you have an absolute advantage in both jobs and a comparative advantage in doing dishes.
B)your roommate has an absolute advantage in doing dishes and a comparative advantage in vacuuming.
C)you have an absolute advantage in both jobs and a comparative advantage in vacuuming.
D)neither of you has an absolute advantage in either tasks,and you have a comparative advantage in vacuuming.

Question 34

The country of Cretonia is the only source of the rare mineral zhytan used in nuclear reactors.The country of Fredonte can produce twice as much creosote as any other country using the same amount of input resources.Both nations enjoy a(n)____ advantage.

A)comparative
B)resource/input
C)absolute
D)hard-core technological

Question 35

Although Fitness Esteem Products has formed a foreign subsidiary,the only two advantages that it can expect from this strategy are full access to local markets and tight controls over subsidiary operations.

Question 36

Having set up factories,sales offices,and branch stores in several foreign nations,U.S.
based Crenco has gone global through a form of expansion called a "joint venture."

Question 37

Many multinational corporations (MNCs)have adopted the motto "Think globally and act locally."

Question 38

Japan's production and exporting expertise lies in the areas of _____.

A)electronics and automobiles
B)industrial goods and airplane parts
C)business services and computer encryption
D)soy products and plastic goods

Question 39

The difference between a country's total outflows and inflows of money over a period of time is its _____.

A)balance of payments
B)balance of trade
C)domestic fluctuation
D)international trade balance

Question 40

Strategic alliances range in scope from informal cooperative agreements to joint ventures.

Question 41

Under a(n)_____,a foreign company pays a royalty fee to manufacture or sell your U.S.company's products,using your name and processes and perhaps your intellectual property.

A)international franchising agreement
B)international licensing agreement
C)strategic alliance
D)outsourcing contract

Question 42

McDonald's,Burger King,Pizza Hut,and KFC restaurants,all of which operate in many different countries,are best characterized as _____ corporations.

A)multidomestic
B)multinational
C)multilocational
D)multilingual

Question 43

A factory worker in the United States receives approximately _____ times more pay per hour than a manual worker in India.

A)three
B)eight
C)ten
D)twelve

Question 44

Cajun Chicken, a growing franchise chain based in Lafayette, Louisiana, has expanded to 185 locations in the United States. Because they realize that domestic growth is limited, the owners are contemplating expansion to selected foreign countries. Thus far, research has shown that the rights to use many of the firm’s recipes can be sold to other restaurants, cafeterias, and food stores. Cajun can also sell prepackaged food products, complete with spices, to other markets. At this point, whether to start by opening company-owned outlets or selling franchises is still a toss up. In any case, the long-term picture looks good.

-In selling recipe rights to buyers in foreign markets,Cajun would be engaged in _____.

A)licensing
B)franchising
C)exporting
D)outsourcing

Question 45

Cajun Chicken, a growing franchise chain based in Lafayette, Louisiana, has expanded to 185 locations in the United States. Because they realize that domestic growth is limited, the owners are contemplating expansion to selected foreign countries. Thus far, research has shown that the rights to use many of the firm’s recipes can be sold to other restaurants, cafeterias, and food stores. Cajun can also sell prepackaged food products, complete with spices, to other markets. At this point, whether to start by opening company-owned outlets or selling franchises is still a toss up. In any case, the long-term picture looks good.

-In selling prepackaged food products and spices to foreign outlets,Cajun would be engaged in _____.

A)licensing
B)franchising
C)exporting
D)outsourcing

Question 46

_____ is a common motto among MNCs (multinational corporations).

A)"Think culturally,act politically"
B)"Think strategically,act locally"
C)"Think globally,act locally"
D)"Think strategically,act politically"

Question 47

By forming a foreign subsidiary,Cane Productions Ltd.hopes to realize such advantages as _____.

A)getting full access to local markets
B)exempting itself from regulations that hamper the activities of foreign firms
C)gaining tighter controls over the subsidiary's operations
D)all of these

Question 48

Many people support increased MNC activities because infant mortality rates have decreased,literacy has improved,and the standard of living has risen in many countries where multinationals operate.

Question 49

Alliances range in scope from informal cooperative agreements to _____.

A)partnerships
B)joint ventures
C)"C" corporations
D)trade consortia

Question 50

Under a(n)_____ between a U.S.
based company and a foreign company,in return for the right to use the parent company's brand name and sell its goods and services,the foreign company is required to adhere to an established business model.

A)international franchising agreement
B)international licensing agreement
C)strategic alliance
D)outsourcing contract

Question 51

Usually driven by the size and attractiveness of the foreign market,_____ is generally the most expensive commitment that a company can make in an overseas market.

A)foreign direct investment
B)a joint venture
C)foreign licensing
D)a strategic alliance

Question 52

High domestic ____ costs have made international contract manufacturing,or outsourcing,attractive to many U.S.companies.

A)building
B)material
C)labor
D)marketing

Question 53

_____ has become a popular location for software development and customer-call centers for American companies.

A)Ireland
B)China
C)Sri Lanka
D)India

Question 54

The formal establishment of business operations on foreign soil,such as factories,sales offices,or branch stores,is called _____.

A)foreign direct investment
B)a joint venture
C)foreign licensing
D)a strategic alliance

Question 55

Both manufacturing and nonmanufacturing functions can be _____ to nations with lower _____.

A)sold / mortality rates
B)outsourced / labor costs
C)licensed / taxes
D)charged / levels of corruption

Question 56

Among other things,many MNCs (multinational corporations)have increased their sensitivity to local market conditions by _____.

A)centralizing decision making
B)decentralizing decision making
C)hiring more local workers and managers
D)using foreign advertising firms

Question 57

A joint venture is a form of strategic alliance (an agreement between two companies to pool resources in order to achieve business goals that benefit both partners).

Question 58

Cajun Chicken, a growing franchise chain based in Lafayette, Louisiana, has expanded to 185 locations in the United States. Because they realize that domestic growth is limited, the owners are contemplating expansion to selected foreign countries. Thus far, research has shown that the rights to use many of the firm’s recipes can be sold to other restaurants, cafeterias, and food stores. Cajun can also sell prepackaged food products, complete with spices, to other markets. At this point, whether to start by opening company-owned outlets or selling franchises is still a toss up. In any case, the long-term picture looks good.

-In granting franchise rights,Cajun would be the _____ and the buyer would be the _____.

A)franchisee / franchiser
B)franchiser / subsidiary
C)parent / subsidiary
D)franchiser / franchisee

Question 59

Which of the following arguments is advanced in favor of increased MNC activities?

A)Infant mortality rates have decreased in many nations.
B)Literacy has improved in many nations.
C)The standard of living has risen in many nations.
D)All of these

Question 60

A strategic alliance between a U.S.firm and a German firm can achieve all of the following benefits except _____.

A)enhancing marketing efforts
B)improving products
C)reducing production and distribution costs
D)guaranteeing increased market share

Question 61

Cajun Chicken, a growing franchise chain based in Lafayette, Louisiana, has expanded to 185 locations in the United States. Because they realize that domestic growth is limited, the owners are contemplating expansion to selected foreign countries. Thus far, research has shown that the rights to use many of the firm’s recipes can be sold to other restaurants, cafeterias, and food stores. Cajun can also sell prepackaged food products, complete with spices, to other markets. At this point, whether to start by opening company-owned outlets or selling franchises is still a toss up. In any case, the long-term picture looks good.

-RJR Nabisco (a U.S.company)allows a company in Singapore to use its brand name and recipe to produce and sell one of its products- Planters Nuts.In return RJR Nabisco receives a royalty fee.This type of international arrangement is called _______

A)direct investment
B)joint venture
C)licensing
D)outsourcing

Question 62

According to some experts,American businesspeople are at a competitive disadvantage when they're prohibited from giving bribes or undercover payments to foreign officials or businesspeople.

Question 63

In many countries,American firms may be at a disadvantage in competing with local companies because only the educated classes speak English.

Question 64

The Foreign Corrupt Practices Act,which prohibits the distribution of bribes,can put American businesspeople at a competitive disadvantage.

Question 65

Cajun Chicken, a growing franchise chain based in Lafayette, Louisiana, has expanded to 185 locations in the United States. Because they realize that domestic growth is limited, the owners are contemplating expansion to selected foreign countries. Thus far, research has shown that the rights to use many of the firm’s recipes can be sold to other restaurants, cafeterias, and food stores. Cajun can also sell prepackaged food products, complete with spices, to other markets. At this point, whether to start by opening company-owned outlets or selling franchises is still a toss up. In any case, the long-term picture looks good.

-Even if Cajun opens company-owned restaurants in a foreign country,it may have to buy local food products to supplement the menu;in fact,it may have to buy chicken from local producers for the standard menu.In doing so,the company would be engaged in _____.

A)outsourcing
B)licensing
C)subcontracting
D)importing

Question 66

When researching global business opportunities,firms must grasp the cultural,legal,economic,and _____ differences between the home country and the host country.

A)linguistic
B)political
C)religious
D)hygienic

Question 67

The _____ prohibit(s)the distribution of bribes and other favors among American businesspeople conducting business with foreign officials and businesspeople.

A)Foreign Corrupt Practices Act
B)Anti-Bribery Act
C)Ten Commandments
D)Sarbanes-Oxley principles

Question 68

Although different countries have different communication styles,virtually all cultures share a basic core of expression values.

Question 69

Cajun Chicken, a growing franchise chain based in Lafayette, Louisiana, has expanded to 185 locations in the United States. Because they realize that domestic growth is limited, the owners are contemplating expansion to selected foreign countries. Thus far, research has shown that the rights to use many of the firm’s recipes can be sold to other restaurants, cafeterias, and food stores. Cajun can also sell prepackaged food products, complete with spices, to other markets. At this point, whether to start by opening company-owned outlets or selling franchises is still a toss up. In any case, the long-term picture looks good.

-If Cajun Chicken opens company owned stores and restaurants in Europe,it will be engaged in _____.

A)licensing
B)franchising
C)exporting
D)foreign direct investment

Question 70

A reliable banking system,a strong stock market,and a government that discourages corruption while encouraging investment and competition are all conducive to economic growth.

Question 71

In high-context cultures,business-people don't need to know much about the personal life of a person in order to deal with him or her in a business setting.

Question 72

When researching global business opportunities,firms must grasp a variety of cultural,technological,economic,and political differences.

Question 73

When they started overseas operations,top managers at Keyboard Electronics had to learn to appreciate other countries' systems of shared beliefs,values,customs,and behaviors.In other words,they had to come to grips with elements of what is best characterized as the social environment.

Question 74

Which of the following is not an argument given in support of U.S.headquartered multinational corporations (MNCs)?

A)Deliver better and cheaper products
B)Export American culture of movies,fast food,mass-produced consumer goods to other countries.
C)Create jobs
D)Raise the standard of living in developing countries

Question 75

If the U.S.dollar goes down relative to a foreign currency,foreign buyers pay more for American goods and services.

Question 76

A common method of protecting domestic goods and trade is to boycott offending nations at home and abroad.

Question 77

Companies doing international business often face a smorgasbord of inconsistent laws and regulations.

Question 78

Ben Franklin's adage "Time is money" is now a universally accepted principle.

Question 79

When Whitlock Clothiers began overseas operations,top management had to learn to appreciate the _____ environments of other countries-that is,other people's systems of shared beliefs,values,customs,and behaviors.

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

Question 80

What's the international language of business?

A)Spanish
B)English
C)Japanese
D)Chinese