Deck 5: The Global Context of Business

Question 1

Which areas represent the three major market places for international business?
North America, South America, and Asia-Pacific
North America, Europe, and Asia-Pacific
South America, Africa, and Asia-Pacific
South America, Europe, and Africa
Asia-Pacific, Europe, and Africa

Answer 1

North America, Europe, and Asia-Pacific

Question 2

Upper middle-income countries are defined as
those with per capita income between US$4036 and US$12 475.
those with per capita income between US$5210 and US$8210.
those with per capita income between US$765 and US$21 345.
those with per capita income between US$3595 and US$11 115.
those with per capita income between US$205 and US$9386.

Answer 2

those with per capita income between US$4036 and US$12 475.

Question 3

Exports are
services that are created in Canada and sold abroad.
goods and services that are made or grown abroad and sold in Canada.
products that are made or grown in Canada and sold abroad; services cannot be exported.
goods and services that are made or grown in Canada and sold abroad.
products that are made or grown abroad and sold in Canada; services cannot be exported.

Answer 3

goods and services that are made or grown in Canada and sold abroad.

Question 4

With regard to the BRIC countries, it is correct to say that
they all emphasize the export of raw materials.
they all have a low level of industrialization at the moment, but are progressing rapidly.
Russia is the strongest in terms of manufacturing.
Brazil is at the front of the pack in terms of optimism and opportunity.
All of these statements are correct.

Question 5

Your television set, your shoes, even the roast lamb on your dinner table is likely to be the result of
importing.
subsidies.
foreign exchange.
a trade deficit.
exporting.

Question 6

Imports are
services that are created in Canada and sold abroad.
products that are made or grown abroad and sold in Canada; services cannot be imported.
goods and services that are made or grown in Canada and sold abroad.
products that are made or grown in Canada and sold abroad; services cannot be imported.
goods and services that are made or grown abroad and sold in Canada.

Question 7

The annual volume of world trade is about
$100 billion.
$3 trillion.
$875 billion.
$15 trillion.
$8 trillion.

Question 8

Which of the following is an example of importing a service?
A Canadian purchases a ticket to see a performance by a Spanish singer
A Toronto taxi driver takes an American from Pearson airport to a downtown Toronto hotel
A Canadian engineer designs a bridge to be built in Australia
An accountant does financial statements for a Mexican company
A Canadian lawyer goes to California to work on a litigation case

Question 9

Which of the following is correct with respect to the BRIC countries?
Russia is the dominant country in the group.
There is very little coordination between the BRIC countries, and they do not act like a unit.
All of the BRIC countries put a heavy emphasis on exporting commodities.
In terms of opportunities and optimism, Brazil leads this group.
Brazil is the most corrupt of the BRIC nations.

Question 10

Susie lives in Vancouver and has noticed that there seems to be a rising interest in goods from the Chinese culture. To take advantage of this she should explore
subsidies.
exporting.
a trade deficit.
foreign exchange.
importing.

Question 11

According to the World Bank, ________ is considered an upper middle-income country.
Singapore
Hong Kong
South Korea
Argentina
United Arab Emirates

Question 12

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

Question 13

The country that has economically dominated Western Europe is
Germany.
Russia.
Finland.
Poland.
Spain.

Question 14

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.

Question 15

The absolute advantage form of competitive advantage means
that a country does not belong to any free trade agreements.
that a country can produce everything better or more cheaply than any other country.
that a country can produce some products better or more cheaply than it can others.
that a country is the sole supplier of a product or service.
that a country can produce something better or more cheaply than any other country.

Question 16

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.

Question 17

The comparative advantage form of competitive advantage means
that a country does not belong to any free trade agreements.
that a country is the sole supplier of a product or service.
that a country can produce everything better or more cheaply than any other country.
that a country can produce some products better or more cheaply than it can other products.
that a country can produce something better or more cheaply than any other country.

Question 18

Which of the following is correct with respect to absolute and comparative advantage?
Brazilian coffee beans are a good example of comparative advantage.
Absolute advantage exists when a country can produce something more cheaply and/or of higher quality than the next three most efficient countries.
A country has a comparative advantage when it can produce a product more efficiently or better than most (but not all) other countries.
All countries have a comparative advantage in some products.
All of these are correct.

Question 19

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.

Question 20

According to the World Bank, ______ are high-income countries, while ______ are upper middle income countries.
Australia, Japan, and Israel; China, Argentina, and South Africa
China, Columbia, and Lebanon; Armenia, Guatemala, and Vietnam
Argentina and South Africa; Columbia, Lebanon, and Turkey
Columbia, Lebanon, and Turkey; Australia, Japan, South Korea;
Canada, the United States, and most countries in Europe; Kuwait, the United Arab Emirates and Oman.

Question 21

Canada has a(n) ________in farming due to its fertile land, while South Korea has a(n) __________ in electronics manufacturing.
absolute advantage; absolute advantage
absolute advantage; comparative advantage
comparative advantage: absolute advantage
comparative advantage; comparative advantage
none of these

Question 22

Which of the following items is least likely to impact a nation's balance of payments?
Gains or losses in exchanges of international currencies
An increase in the GDP
Money spent by tourists
Trade deficits or surpluses
Foreign aid programs

Question 23

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

Question 24

Which of the following is correct with regard to the balance of trade and the balance of payments?
If a country has a favourable balance of trade, it will also have a favourable balance of payments.
The balance of payments is computed by dividing the value of a country's currency by the number of currency transactions that took place in the previous year.
A country that imports more than it exports has a favourable balance of trade.
Countries used to strive to have a favourable balance of trade, but governments no longer worry about that issue because of globalization.
Canada has generally had a favourable balance of trade during the last few decades.

Question 25

The Congo imported $150 billion worth of goods and services while exporting $175 billion to other countries. It has a
negative balance of payments.
comparative advantage.
positive balance of payments.
trade surplus.
trade deficit.

Question 26

As the value of a country's currency rises
domestic companies will have a harder time selling their products in foreign markets.
foreign companies will find it harder to sell their products in local markets.
imports and exports will remain relatively constant.
domestic companies will shift from the production of consumer goods to the production of industrial goods.
all of these will happen.

Question 27

In the World Economic Forum's 2012‒13 global competitiveness ranking, Canada ranked
first.
second.
fourth.
sixth.
fourteenth.

Question 28

The balance of payments refers to
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 as a result of trade and other transactions.
the difference in exchange rates between two countries.

Question 29

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.

Question 30

The theory of national competitive advantage derives from all of the following conditions except
demand conditions.
supply conditions.
strategies, structures, and rivalries.
related and supporting industries.
factor conditions.

Question 31

If the Canadian dollar becomes weak compared to the Japanese yen, which of the following is likely to occur?
Demand for goods would be unaffected by currency changes
Japanese products would become cheaper in Canada
It would take fewer dollars to buy the same number of yen
Canadian products would become less expensive in Japan
Japanese demand for goods from Canada would fall

Question 32

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.

Question 33

Which of the following best explains why a nation like Canada or Japan would export a particular product or service?
That nation has multinational companies
That nation has an absolute advantage
That nation has a positive balance of trade
That nation has a negative balance of trade
All of these

Question 34

If there is a favourable balance of payments, it means that
a country exports manufactured goods and imports raw materials.
a country imports more than it exports for each country with which it trades.
a country exports more than it imports for each country with which it trades.
the country has more money flowing into it than out as a result of trade and other transactions.
a country exports raw materials and imports manufactured goods.

Question 35

As the value of a country's currency falls, its balance of trade should
decline.
remain the same.
improve.
either increase or decrease.
none of these.

Question 36

If Japan's total exports are $12 billion and total imports are $4 billion, then this is called
a trade deficit.
a positive balance of trade.
an absolute advantage.
a negative balance of payments.
negative capital mobility.

Question 37

The difference between absolute and comparative advantages is that absolute advantage is relative to ________, while comparative advantage is relative to ________.
other nations; activity inside the country
similar industries; dissimilar industries
similar products; dissimilar products
activity inside the country; other nations
dissimilar products; similar products

Question 38

According to the World Economic Forum's global competitiveness ranking, the top three countries in 2012‒13 were
China, India, and Ireland.
Finland, Switzerland, and Singapore.
the U.S., Canada, and Australia.
Ireland, Iceland, and Sweden.
China, Singapore, and Japan.

Question 39

Which of the following best explains why a nation exports specific products and services?
Whether the nation has international companies
Whether a nation has a trade surplus
Whether a nation has an absolute advantage
Whether a nation has a balance of trade
The level of the country's GNP

Question 40

Which of the following is correct with regard to Canada's balance of trade?
Canada has had a favourable balance of trade for many years, with 2012 seeing the largest ever recorded.
The U.K. is Canada's largest trading partner.
Canada's generally favourable trade balance over the years has occurred because our unfavourable balance of trade with the U.S. is offset by our favourable balance of trade with most other countries.
Canada's unfavourable balance of trade in 2012 was due partly to the increase in the value of the U.S. dollar.
None of these are accurate.

Question 41

Which of the following companies may not find it profitable to go international?
A mining company
A company that buys and sells fresh produce and fish
A manufacturing firm specializing in bicycles
A financial investment firm
A newsprint company

Question 42

Algoma Treasures, a gift-wrap manufacturer, is considering expanding its business into the international market. What key question must have a positive answer before a company begins international operations?
Is there a demand for its products abroad?
Is there a favourable balance of trade?
What is the currency exchange rate?
Is there a favourable balance of payments?
Is local culture compatible?

Question 43

If the Canadian dollar rises, our balance of trade will most likely ________ resulting in a ________ of jobs in the export industry.
rise; increase
decrease; decrease
decrease; increase
rise; decrease
None of these

Question 44

With respect to exchange rates and competition, it is correct to say that
companies that conduct international operations do not have to worry about the effect of exchange-rate fluctuations on competition because the accounting department does the conversions.
as the value of a country's currency falls, its balance of trade becomes less favourable.
as the value of a country's currency falls, there is an increased incentive for foreign companies to ship products into the domestic market.
Canadian firms can deal with a stronger Canadian dollar by increasing the efficiency their operations.
all of these are correct.

Question 45

When the value of the Canadian dollar rises
both our imports and our exports become more expensive.
there is no change in the price of our imports and our exports.
our imports become more expensive and our exports become cheaper.
our imports become cheaper and our exports become more expensive.
both our imports and our exports become cheaper.

Question 46

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

Question 47

Which of the following is correct with respect to exchange rates?
The value of one country's currency relative to another varies with changes in GDP, but not as a response to market conditions.
The value of the Canadian dollar falls as the foreign demand for Canadian goods rises.
Exchange rates typically fluctuate by very small amounts on a daily basis.
Fluctuation in exchange rates have little impact on the balance of trade.
All of these are correct.

Question 48

Beta Corp. is trying to decide whether to market its products internationally. Its first decision is to
determine what the costs would be.
check the business climate to see if the foreign country would be positive.
check the competition to see what its situation would be.
determine whether there is international demand for its products.
check the exchange rates to see if they are favourable.

Question 49

Canada ranks ____among the G8 countries in the proportion of production that is exported.
first
second
third
fourth
fifth

Question 50

When the value of the Canadian dollar drops
both our imports and our exports become more expensive.
our imports become cheaper and our exports become more expensive.
our imports become more expensive and our exports become cheaper.
both our imports and our exports become cheaper.
there is no change in the price of our imports and our exports.

Question 51

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

Question 52

If the Canadian dollar becomes stronger in relation to the Japanese yen,
the prices of all Canadian-made products would rise in Japan and the prices of all Japanese-made products would fall in Canada.
there would be no effect on the prices of Canadian-made products sold in Japan.
the prices of all Canadian-made products would fall in Japan and the prices of all Japanese-made products would rise in Canada.
the prices of all Canadian-made products would fall in Japan and the prices of all Japanese-made products would fall in Canada.
the prices of all Canadian-made products would rise in Japan and the prices of all Japanese-made products would rise in Canada.

Question 53

With regard to exchange rates, it is correct to say that
they affect trade balances.
they typically vary substantially on a daily basis.
they do not vary with market conditions.
changes affect only narrow product lines, not all products.
as the value of a country's currency falls, foreign companies have less incentive to ship products into that country.

Question 54

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.

Question 55

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.

Question 56

How will a business firm know if there is a demand for its product in another nation?
The company is willing to discuss royalty fees with other international firms.
There is a positive balance of payments.
A firm cannot know if such a demand exists.
The product is very successful in the company's home nation.
Due to the successful prior entry of a competitor firm with a similar product in the international market.

Question 57

Biltmore Corp. is involved in a planning process for doing business internationally. They have already determined that their product can be modified to fit foreign markets. What should they do next?
Determine if the company has the skills necessary to do business abroad
Determine if there is international demand for the product
Assess the business climate for receptivity to imports
Determine if the product needs to be modified to fit the foreign market
Conduct market research to determine potential sales

Question 58

McCain Foods developed single-sized portions of frozen vegetables to serve customers in South Africa that do not have proper refrigeration. This is an example of
determining whether there is international demand for a product.
modifying a product to fit a foreign market.
determining the receptivity of a foreign market for a company's product.
acquiring the necessary skills to do business abroad.
bootstrapping.

Question 59

Marina Corp. wants to "go international," and has already determined that there is international demand for its products. What should the company do next?
Determine if their products need to be modified to fit the foreign market
Assess the business climate for reaction to foreign products
Locate a local business to form a joint venture
Conduct market research to determine potential sales
Determine what competition would be encountered

Question 60

What is an expected result when a nation devalues its currency?
Export sales of its products decline.
The number of independent agents declines.
Export sales of its products increase.
No result is more likely than any other.
Export sales of its products will be unchanged.

Question 61

Clement is the owner of Dills Distillery, which makes and bottles fruit wine. In his planning to export the wine, Clement should consider all of the following except
the target country's balance of trade.
demand for the wine.
legal aspects of the target country.
cultural aspects of the target country.
economic road blocks.

Question 62

Greencorp Ltd. sold the rights for production of 4 Star Soil to Soil X of Italy, and that company now produces the special mix of fertilized soil and sells it in Italy. This arrangement is called a(n)
independent agent.
licensing arrangement.
strategic alliance.
branch office.
equality relationship.

Question 63

A firm that conducts a significant portion of its business abroad, that has some facilities overseas, and that imports a significant portion of goods from other countries is best described as
an importer.
an international firm.
mininational.
an exporter.
a multinational firm.

Question 64

Michael is going to sell his baby products abroad, and he is interested in having someone in the foreign country sell the product for him. Michael is most interested in working with a(n)
franchisee.
multinational firm.
branch office.
international firm.
independent agent.

Question 65

Which type of firm is one in which management doesn't think of itself as having domestic and international operations but rather as a firm that designs, makes, and markets products in many nations?
An exporter
An importer
An international firm
A multinational firm
Mininational

Question 66

With respect to international organizational structures, it is correct to say that
independent agents usually represent just one firm in foreign markets.
licensing arrangements are too expensive for most Canadian firms to get involved in.
a company has more control over branch managers than it does over agents or licence holders.
the number of strategic alliances has declined somewhat in recent years because of strict government regulations in many foreign countries.
Investment Canada's mandate is to limit direct foreign investment in Canada so that Canadian firms, not foreign ones, will control the Canadian market.

Question 67

Which of the following is correct regarding the levels of foreign involvement a business can exhibit?
Importing and exporting represent the highest level of involvement in international operations.
Exporters and importers tend to conduct most of their business in foreign markets.
Only large companies are exporters.
An international firm conducts a significant portion of its business abroad, and it usually manufactures the vast majority of its products in foreign countries.
For multinational firms, the location of its head office is largely irrelevant.

Question 68

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.

Question 69

BBX represents several firms at once and usually does not specialize in a particular product or market. It is a(n)
independent agent.
royalty company.
licensing company.
branch office.
strategic alliance.

Question 70

In which international structure would royalties likely be paid to the exporter?
By a branch office
Under a licensing arrangement
By a subsidiary manufacturing plant
In a joint venture
In a strategic alliance

Question 71

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.

Question 72

A firm that buys products made in another country for distribution and sale in its own country is
a multinational firm.
a joint venture.
an exporter.
an international firm.
an importer.

Question 73

Computers-B-Us sent some of its managers abroad to gain more control over the operations and provide a more visible public presence. This type of organizational structure is known as a(n)
independent agent.
branch office.
direct investment.
strategic alliance.
licensing arrangement.

Question 74

In France, McDonald's restaurants sell wine. This is a classic example of
adapting to customer needs.
importing.
foreign exchange.
misreading demand for the product.
balance of payments.

Question 75

Can-Eng Manufacturing, Canada's largest supplier of industrial furnaces, exports its furnaces to companies in Japan, Brazil, Germany, Korea, Taiwan, and Mexico. Can-Eng has an agreement with foreign companies in these countries called a(n)
international mandate.
licensing arrangement.
independent agency.
export agreement.
strategic alliance.

Question 76

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.

Question 77

________ is an example of an export of a service.
An advertising agency in Montreal making a TV commercial for a company in France
Obtaining information from a foreign database
Vacations taken by Canadians in a foreign country
Purchasing a camera made in Japan
A Canadian tourist having a camera repaired in Egypt

Question 78

Levi Strauss has an organization in a foreign country that has agreed to sell their products, to collect payments from the buyers, and to make sure that the buyers are satisfied. The organization is not part of Levi Strauss and may represent several non-competing firms at the same time. The organizational structure that Levi Strauss has selected is called a(n)
strategic alliance.
independent agent.
branch office.
licensing agreement.
direct investment.

Question 79

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

Question 80

All of the following characteristics describe an independent agent except that it
often sells the exporter's products.
often makes sure that customers are happy.
often represents only one firm.
often collects payments.
is a foreign individual or organization.