Deck 3: Competing in Global Markets

Question 1

The comparative advantage theory states that all nations should strive to become self-sufficient in order to enjoy the highest standard of living.

Answer 1

False

Question 2

Global trade includes the exchange of goods and services across national borders.

Answer 2

True

Question 3

Exporting involves the selling of products to another country.

Answer 3

True

Question 4

Canada,as of 2009,enjoys a favourable balance of trade with the rest of the world.

Question 5

Absolute advantage is the basis for most global trade.

Question 6

Foreign travel can help in identifying global business opportunities.

Question 7

Flynn Graphics is a small Canadian firm that began selling its products in the global market a few years ago.Flynn's global approach is unusual,since the trend has been for small firms to focus on domestic markets,leaving global markets to larger firms.

Question 8

Just about anything that can be sold in Canada,can also be sold to buyers in other countries.

Question 9

Canada has a comparative advantage in coffee and shoes.

Question 10

Comparative advantage theory states that a country should sell to other countries those products that it produces most efficiently and buy from other countries those products it cannot produce as efficiently.

Question 11

Exports account for about 5% of Canadian jobs.

Question 12

Importing is the selling of products to another country.

Question 13

A favourable balance of trade occurs when the value of a country's imports exceeds the value of its exports.

Question 14

One reason countries trade with other countries is that even technologically advanced nations cannot produce all the products their people want and need.

Question 15

Free trade is the movement of goods and services among nations without political or economic barriers.

Question 16

A country has an absolute advantage if it has a monopoly in the production of a specific product or is able to produce it more efficiently than all other nations.

Question 17

The theory of absolute advantage explains most of today's global trade.

Question 18

When a Canadian company buys oil from Saudi Arabia,this is an example of a Canadian import.

Question 19

The balance of payments measures the inflows and outflows of money from tourism,foreign aid,military expenditures and foreign investments as well as flows resulting from exports and imports.

Question 20

According to the theory of comparative advantage,a country should buy from other countries those goods it produces most efficiently.

Question 21

Canada,as of 2009,enjoys a trade surplus in the global market.

Question 22

A Conference Board of Canada reports that by 2050,India will be the world's largest economy.

Question 23

One advantage of foreign licensing is that the licensor spends little or no money to produce and market their product

Question 24

Export trading companies help to match buyers and sellers from different countries.

Question 25

Canada's main trading partner is the European Union.

Question 26

The country of Urbanistan exports $250 of goods and services and imports $170 of goods and services.Urbanistan has an unfavourable balance of trade of $80.

Question 27

Countries enjoying high growth rates and rapid increases in living standards are known as emerging economies.

Question 28

A favourable balance of trade occurs when the value of a nation's exports exceeds its imports.

Question 29

When trading in global markets,most countries prefer to import more than they export.

Question 30

Of the strategies available to reach global markets,licensing offers the firm the greatest opportunity for profit potential.

Question 31

When competing in global markets,business organizations can choose among a variety of ways to reach foreign buyers.

Question 32

Tokyo Disneyland is an example of an export trading company.

Question 33

Export trading companies assist businesses in getting paid for export transactions.

Question 34

Canada ranks 2^nd in the world as leading exporter,and 3^rd in the world as leading importer in world merchandise trade.

Question 35

Franchising is popular both domestically and internationally.

Question 36

To expand Canada's profile in new and emerging markets,the Canadian government has identified 25 priority markets around the world.

Question 37

Granting another firm the right to manufacture your product or use your trademark for a fee is called licensing.

Question 38

While franchising is popular in Canada,it is not an accepted strategy for firms in the global market.

Question 39

One advantage of foreign licensing as a strategy to enter the global market is the sharing of trade secrets.

Question 40

Most governments prohibit their citizens from participating in joint ventures.

Question 41

A joint venture is a partnership in which two or more companies join to undertake a major project.

Question 42

Xanadu Enterprises wants to sell its products in the centrally planned economy of North Vietnam,but the Vietnamese government will allow Xanadu entry into its markets only if it enters into a major partnership with Vietnamese producers.The Vietnamese government is requiring Xanadu to enter into a joint venture arrangement.

Question 43

The Honda automobile assembly plant in Alliston,Ontario is an example of foreign direct investment in Canada.

Question 44

When Nestle,a Swiss company,purchased Carnation,a U.S.company,it resulted in Carnation becoming a foreign licensee.

Question 45

Canadian subsidiaries of foreign-based companies have played a major role in developing the Canadian economy.

Question 46

Only firms with a physical presence in different nations can be truly called a multinational corporation.

Question 47

Foreign investment in a country can be viewed as a sign of strength in the country's economy.

Question 48

According to current Canadian laws,Canadian firms are prohibited from participating in joint ventures with foreign firms.

Question 49

The country where a parent firm is located is called the home country.

Question 50

One benefit of an international joint venture is sharing the risk of a major project.

Question 51

Contract manufacturing involves the production of private-label goods by a foreign company to which a company then attaches its brand name or trademark.

Question 52

One way to satisfy an unexpected increase in sales is through contract manufacturing.

Question 53

A disadvantage of the use of a foreign subsidiary is the loss of control over technology and expertise used in the production of the product.

Question 54

Expropriation occurs when a host government takes over the assets of a foreign company.

Question 55

Contract manufacturing allows Nike to utilize a German firm to produce their shoes in Europe.

Question 56

A firm desiring to enter a foreign market with a limited investment should consider foreign licensing.

Question 57

Foreign direct investment refers to the buying of goods produced in another country.

Question 58

The Tsingtao Brewing Company pays a fee to Anheuser-Busch for the right to brew and distribute Budweiser in China.Tsingtao is the licensor and the fee paid is a royalty.

Question 59

An example of foreign direct investment would be Pepsi granting a Japanese firm the use of its formula and trademark for a fee.

Question 60

Any corporation that exports at least 50 % of its total output can be classified as a multinational corporation.

Question 61

Nestle is an example of a major firm with many foreign subsidiaries and a multinational corporation.

Question 62

Currency fluctuations can cause problems to firms trading in the global market.

Question 63

Bartering is the exchange of goods or services for other goods or services with no exchange of money involved.

Question 64

Strategic alliances are the same as joint ventures.

Question 65

In global markets,no central system of laws exists.

Question 66

Magna is an example of a Canadian multinational.

Question 67

Sociocultural forces that affect global businesses include customs,language,and religion.

Question 68

An increase in the exchange rate value of the dollar causes the dollar price of foreign made goods to decrease.

Question 69

Hewlett-Packard has established a relationship with Hitachi to help each company build a competitive market advantage.This is an example of a joint venture.

Question 70

Ethnocentricity can have a negative impact on a firm's ability to trade in global markets.

Question 71

In global markets,cultural differences affect marketing strategies but not management policies.

Question 72

A firm may export everything it produces overseas and yet not be considered a multinational.

Question 73

A global marketing strategy can be difficult to implement.

Question 74

Effective marketing strategies focus on the product and ignore the sociocultural differences in the global environment.

Question 75

An exchange rate is the value of one nation's currency relative to the currencies of other nations.

Question 76

Effective management styles are transferable from one culture to another.

Question 77

A devaluation of the Canadian dollar would make Canadian goods cheaper to foreign buyers.

Question 78

Efficient currency exchange markets have eliminated countertrade in global business transactions.

Question 79

A strategic alliance is similar to a joint venture because they typically involve sharing costs,risks,management and even profits.

Question 80

Successful multinational corporations disregard cultural differences between countries in which they operate.