Deck 3: Doing Business in Global Markets

Question 1

Absolute advantage is the basis for most global trade today.

Answer 1

False

Question 2

Importing is the selling of products to another country.

Answer 2

False

Question 3

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.

Answer 3

True

Question 4

Competition in exporting is very intense.

Question 5

The United States imports more products and services than any nation in the world.

Question 6

Global trade in services and entertainment has lagged behind the global trade of products.

Question 7

Free trade results in a mutually beneficial exchange between and among nations.

Question 8

Global trade includes the exchange of art, sports, and cultural events.

Question 9

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

Question 10

Today, there are more countries that have some form of absolute advantage in a product or service, than years ago.

Question 11

A major force that often impeded global trade occurs when government regulations limit the import of goods and services. We call this:

A)anti-trade concessions.
B)countertrading.
C)de-facto trading.
D)trade protectionism.

Question 12

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 13

Exporting is the selling of products to another country.

Question 14

With respect to free trade, many U.S. citizens prefer "fair trade, not free trade."

Question 15

Today, over 90% of the companies doing business globally believe it is important for their employees to have experience working in other countries.

Question 16

While the U.S. is a large exporter, Germany exports a higher percentage of their GDP.

Question 17

The United States is the largest exporter in the world.

Question 18

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

Question 19

Global trade is the exchange of goods and services between countries.

Question 20

Opportunities for college graduates in international business continue to decrease as it gets more expensive to travel abroad.

Question 21

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

Question 22

Even though the U.S. exports a vast amount of goods globally, it exports a much lower percentage of its products than other countries do.

Question 23

Products made in Canada are sold in the U.S. because these two nations agree to eliminate economic and political barriers between nations. They participate in free trade.

Question 24

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

Question 25

Foreign travel can help in identifying global business opportunities.

Question 26

Small businesses are less involved in global trade today than in the past.

Question 27

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

Question 28

Recently the United States has experienced its highest trade deficits with China.

Question 29

In the Spotlight on Small Business topic, "Finding Cracks in the Great Wall," Mitch Free of MFG.com learned that lessons in doing business with other cultures are probably an unnecessary expense.

Question 30

The U.S. Department of Commerce predicts that by the year 2018, at least half of all small businesses will be exporters.

Question 31

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

Question 32

Many foreign students in U.S. colleges and universities have discovered profitable opportunities by importing goods from their home countries into the United States.

Question 33

After finishing college, Nathan joined his uncle's company in Miami, FL, a company that buys bauxite, copper, and other minerals from the country of Chile, and brings them into the U.S. Everyday, he brokers trades with mines in Chile. His uncle's company is in the export business.

Question 34

U.S. exports boost the U.S. economy.

Question 35

If your business has an outstanding product, exporting offers a quick, easy, no hassle way to improve your profitability.

Question 36

The United States enjoys a trade surplus in the global market.

Question 37

An example of a U.S. import would be the purchase of oil by U.S. companies from Saudi Arabia.

Question 38

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 39

Just about anything that can be sold in the United States can also be sold to buyers in other countries.

Question 40

A trade deficit is the same as a favorable balance of trade.

Question 41

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

Question 42

In any given year, the United States' cash outflow to other nations exceeds its cash inflow from other nations.

Question 43

Japanese auto manufacturers, such as Toyota and Nissan, have invested billions of dollars in the United States by building new factories, warehouses, and offices. These investments increase "favorably" the balance of payments for the United States.

Question 44

In order to prevent dumping, U.S. law stipulates that foreign firms selling similar products as domestic firms to U.S. customers must charge at least 10% more than what U.S. firms charge.

Question 45

Compared to many other industrialized countries, the United States has historically exported a lower percentage of its products than other countries do.

Question 46

When competing in global markets, business organizations utilize a variety of strategies to reach foreign buyers.

Question 47

When the U.S. provides foreign aid to Israel and Egypt, a balance of payments outflow occurs.

Question 48

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

Question 49

The value of Chinese exports coming to the United States is greater than the value of goods China buys from the United States. This results in a U.S. trade deficit with China.

Question 50

The country of New Florentina mines more fluorite each year than it needs for its own manufacturing purposes. Recently, a neighboring country complained that its manufacturing sites could buy fluorite from New Florentina cheaper than they could buy it from its own mines. A government trading expert's claim that New Florentina is dumping fluorite onto its neighbor's market is probably accurate.

Question 51

Dumping is the practice of selling products in foreign markets at lower prices than what domestic firms are charging for the same product.

Question 52

Compared to many other industrialized countries, the United States has historically exported a much higher percentage of its products than other countries do.

Question 53

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

Question 54

If visitors from Germany spend money at Orlando, Florida's Disney World, it will increase the U.S.'s unfavorable balance of payments.

Question 55

According to the Spotlight on Small Business box, "Finding Cracks In the Great Wall", the Internet (alone) made it possible for the owner of MFG.com to penetrate and develop long lasting relationships in the Chinese market.

Question 56

As the most powerful economy in the world, the United States does not need to concern itself with having an unfavorable balance of payments.

Question 57

Some firms will practice "dumping" in order to gain a foothold in a new market.

Question 58

A Chinese steel manufacturer is selling certain types of steel in the United States at a price significantly lower than it sells the same steel in its home market. This practice may be a violation of U.S. law.

Question 59

Foreign firms find it difficult to sell goods in the United States because most goods produced by foreign firms are already produced more efficiently by American firms.

Question 60

The United States currently enjoys a favorable balance of trade with the rest of the world.

Question 61

Contract manufacturing is a form of outsourcing.

Question 62

The U.S. government is reducing Export Assistance Centers due to businesses' lack of interest in their support.

Question 63

An advantage of licensing is that licensors spend little or no money to produce and market their products. These costs are born by the licensees.

Question 64

A joint venture is a partnership in which two or more companies join to undertake a major project. All parties commit financing and risk to the project.

Question 65

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

Question 66

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

Question 67

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

Question 68

Contract manufacturing is when a firm pays foreign manufacturers to produce its product. The Foreign manufacturer places the domestic company's label on the products.

Question 69

The purpose of forming strategic alliances is to share the costs of marketing new products and services to several countries.

Question 70

One advantage of franchising is that the parent corporation does not need to concern itself with adapting to the culture of another country.

Question 71

When a firm agrees to license its product, it gains notoriety but gives up all revenues.

Question 72

Export trading companies assist businesses in reaching buyers, and dealing with customs, documentation, and payment.

Question 73

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

Question 74

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

Question 75

Through licensing, domestic firms give foreign manufacturers/producers the right to produce their product and use their trademark in exchange for royalties.

Question 76

According to Reaching Beyond our Borders box, the McDonald's Corporation is king of franchising due to its ability to adapt to other cultures.

Question 77

Contract manufacturing requires heavy start-up costs by the domestic company.

Question 78

One advantage of licensing is the relatively low cost of entering a foreign market.

Question 79

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

Question 80

Franchising is popular both domestically and internationally.