Deck 3: Business in a Global Environment

Question 1

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.

Answer 1

True

Question 2

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

Answer 2

C

Question 3

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.

Answer 3

True

Question 4

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

Question 5

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 6

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 7

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 8

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 9

The United States is currently experiencing an international trade _____.

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

Question 10

The United States currently enjoys an international trade equilibrium.

Question 11

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

Question 12

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

Question 13

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.

Question 14

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

Question 15

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 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

By the year 2010, international trade in merchandise and services had topped _____.

A) $11 billion
B) $100 billion
C) $11 trillion
D) $18 trillion

Question 21

Compare and contrast absolute advantage and comparative advantage.

Question 22

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 23

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 24

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 25

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 26

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

Question 27

Explain the difference between importing and exporting.

Question 28

What role do balance of trade, trade surplus, and trade deficit play in a nation's economy?

Question 29

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 30

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 31

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

Question 32

Explain a nation's balance of payments.

Question 33

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 34

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 35

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 36

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 37

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 38

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 39

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 40

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 41

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 42

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 43

_____ 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 44

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 45

A _____ is an agreement between two companies (or a company and a nation) to pool resources to achieve goals that benefit both partners.

A) limited partnership b licensing
C) strategic alliance
D) direct investment

Question 46

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 47

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 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

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 50

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 51

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 52

_____ 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 53

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

Question 54

In terms of sales revenue, the oil and gas company Royal Dutch Shell is the world's second largest multinational corporation, behind only ______

A) BP
B) Toyota
C) Wal-Mart
D) Honda

Question 55

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 56

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 57

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

Question 58

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 59

Alliances range in scope from informal cooperative agreements to _____.

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

Question 60

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 61

How does an international franchise work?

Question 62

Why do multinational companies practice decentralization?

Question 63

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 64

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

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

Question 65

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 66

Compare international licensing with international contract manufacturing (or outsourcing).

Question 67

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 68

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

Question 69

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 70

All of the following are common criticisms of MNCs (multinational corporations) except:

A) they destroy the livelihoods of home?country workers by exporting jobs.
B) their constant demand for resources jeopardizes the physical environments of host countries.
C) they weaken and Americanize the cultures and values of host countries.
D) they inflate standards of living in host countries.

Question 71

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

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

Question 72

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 73

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

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

Question 74

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 75

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

Question 76

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 77

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 78

As strategies for going international, how do foreign direct investment and opening a foreign subsidiary differ from licensing?

Question 79

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

Question 80

What purposes can a strategic alliance serve?