Deck 3: Doing Business in Global Markets

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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

Answer 3

True

Question 4

The United States is the largest exporter in the world.

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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 10

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

Question 11

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

Question 12

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

Question 13

Competition in exporting is very intense.

Question 14

Importing is the selling of products to another country.

Question 15

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

Question 16

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

Question 17

Absolute advantage is the basis for most global trade today.

Question 18

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

Question 19

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 20

Exporting is the selling of products to another country.

Question 21

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 22

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

Question 23

International trade is not limited to multinational corporations.Small businesses do about 30% of all exporting out of the U.S.

Question 24

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 25

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

Question 26

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 27

In southern California,there are banana plantations.These plantations cannot produce all the bananas consumed by persons in the U.S.The fact that the U.S.grows and sells bananas gives it a comparative advantage in bananas.It is not an absolute advantage and that is why we choose to import bananas from other countries,as well.

Question 28

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

Question 29

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

Question 30

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

Question 31

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 32

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

Question 33

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

Question 34

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

Question 35

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 36

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 37

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

Question 38

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

Question 39

Foreign travel can help in identifying global business opportunities.

Question 40

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

Question 41

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

Question 42

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

Question 43

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

Question 44

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

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

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

Question 47

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

Question 48

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

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

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 51

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 52

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 53

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 54

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

Question 55

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

Question 56

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

Question 57

Franchising is popular both domestically and internationally.

Question 58

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

Question 59

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 60

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 61

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

Question 62

Sovereign wealth funds (a form of foreign direct investment)are investment funds controlled by governments that hold large stakes in foreign companies.

Question 63

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

Question 64

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

Question 65

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

Question 66

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 67

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

Question 68

Contract manufacturing is a form of outsourcing.

Question 69

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

Question 70

One characteristic of an international joint venture is all parties sharing the risk of a major project.

Question 71

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

Question 72

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 73

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

Question 74

Firms with a physical presence in several different nations are considered multinational corporations.

Question 75

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

Question 76

As a form of franchising,sovereign wealth funds are getting very little attention as a strategy for doing business in foreign markets.

Question 77

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

Question 78

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

Question 79

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

Question 80

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