Question 1

National competitive advantage derives from four conditions.One of those conditions includes factor conditions.What do factor conditions include?

Accepted Answer

Factor conditions refer to the inputs or factors of production that a country has available, including labor, capital, entrepreneurs, physical resources, and information resources. These factors can vary in quality and abundance from country to country, and can thereby influence a country's competitive advantage in certain industries. Options A, B, and D do not fully encompass all the necessary factor conditions for creating a national competitive advantage.

Question 2

A country has a(n)________ in goods it can produce more efficiently than other goods.

Accepted Answer

This is a classic concept in international trade theory - comparative advantage. It implies that even if a country can produce all goods more efficiently than another country, it can still benefit from specializing in goods in which it has a lower opportunity cost of production, i.e., a lower relative efficiency disadvantage. This allows for mutually beneficial international trade between countries. Absolute advantage refers to a country's ability to produce a good with fewer resources than another country, while national competitive advantage refers to a country's ability to compete in an industry on a global scale. Monopolistic advantage is a concept from industrial organization theory that refers to a firm's ability to earn a higher profit based on its monopolistic control over intellectual property or market power.

Question 3

Which of the following is NOT considered an international organizational structure?

Accepted Answer

Exporters are not considered an international organizational structure, as they simply sell their products to foreign markets without establishing any physical presence or organizational structure in those markets. Independent agents, licensing arrangements, and branch offices are all examples of international organizational structures.

Question 4

In which international organization structure does a firm have greater control over foreign activities?

Accepted Answer

Strategic alliances involve a closer relationship between two or more companies, allowing for more control over foreign activities compared to exporting, licensing, or using agents.

Question 5

Assume that the United States requires that products sold here be at least 51 percent made here.This would be an example of a ________.

Accepted Answer

A local content law requires a certain percentage of a product to be produced domestically in order to be sold in that country. This helps protect domestic industries and jobs.

Question 6

Which of the following types of payments are usually received by an exporter as an ongoing payment calculated as a percentage of the license holder's sales?

Accepted Answer

Royalties are payments made to the owner of a product or process for the right to use that product or process. This type of payment is usually calculated as a percentage of the licensee's sales and is an ongoing payment for as long as the license agreement is in place. Flat fees are one-time payments made for the use of a product or process. Agent fees are payments made to an agent or intermediary for facilitating a transaction. Direct investments refer to investments made by a company in another company or project.

Question 7

Tariffs that are imposed strictly to raise money for the government are ________.

Accepted Answer

Revenue tariffs are taxes imposed on imported goods with the main purpose of generating income for the government. These revenues could be used to fund public services or pay off government debt. In contrast, quota tariffs limit the quantity of specified imports, subsidy tariffs provide financial assistance to domestic producers, and union tariffs are levied by a labor union to protect domestic workers from foreign competition.

Question 8

The U.S.government requires that the U.S.Air Force buy all of its planes from U.S.manufacturers.In this case,protectionism is justified based on ________.

Accepted Answer

The justification for requiring the U.S. Air Force to buy planes from domestic manufacturers is based on national security interests. The government wants to ensure that the planes used by the military are reliable and safe, and buying from domestic manufacturers can help ensure this. Additionally, the government may want to avoid reliance on foreign manufacturers, which could present a security risk in times of conflict. This justification is different from protecting businesses from foreign competition, political differences, or protecting domestic jobs.

Question 9

Imports of Canadian timber are limited to 14.7 billion board feet per year.This is an example of a(n)________.

Accepted Answer

The statement describes a quota, which is a quantitative restriction on imports or exports of a particular product or service. This quota limits the amount of Canadian timber that can be imported into a particular country.

Question 10

Which global arrangement most closely represents a partnership?

Accepted Answer

A strategic alliance is a global arrangement where two or more companies partner together for a common goal, such as research and development, marketing, or distribution. It involves a shared risk and reward system, making it the arrangement that most closely represents a partnership. Exporting is simply selling goods to a foreign country. Licensing arrangement refers to allowing another company to use your intellectual property in exchange for royalties. Enterprise resource planning (ERP) is a system used for managing business processes and operations.

Question 11

To avoid transportation costs and tariffs,Apics Enterprises gave exclusive rights to Svenson AB in Finland to produce its product.What does this illustrate?

Accepted Answer

This situation is an example of a licensing arrangement, as Apics Enterprises has given exclusive rights to Svenson AB to produce its product in Finland in order to avoid transportation costs and tariffs.

Question 12

Which of the following types of tariff is meant to discourage the import of particular products?

Accepted Answer

A protectionist tariff is designed to discourage imports by making them more expensive, thereby protecting domestic industries from foreign competition.

Question 13

Which of the following types of firms design,produce,and manufacture products in many nations?

Accepted Answer

Multinational firms are companies that have operations in multiple countries, including design, production, and manufacturing. They often have a decentralized management structure that allows them to adapt to local market conditions and take advantage of economies of scale. Importing firms primarily focus on importing goods from other countries. Domestic firms produce and sell products within one country. Exporting firms primarily produce goods for export to other countries.

Question 14

The United States has current embargoes against ________ .

Accepted Answer

The United States has a current embargo against Cuba.

Question 15

In some South American countries,it is sometimes legal to bribe other businesses and government officials,while this practice is illegal in the United States.This barrier to international trade is known as ________.

Accepted Answer

The barrier to international trade described in the scenario is related to the differences in business practice laws between South American countries and the United States, where bribery is legal in some countries and illegal in others. Therefore, option B, which refers to business practice laws, is the most appropriate answer. Protectionism, quotas, and local content laws are different barriers to international trade, which are not directly related to the described scenario.

Question 16

Which statement is true regarding independent agents?

Accepted Answer

Independent agents act as sales representatives for multiple firms, not just one, and they typically do not specialize in a particular product. They focus on selling products and services rather than monitoring customer satisfaction.

Question 17

The Oil Producing and Exporting Countries (OPEC)is an example of a ________.

Accepted Answer

OPEC is a cartel, meaning it is a group of producers who work together to control the supply and pricing of their product (in this case, oil). The member countries coordinate their production levels and limit supply to keep prices higher than they might be in a competitive market.

Question 18

A main purpose of tariffs on imports is to ________.

Accepted Answer

The main purpose of tariffs on imports is to maintain domestic competitiveness by making imported goods more expensive, which encourages consumers to buy domestically produced goods, thereby protecting local industries from foreign competition.

Question 19

The United States government forbids the importation of cigars from Cuba into the United States.This government order is known as a(n)________.

Accepted Answer

An embargo is a government order that restricts or prohibits trade with a particular country or region. The United States has an ongoing embargo on Cuba, which includes a ban on importing Cuban cigars. Tariffs are taxes on imported goods, subsidies are financial assistance provided by the government, and local content laws require a certain percentage of a product to be manufactured locally. None of these terms accurately describe the ban on Cuban cigar imports.

Question 20

A strategic alliance may also be referred to as a ________.

Accepted Answer

A strategic alliance can also be referred to as a joint venture, which is a business agreement between two or more companies to work together on a specific project or business goal. It is not a branch office, tying contract, or consolidation.

Quiz 4: The Global Context of Business