Question 1

_______________ are specialists that match buyers and sellers from different countries and provide services to ease the process of entering global markets.

Accepted Answer

Export trading companies specialize in matching buyers and sellers from different countries and provide services such as financing, shipping, and documentation to facilitate global trade. Licensees are companies that are granted permission to use another company's intellectual property, while strategic alliances and keiretsu are forms of business partnerships.

Question 2

The nation of Redland reported that its imports for the previous year were $4 billion greater than its exports.During the same period,Redland reported a favorable balance of payments.This information suggests:

Accepted Answer

The fact that Redland reported a favorable balance of payments despite having $4 billion more in imports than exports suggests that money inflows from various sources, such as tourism, foreign aid, and foreign investment, more than offset the trade deficit.

Question 3

A form of foreign direct investment,where a domestic company purchases a company in a foreign country to produce a similar product or service is a:

Accepted Answer

A foreign subsidiary is a company that is owned and controlled by a parent company in another country. In this case, the domestic company is purchasing a company in a foreign country to produce a similar product or service, which fits the definition of a foreign subsidiary. A licensor is a company that grants a license to another company to use its intellectual property, while a joint venture is a business agreement between two or more companies to collaborate on a specific project or venture. A host company refers to a company that is hosting an event or conference. These options do not fit the description of the scenario presented.

Question 4

An advantage of forming a joint venture is:

Accepted Answer

Forming a joint venture is a good strategy for entering new markets where you have never had a presence. This allows you to benefit from the knowledge and expertise of your partner, while reducing the risks and costs of entering a new market on your own. Option A is incorrect because the whole premise of a joint venture is to share costs and risks. Option B is also incorrect because joint ventures usually have a limited duration. Option D is incorrect because joint ventures require both parties to share information and collaborate on marketing and management strategies.

Question 5

The fee paid to a firm in a licensing agreement that gives another firm the right to manufacture their product or use its trademark is called:

Accepted Answer

The fee paid by the licensee for the right to manufacture a product or use a trademark is called a royalty.

Question 6

A major advantage of licensing is:

Accepted Answer

Licensing arrangements typically involve minimal costs to the licensor, as most of the expenses associated with production, marketing, and distribution are borne by the licensee. This can be an advantage for companies looking to expand their reach into foreign markets without significant investment. Choices A, B, and C are not accurate statements about licensing arrangements.

Question 7

A disadvantage of licensing is:

Accepted Answer

The answer of A disadvantage of licensing is:
...

Question 8

The president of Auto Parts of America Corporation recently testified before Congress,urging them to limit the flow of imported automobile parts into the United States.He contended that these imports were priced lower than foreign producers were charging for them in their own countries.He believes foreign producers are:

Accepted Answer

Dumping refers to the practice of selling goods in a foreign market at a price that is below the cost of production or below the price charged in the domestic market. The president's testimony suggests that imported automobile parts are being sold at a lower price in the US than in the countries where they are produced, which is consistent with the definition of dumping.

Question 9

Nikkei Auto Parts testified before Congress defending the company against an accusation that it was dumping auto parts on the U.S.market.In her testimony,the president claimed ________________.Using traditional guidelines,Congress determined that Nikkei was not dumping.

Accepted Answer

The president of Nikkei claimed that the company includes 10% overhead costs and an 8 percent profit margin in the price of all the parts they export to the U.S. This information can be used to argue against the accusation of dumping, as it suggests that the price of the auto parts is not significantly lower than the cost of producing them. Congress determined that Nikkei was not dumping based on traditional guidelines, which may have taken into account factors such as price and volume of imports, market conditions, and the impact on domestic industries. Options B, C, and D are not directly relevant to the accusation of dumping.

Question 10

Export trading companies:

Accepted Answer

Export trading companies facilitate international trade by connecting U.S. sellers with foreign buyers, helping with documentation, customs, and payments. They are privately owned businesses that do not necessarily have government ownership or provide joint venture opportunities or franchise sales.

Question 11

According to Reaching Beyond our Borders box,the king of global franchising is:

Accepted Answer

The Reaching Beyond our Borders box states that McDonald's is the largest global franchising company with over 38,000 restaurants in over 100 countries.

Question 12

Reviewing the recent experience of the United States in global markets reveals that the U.S has:

Accepted Answer

The United States has had a large trade deficit with China, which has been a major issue in recent years. This has been a source of concern for policymakers and has led to a number of trade disputes between the two countries. The U.S also has a merchandise trade deficit with the rest of the world, meaning it imports more goods than it exports. While the U.S is not currently a debtor nation, its national debt has been growing in recent years. However, the U.S has attracted significant foreign direct investment, with foreign companies investing in a variety of industries and sectors.

Question 13

A __________ is a partnership in which two or more companies (often from different countries)join together and share the risk and costs in order to undertake a major project.

Accepted Answer

A joint venture is a partnership between two or more companies where they combine their resources and expertise to undertake a major project which involves sharing risks, costs, profits and losses. The joint venture typically has its own management structure and operates as a separate business entity.

Question 14

Granting a foreign company the right to manufacture your product or to use your firm's trademark in return for a fee is called:

Accepted Answer

The scenario described is that of licensing, where a foreign company pays a fee to use another company's patent or trademark. Joint venture and foreign subsidiary refer to forms of business partnerships, while outsourcing is when a company contracts with another company to perform a specific task or service.

Question 15

A __________ represents a long-term partnership between two or more companies established to help each firm build competitive market advantages,without sharing the cost of risk.

Accepted Answer

A strategic alliance is a partnership between two or more companies for a long term period where each firm builds competitive market advantages without sharing the cost of risk. Multinational cooperative involves sharing of resources between companies, shared venture involves sharing of costs, and global franchise involves giving rights to use a brand name and business model in exchange for a fee. Hence, option D is the most appropriate choice.

Question 16

The federal government created ___________ to help small and medium sized businesses get involved in exporting.

Accepted Answer

The Export Assistance Centers were created by the federal government to provide assistance to small and medium sized businesses to help them get involved in exporting.

Question 17

Last year,the nation of Kwansai reported that it had a favorable balance of trade even though it imported $11 billion worth of goods.This indicates that Kwansai:

Accepted Answer

The answer of Last year,the nation of Kwansai reported that...

Question 18

__________ is an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell the parent company's product or service to others in a given territory in a specified manner.

Accepted Answer

This is the definition of franchising, where the franchisor sells the right to operate under the company's brand and sell its products or services to franchisees in a specific area or manner. Contract manufacturing involves outsourcing the production of goods, import trading involves buying and bringing in goods from other countries, and export trading involves selling goods to other countries.

Question 19

According to the material in the "Reaching Beyond Our Borders" box in Chapter 3,which of the following statements best describes McDonald's current involvement in global markets?

Accepted Answer

According to the "Reaching Beyond Our Borders" box in Chapter 3, McDonald's global market success is attributed to its willingness to adapt its menu to local tastes and culture. The article states that McDonald's has successfully adapted to local tastes in various markets such as India, Japan, and Saudi Arabia.

Question 20

When a company's strategy is __________ the firm makes arrangements for a foreign manufacturer to produce the product.The domestic company's label and/or trademark are attached to the completed product.

Accepted Answer

The description matches the process of contract manufacturing, where a domestic company outsources the production of its product to a foreign manufacturer, who then attaches the domestic company's label or trademark to the finished product. Franchising involves a more complex arrangement where the franchisor grants the franchisee the right to use its business model, while import sourcing refers to the process of a company purchasing goods from a foreign supplier for import into the domestic market. Export trading involves selling products to customers in foreign countries.

Quiz 3: Doing Business in Global Markets