Deck 3: Competing in Global Markets

Question 1

Which of the following government policies creates an environment of restrictive standards intended to make it difficult for foreign firms to successfully sell their products?

A)Monetary tariffs
B)Export constraint policies
C)Countertrade policies
D)Nontariff barriers

Answer 1

D

Question 2

Climate and terrain in several South American countries are conducive to growing coffee efficiently.While other countries can grow coffee,they are not as productive or efficient.This fact would lead you to believe that the South American countries have a(n) _________________ advantage in the production of coffee.

A)comparative
B)absolute
C)progressive
D)unprotected

Answer 2

A

Question 3

ExxonMobil Corporation refines and markets its petroleum products in different nations.In addition,Exxon's stockholders and managers come from different nations.ExxonMobil is an example of a true:

A)joint international venture.
B)meganational.
C)international bureaucracy.
D)multinational corporation.

Answer 3

D

Question 4

All of the following are objectives of the North American Free Trade Agreement (NAFTA)except:

A)creation of a single currency to compete with the euro.
B)provision of protection for intellectual property rights.
C)increment in investment opportunities in each of the member nations.
D)elimination of trade barriers between member nations.

Question 5

What is the major disadvantage of a subsidiary?

A)The need to commit funds and technology within a foreign country.
B)The need for an export license for the subsidiary and the parent company.
C)The parent company's need for contract manufacturers.
D)The need for constant oversight of the subsidiary.

Question 6

The purpose of the General Agreement on Tariffs and Trade (GATT)is to:

A)negotiate an end to civil wars.
B)create common market arrangements in specific geographical regions.
C)establish a set of international property right laws.
D)facilitate global trade.

Question 7

tariffs are designed to raise money for the government.

A)Price
B)Revenue
C)Profit
D)Regulatory

Question 8

What two priority markets are of particular interest to Canada due to their size and economic transformation?

A)United States,Brazil.
B)China,India.
C)Japan,Russia.
D)Russia,Brazil.

Question 9

Who has led a global effort to fight corruption and bribery in foreign markets?

A)The Euro
B)The WTO
C)The OECD
D)Canada

Question 10

For a firm to be considered a multinational corporation,all the following conditions must be true except that:

A)all transactions must be financed by the International Monetary Fund.
B)it must have manufacturing facilities in different countries.
C)it must have marketing facilities in different countries.
D)the stock ownership must be multinational.

Question 11

A is a partnership in which companies from two different countries join to undertake a major project.

A)joint venture
B)franchisee transfer
C)recruit affiliation
D)multinational cooperative

Question 12

A tariff is designed to raise the price of imported products so that domestic goods are more competitively priced.

A)progressive
B)revenue
C)protective
D)restrictive

Question 13

A major concern voiced by Canadian critics of the North American Free Trade Agreement (NAFTA)is that it would result in:

A)increased illegal immigration from Mexico.
B)higher prices for consumer goods.
C)loss of jobs in the Canadian economy.
D)national security problems.

Question 14

In a licensing agreement,who pays for marketing the product?

A)The government
B)The licensor
C)The licensee
D)The franchisor

Question 15

The three countries participating in NAFTA are:

A)Canada,Mexico,and the United States.
B)Canada,Nicaragua,and Mexico.
C)Canada,Panama,and the United States.
D)Mexico,Panama,and the United States.

Question 16

The outlook for growth in global trade in the future will likely focus on:

A)Latin America.
B)The United States.
C)NAFTA countries.
D)China.

Question 17

An unfavourable balance of trade occurs when the value of:

A)imports equals the value of exports.
B)cash inflows are equal to the value of cash outflows.
C)exports exceed the value of imports.
D)imports exceeds the value of exports.

Question 18

Patrick's Products has a manufacturing plant near Calgary.The plant specializes in compact washers and dryers for countries in which consumers have less living space.Patrick's Products participates in the global market through:

A)balancing trade
B)dumping
C)importing
D)exporting

Question 19

The country where a parent firm is located is known as what?

A)Host country
B)Subsidiary country
C)Home country
D)Parent country

Question 20

Country A is an extremely efficient producer of tin.However,its climate and terrain makes it difficult to produce corn.According to the theory of comparative advantage,Country A should:

A)produce both tin and corn in order to remain self-sufficient.
B)import the resources needed to produce corn.
C)concentrate its production on tin and buy corn from an efficient producer.
D)watch the global market to see which product brings the highest price.

Question 21

When Steam Whistle Breweries of Toronto sells beer to Germany,the sales of its product would be classified as a Canadian ____________

A)export.
B)countertrade arrangement.
C)import.
D)foreign aid shipment.

Question 22

A licensor may assist a licensee in what areas?

A)Risk management.
B)Franchising.
C)Promotion.
D)FDI.

Question 23

For firms interested in global markets,investments in China are considered to be:

A)an emerging business opportunity.
B)illegal based on World Trade Organization (WTO)rulings.
C)dependent on Yao Ming's success in the National Basketball Association.
D)too risky and not worth the effort.

Question 24

Comparative advantage theory was first put forward by who?

A)David Ricardo.
B)Adam Smith.
C)The World Bank.
D)The WTO.

Question 25

Many of the toy products sold in Canada are imported from Taiwan because the Taiwanese can produce these products more effectively and efficiently than we can in Canada.This is an example of:

A)a bilateral free trade agreement.
B)a multilateral resource priority.
C)the theory of absolute advantage.
D)the theory of comparative advantage.

Question 26

All of the following are generally considered to be benefits of joint ventures as a strategy in reaching global markets,except:

A)access to markets where foreign goods are often not allowed.
B)shared technology and marketing expertise.
C)elimination of potential competition.
D)shared risk.

Question 27

Emerging economies include all of the following factors except:

A)Rising inflation.
B)High growth rates.
C)A rising global prominence.
D)Increasing living standards.

Question 28

All of the following are advantages of free trade except:

A)productivity increases in areas of comparative advantage.
B)free trade helps keep interest rates high.
C)the global market consists of over 7 billion potential customers.
D)global competition helps to keep prices down.

Question 29

is the use of government regulations to limit the import of goods and services.

A)Trade protectionism
B)Countertrade policy
C)Fiscal policy
D)Monetary policy

Question 30

Which country is Canada's largest trading partner?

A)The United States
B)China
C)Russia
D)Japan

Question 31

involves the production of private-label goods by a foreign company to which a company then attaches its brand name or trademark.

A)Import trading
B)Contract manufacturing
C)Franchising
D)Export trading

Question 32

Pepsi Cola has entered into a long-term contract with a South African beverage business.The contract calls for the South African firm to produce and market Pepsi Cola in South Africa.Pepsi Cola will receive a royalty on each case of soda sold.This is an example of:

A)licensing.
B)foreign direct investment.
C)a joint venture.
D)a foreign subsidiary.

Question 33

Which of the following is the least valid criticism when potential investors look at China?

A)Human rights issues and other concerns have led some Canadian political leaders to call for the removal of most favoured nation status for China.
B)China's economic growth has been disappointing in recent years.
C)The large trade imbalance between Canada and China may lead to friction in trade relations between the two countries.
D)China's one party political system is undemocratic.

Question 34

Adam's Apple Corporation ships all of the apples from its orchards in British Columbia to a single buyer in Japan.The firm's entire profits are derived from this international transaction.Adam's Apple Corporation:

A)is not a multinational corporation.
B)is contributing to the Canadian balance of trade deficit.
C)is an example of a multinational corporation.
D)will benefit greatly from the establishment of NAFTA.

Question 35

Which of the following is a Canadian multinational?

A)WalMart
B)Magna
C)Tim Hortons
D)McDonalds

Question 36

is the practice of selling a product in foreign countries for a lower price than the good is sold domestically.

A)Countertrading
B)Dumping
C)Inflating
D)Deflating

Question 37

In an effort to protect domestic jobs,some countries will place a limit on the number of certain types of products that can be imported.These limits are called:

A)revenue tariffs.
B)import quotas.
C)tariffs.
D)protective tariffs.

Question 38

To provide better service for their customers,Google purchased office space in India for their online customer service representatives.This is an example of:

A)dumping.
B)ethnocentricity.
C)a nontariff trade restriction.
D)foreign direct investment.

Question 39

A Mexican firm has agreed to trade petroleum to an American importer in return for Canadian made computers.This arrangement is an example of:

A)a non tariff trade.
B)countertrade.
C)arbitrage.
D)a letter of credit arrangement.

Question 40

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:

A)a joint venture.
B)an outsource agreement.
C)a royalty.
D)a licensee.

Question 41

A represents a long-term partnership between two or more companies established to help each firm build competitive market advantages.

A)strategic alliance
B)global franchise
C)shared venture
D)multinational set-up

Question 42

Which of the following statements best describes the theory of comparative advantage?

A)Each nation should produce those goods that it can produce more efficiently than other nations,and buy the goods it cannot produce efficiently from other nations.
B)A nation should produce those goods for which domestic demand is comparatively strong,and should import those goods for which domestic demand is comparatively weak.
C)The best way for a nation to ensure full employment is to be totally self-sufficient rather than relying on other nations to obtain goods and services.
D)The nation that has the largest reserves of gold and other natural resources will enjoy a position of comparative advantage in trade relationships.

Question 43

Which of the following countries was the prime mover behind NAFTA?

A)Germany
B)Mexico
C)Canada
D)China

Question 44

All of the following are considered when calculating a country's balance of payments except:

A)foreign aid.
B)tourism.
C)military expenditures.
D)domestic inflation rates.

Question 45

In allocating resources to promote new and emerging markets for Canadian exports,the federal government is,

A)doing nothing,as they don't have the funding available to compete with the United States in developing new and emerging markets.
B)targeting only India as they are not able to compete with the other countries who are trading with China.
C)identifying 21 priority markets that have the greatest potential for growth.
D)targeting only China as China is their second-largest trading partner.

Question 46

Pillsbury is a firm that operated throughout Canada,even when it was wholly owned by a British company,Grand Metropolitan.Pillsbury is an example of a(n):

A)licensed venture.
B)foreign subsidiary.
C)joint venture.
D)export trading company.

Question 47

Last year,the nation of Tigerland imported goods totalling $500 million and exported products totalling $386 million.Tigerland experienced a(n):

A)trade surplus.
B)favourable balance of trade.
C)benefit from membership in a free trade zone.
D)unfavourable balance of trade.

Question 48

is the selling of goods and services to other countries.

A)In-trading
B)Dumping
C)Importing
D)Exporting

Question 49

Which of the following terms describes the set of values,beliefs,rules,language,and institutions held by a specific group of people?

A)Institutional society
B)Social myopia
C)Culture
D)Ethnocentricity

Question 50

The world is home to over billion potential customers.

A)One
B)Five
C)Three
D)Seven

Question 51

An American firm recently criticized a Chinese steel producer for charging a lower price for their products in Canada than they charge in China.If proven to be true,the Chinese firm has engaged in:

A)industrial protectionism.
B)dumping.
C)a low labour cost strategy.
D)exchange rate manipulation.

Question 52

The two basic types of tariffs are:

A)revenue and protective.
B)general and limited.
C)comparative and absolute.
D)goods and services.

Question 53

As a business strategy,dumping can be used to:

A)avoid trade protectionist laws.
B)achieve eligibility for foreign aid.
C)better utilize e-commerce opportunities.
D)gain a foothold in a new market.

Question 54

A(n)refers to a complete ban of the imports or exports of certain products from a specific country.

A)health quarantine
B)absolute tariff
C)quota
D)embargo

Question 55

What is the primary advantage of a subsidiary?

A)The company can then franchise.
B)The company maintains control over technology.
C)The company gains from tax advantages.
D)The company maintains host country advantages.

Question 56

Multinational corporations are typically what?

A)Driven by tax considerations.
B)Located in developing countries.
C)Very large.
D)Canadian.

Question 57

for a country occurs when it has a monopoly on producing a product or is able to produce it at a cost below that of all other countries.

A)Dumping advantage
B)Complete advantage
C)Comparative advantage
D)Absolute advantage

Question 58

Which of the following statements is the most accurate observation regarding multinational corporations?

A)Only those firms with a physical presence in different nations qualify as a multinational corporation.
B)Because of political and economic concerns,most multinational corporations have chosen to ignore investment opportunities in China and Russia.
C)Rather than manage manufacturing and marketing facilities overseas,most multinational corporations attempt to enter global markets by exporting domestically produced goods.
D)Most multinational corporations are actually small to medium-sized firms.

Question 59

A favourable balance of trade occurs when the value of:

A)imports equals the value of exports.
B)the dollar is greater than the value of the euro.
C)cash inflows equal the value of the cash outflows.
D)imports is less than the value of exports.

Question 60

Which of the following describes a complex form of bartering involving several countries?

A)Counter intuitive
B)Countertrading
C)Counterespionage
D)Geiger counter

Question 61

When foreign firms build production facilities in Canada,they are engaging in:

A)exporting.
B)foreign direct investment.
C)importing.
D)countertrading.

Question 62

The represents the first attempt to establish a truly global mediation centre to resolve international trade disputes.

A)International Trade Court
B)Global Trade Commission
C)World Trade Organization
D)United Nations Arbitration Centre

Question 63

McHugh Corporation of Ireland and Enomoto Enterprises based in Japan have undertaken the production of a new electric car with rechargeable batteries that can be driven at high speeds for long distances.They have shared the investment,and each has contributed important technological expertise to the effort.These two firms have entered into a(n):

A)multinational limited partnership.
B)multinational cartel.
C)industrial countertrade agreement.
D)international joint venture.

Question 64

Which of the following strategies offers the greatest profit potential?

A)Exporting
B)Importing
C)Licensing
D)FDI

Question 65

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

A)Licensees
B)Export trading companies
C)Keiretsu
D)Strategic alliance companies

Question 66

Which of the following strategies for competing in the global markets involves the lowest risk and offers the lowest profit potential?

A)Licensing
B)A joint venture
C)A foreign subsidiary
D)Contract manufacturing

Question 67

is the exchange of merchandise or services for other merchandise or services without the exchange of money.

A)Bartering
B)Importing
C)Exporting
D)Factoring

Question 68

The hurdles to success are generally in global markets than domestic markets.

A)The same.
B)Lower.
C)Getting lower.
D)Higher.

Question 69

Differences in electrical power and transportation systems can present special problems for Canadian firms when attempting to enter global markets.These represent the __________ forces that impact global business.

A)economic
B)legal and regulatory
C)governmental
D)physical and environmental

Question 70

Which theory states that a nation should produce and sell goods to other countries that it produces most efficiently,and buy goods produced more efficiently by other countries?

A)Mercantilism.
B)Bilateral advantage.
C)Absolute advantage.
D)Comparative advantage.

Question 71

If a Swiss chocolate firm purchases a Canadian ice cream manufacturer,the Canadian ice cream manufacturer becomes a:

A)foreign subsidiary.
B)global franchise.
C)a global joint venture.
D)contract manufacturer.

Question 72

A is a regional group of countries that have neither internal tariffs,nor common external tariff,where by the coordination of laws facilitating exchange among the member countries exist.

A)joint venture
B)trade cartel
C)mutual trade association
D)common market

Question 73

What is it called when more money is flowing out of a country than flowing into it?

A)Unfavourable balance of trade.
B)Exporting.
C)Free trade.
D)Unfavourable balance of payments.

Question 74

Which of the following statements best describes the possibilities for small businesses in global markets?

A)Small businesses already dominate global business.In fact,most multinational corporations are actually quite small.
B)Small businesses are often better prepared to enter global markets than large,bureaucratic corporations.
C)Small businesses have little chance of competing against giant multinational corporations in global markets.
D)The main problem faced by small businesses in global markets is that franchise arrangements favoured by small business owners are illegal in most countries.

Question 75

In which of the following products does Canada enjoy a comparative advantage in global trading?

A)Computer chips
B)Forestry products
C)Shoes
D)IPods

Question 76

is the purchase of goods and services produced in foreign countries.

A)Exporting
B)Outsourcing
C)Importing
D)Retailing

Question 77

Maureen,a Canadian resident,was surprised to see that her home computer was actually made in Japan.Maureen did not know she had purchased a(n):

A)generic good.
B)protected good.
C)exported item.
D)imported item.

Question 78

The president of the Auto Parts of Canada Corporation recently testified before a Parliament committee,urging them to limit the flow of imported automobile parts into Canada.She contended that these imports were priced lower than the foreign producers were:

A)exhibiting ethnocentricity.
B)promoting free trade.
C)engaging in dumping activities.
D)exercising trade deficits.

Question 79

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

A)overpriced the value of its exports.
B)exported $11 billion worth of goods.
C)exported more than $11 billion worth of goods.
D)exported less than $11 billion worth of goods.

Question 80

Many economists and business experts contend that will likely be the growth market of the future.

A)South America
B)Asia
C)Africa
D)the Middle East