Question 1

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 description given in the question is the definition of licensing. Joint venture involves two or more companies coming together to create a new enterprise. A foreign subsidiary is a company fully owned and controlled by a foreign parent company. Outsourcing involves contracting with a third party to handle certain business functions.

Question 2

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

Accepted Answer

Contract manufacturing involves a foreign company producing goods for another company, which then attaches its brand or trademark to the product. This allows the company to customize its products without having to invest in manufacturing facilities or expertise. Franchising involves a company allowing other individuals or businesses to use its brand name and operating system in exchange for a fee. Import and export trading involve the buying and selling of goods between companies in different countries.

Question 3

Canada exports most of its merchandise to:

Accepted Answer

Canada's largest trading partner is the United States. In fact, approximately 75% of all Canadian exports go to the United States.

Question 4

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

Accepted Answer

Joint ventures do not eliminate competition, rather they allow for collaboration and sharing of resources between two or more companies to better compete in the global market. The other options are all benefits of joint ventures.

Question 5

A specialized organization that assists businesses in creating relationships with foreign customers and suppliers is known as a(n):

Accepted Answer

Export trading companies help businesses by facilitating the export of goods and services, connecting them with foreign customers and suppliers.

Question 6

Canada imports most of its merchandise from:

Accepted Answer

The United States is Canada's largest trading partner, accounting for approximately 75% of Canada's merchandise imports.

Question 7

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

Accepted Answer

A joint venture is a partnership between two or more companies from different countries that come together to undertake a specific project or business activity. A multinational cooperative is a broader term that can refer to any cooperative effort between companies from different countries, not necessarily for a specific project. Franchisee transfer and recruit affiliation are not related to partnerships between companies from different countries.

Question 8

The difference between money coming into a country (from exports)and money leaving the country (for imports)plus money flows from other factors such as tourism,foreign aid,and military expenditures is referred to as the:

Accepted Answer

The balance of payments measures all the monetary transactions between a country and the rest of the world, including exports, imports, tourism, foreign aid, and military expenditures. Therefore, the correct option is A, balance of payments. B is incorrect because it only refers to the difference between exports and imports. C and D are not common terms used to refer to the balance between a country's monetary inflows and outflows.

Question 9

The value of goods imported into France exceeds the value of French exports.This indicates that France:

Accepted Answer

If the value of goods imported into France exceeds the value of French exports, it means that France has a trade deficit, or a negative balance of trade. This implies that France is importing more than it is exporting, resulting in a net outflow of currency to other countries, which has a negative impact on the economy.

Question 10

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

Accepted Answer

Licensing involves the lowest risk as it involves allowing another company to use your intellectual property (patents, trademarks, etc.) in exchange for royalties or fees. This strategy does not require significant investment or operational involvement in the foreign market, but it also offers the lowest profit potential.

Question 11

_______________ 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 to ease the process of entering global markets. Licensees are companies that obtain a license from a foreign company to produce and sell its products in the licensee's country. Strategic alliance companies are partnerships formed between two or more companies to pursue a specific business opportunity. Keiretsu are a type of Japanese corporate structure characterized by interlocking relationships between companies belonging to a group.

Question 12

Firms such as McDonald's,Pizza Hut,and KFC,have entered the global market by offering investors the opportunity to set up:

Accepted Answer

McDonald's, Pizza Hut, and KFC have entered the global market by offering franchises. This allows investors to use the company's brand, business model, and products in exchange for a fee and a percentage of sales. Franchising is a common strategy for expanding globally, as it allows for rapid growth with minimal investment from the parent company.

Question 13

Using contract manufacturing as a strategy to reach global markets offers firms the advantage of:

Accepted Answer

Contract manufacturing allows firms to shift the risks and costs of production to the external supplier, reducing the firm's own risks and costs associated with developing or expanding production facilities. This also allows the firm to focus on other areas of their business, such as marketing and sales, to effectively reach global markets.

Question 14

Buying permanent property and businesses in foreign nations is known as what?

Accepted Answer

Foreign direct investment (FDI) refers to the purchase of property or business in a foreign country with the goal of controlling assets or services. This form of investment typically involves the acquisition of substantial assets or ownership of shares in a foreign company. Other options such as hostile takeover, parent company investment, and strategic alliances refer to different forms of investment or acquisitions.

Question 15

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 in a licensing agreement is commonly known as a royalty fee. This fee is paid to the original owner of a product or trademark in exchange for the right to manufacture or use it under license. Choices A, C, and D are not correct as they do not accurately describe the fee paid in a licensing agreement.

Question 16

When entering a foreign market,Anheuser-Busch will contract with a local firm to brew and market the Anheuser-Busch product Budweiser.This is an example of:

Accepted Answer

Licensing involves a company contracting with a foreign firm to produce and market its products in the foreign market, in exchange for payment and possibly royalties. This is what Anheuser-Busch is doing by contracting with a local firm to brew and market Budweiser in the foreign market. Franchising involves a company contracting with a foreign firm to use its brand name and operating system in exchange for payment and possibly royalties. Foreign direct investment involves a company establishing its own subsidiaries or operations in a foreign market via capital investment. Foreign subsidiaries involve a company establishing a separate legal entity in a foreign market, which is wholly or partially owned by the company.

Question 17

Which of the following terms describes a long-term partnership between two or more companies intended to help each firm build competitive market advantages? This arrangement does not call for the firms to share costs,risks,or management.

Accepted Answer

Strategic alliances are a long-term partnership between two or more companies intended to help each firm build competitive market advantages. It does not call for the firms to share costs, risks, or management. Export-trading affiliations involve a firm agreeing to handle the export of products for another company, joint ventures involve two or more firms coming together to form a new business entity and sharing costs, risks, and management responsibilities, while foreign subsidiaries involve a company establishing a new business in a foreign country with the intention to control and manage it directly.

Question 18

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):

Accepted Answer

Pillsbury being wholly owned by a British company, Grand Metropolitan, makes it a foreign subsidiary.

Question 19

A key feature of a(n)____________________ is that it has manufacturing and marketing facilities in many different countries.

Accepted Answer

A multinational corporation is a company that has operations in multiple countries. This includes manufacturing and marketing facilities, as well as other business functions. The other options listed do not necessarily have operations in multiple countries. A trade cartel is a group of companies that work together to control prices and limit competition. An import trading company focuses on importing goods from other countries for domestic distribution. An export forwarding company assists in the logistics of exporting goods to other countries.

Question 20

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

Accepted Answer

A strategic alliance is a long-term partnership between two or more companies established to help each firm build competitive advantages in the market. This type of partnership involves sharing resources, expertise, risks, and rewards while staying independent of each other's corporate structure. It allows firms to leverage each other's strengths to achieve a common goal while minimizing costs and risks.

Quiz 3: Competing in Global Markets