Question 1

When Manulife Financial entered the Chinese market, it made an agreement with Sinochem, a state-owned trading company. This is an example of

Accepted Answer

Manulife's agreement with Sinochem, a state-owned company, indicates a strategic alliance as it involves a long-term partnership between two organizations to achieve their mutual objectives in a foreign market.

Question 2

Licensing arrangements are arrangements

Accepted Answer

Licensing arrangements are arrangements by an owner of a process or product to allow another business to produce, distribute, or market it for a fee or royalty.

Question 3

Bob's Barbecue has expanded its operations to include several foreign countries. Bob has given individuals or organizations in those countries exclusive rights to market Bob's products. He has shared his secret recipe and trade secrets on how to produce the products. In return for this, Bob will receive a percentage of the revenues generated in each of the countries. Bob's arrangements are best described as a(n)

Accepted Answer

Bob's arrangement is a licensing arrangement, as he is giving exclusive rights to market his products in different countries and sharing his secret recipe and trade secrets in exchange for a percentage of revenues generated in each country.

Question 4

Investment Canada's mandate is

Accepted Answer

Investment Canada's mandate is to review and approve foreign investments in Canada that meet specific criteria related to national security and net economic benefit to Canada. Therefore, their focus is on attracting foreign investment to Canada.

Question 5

When Bob began exporting his famous barbecue beef he found that one country would let him bring only 1000 pounds of beef into the country each year. Bob had just discovered a(n)

Accepted Answer

The situation described is a quota, which is a type of trade barrier that limits the amount of a particular good that can be imported into a country. In this case, the country is only allowing Bob to bring in 1000 pounds of beef per year. Embargoes, local content laws, tariffs, and subsidies are all also types of trade barriers, but they each have different characteristics and effects.

Question 6

HydroCan and Ozo of Asia work together to research and develop water filtration. They have been manufacturing two water filters in the Asia plant. With regard to this strategic alliance, which of the following is true?

Accepted Answer

The strategic alliance between HydroCan and Ozo is based on mutual benefit, which means that each party agrees to cooperate to achieve common goals. A clear vision of the future is important, but it doesn't have to be held by one specific party. Financial agreements cannot guarantee partner compatibility, and it's not true that Ozo is the most influential party. Therefore, the most accurate statement is that both parties are committed to working together for mutual benefit.

Question 7

Which of the following is correct with regard to social and cultural differences?

Accepted Answer

This statement provides a specific difference between Canadians and Europeans in terms of their shopping habits.

Answer: B
 This statement is incorrect as cultural differences can often be subtle and nuanced, requiring deeper understanding and knowledge.

Answer: C
 This statement is incorrect as there are still cultural differences in clothing preferences and styles that need to be considered by manufacturers.

Answer: D
 This statement is incorrect as countries with growing populations tend to have a higher proportion of younger people, not older people.

Therefore, the correct answer is A.

Question 8

In which international organizational structure would royalties likely be paid to the exporter?

Accepted Answer

In a licensing arrangement, the exporter grants permission to a foreign partner to use their intellectual property such as patents or technology in exchange for royalty payments. Therefore, royalties would likely be paid to the exporter in this organizational structure.

Question 9

If Montrose Corp. purchases tangible assets in Germany, which international organizational structure is it using?

Accepted Answer

Montrose Corp. is engaging in foreign direct investment by purchasing tangible assets in Germany, indicating a high level of control over the operations and management of the acquired assets. This is different from the other options, which involve varying degrees of partnership or reliance on an external entity for operations in foreign markets.

Question 10

Which of the following is correct regarding the barriers to international trade?

Accepted Answer

Local content laws, embargoes, tariffs, and the distinction between command and market economies are all relevant to international trade barriers, but none of these options are described accurately in the choices provided. However, the case of Google agreeing to pay $500 million to settle a case with the U.S. government over advertising revenue earned from Canadian online pharmacies is an example of business practice laws being violated, which can be a barrier to international trade. This demonstrates how legal and regulatory frameworks can impact international business operations.

Question 11

With regard to strategic alliances, which of the following is true?

Accepted Answer

The answer of With regard to strategic alliances, which of...

Question 12

In marketing its new product in a foreign nation, Mega Computer was surprised to see the very low prices on its local competitor's models. Subsequent investigation revealed that the domestic businesses had received money from the government. Mega now knows what a(n) ________ is.

Accepted Answer

The situation described is an example of a subsidy, which is a financial benefit given by a government to a domestic business or industry in order to support and promote its growth and competitiveness. This can result in lower prices for the subsidized product, making it difficult for foreign competitors to enter the market.

Question 13

International trade improves peoples' standard of living, yet countries often put up trade barriers? Why is this?

Accepted Answer

Domestic producers may feel threatened by the competition from imports, leading them to pressure the government to put up trade barriers (like tariffs or quotas) to protect them from being outcompeted. However, these barriers ultimately hurt consumers by limiting their access to lower cost or higher quality products.

Question 14

Which of the following social or cultural differences would a Canadian exporter of refrigerators to Europe have to deal with?

Accepted Answer

European consumers often shop more frequently, sometimes daily, due to smaller living spaces and refrigerators, which impacts purchasing patterns and storage needs.

Question 15

Which of the following statements best describes the effects of subsidies?

Accepted Answer

A subsidy is essentially a form of financial assistance given to producers or consumers that lower the costs of production or purchase of goods and services. This essentially leads to a lower price of the subsidized goods, making them more attractive to consumers. This increased demand for subsidized goods can lead to an increase in domestic production, leading to a lower price of domestic goods. However, this may not necessarily raise the price of foreign goods since they are not being subsidized.

Question 16

Which type of firm is more likely to have its board of directors composed of people from many different nations?

Accepted Answer

A multinational firm operates in many different countries and therefore would benefit from having a board of directors composed of people from those various countries to ensure diverse perspectives and cultural understanding. The other options are either focused on one particular aspect of international business (such as exporting or importing), or are purely domestic and thus wouldn't require a multinational board of directors.

Question 17

In this type of international structure, the firm locates a partner who shares in the risk and in the profits.

Accepted Answer

A strategic alliance is a type of international structure in which a firm locates a partner who shares in the risk and profits. The partnership is usually formed to achieve a specific goal or mission, and each partner brings their unique strengths and resources to the table. The partners remain separate legal entities, but work together to achieve their common goal.

Question 18

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

Accepted Answer

The answer of In which international organization structure does a...

Question 19

Canada prohibits the importing of ivory from any foreign nation. This is a(n)

Accepted Answer

An embargo is a government-imposed restriction on the movement of goods or people. In this case, Canada has imposed an embargo on the import of ivory from any foreign nation, meaning that ivory cannot be brought into Canada from any other country. This is done in order to prevent the trade in illegal ivory and protect endangered species.

Question 20

Laura's Lights began shipping products to its new partner in a foreign nation only to find out that before the products would be let into the country a tax of $1.00 per unit had to be paid. This tax is known as a(n)

Accepted Answer

The tax of $1.00 per unit that Laura's Lights has to pay in order to export its products to the foreign country is known as a tariff. A tariff is a tax on imported or exported goods, often used by governments to protect domestic industries or to raise revenue.

Quiz 5: The Global Context of Business