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Exam 3: Doing Business in Global Markets

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Question 51

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An unfavorable balance of trade occurs when the value of:

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

E) A) and C)
F) None of the above

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Question 52

Multiple Choice

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

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

E) A) and B)
F) None of the above

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Question 53

Multiple Choice

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Jake's family business sells and installs tile in bathrooms and kitchens. He is convinced that heater coils under bathroom floor tiles is the best thing since sliced bread. In his effort to avoid domestic competition, he sets his sights on the vast Chinese market. Much to his surprise, most Chinese people do not yet have indoor plumbing and are accustomed to government-run communal baths. Jake realizes that his global marketing effort is hampered by:

One advantage of offshore outsourcing is that consumers benefit from lower prices.

The U.S. and China continue to spar over sociocultural issues, such as human rights, and economic and financial issues, such as the value of the Chinese yuan against the U.S. dollar. U.S. diplomats assert that these differences continue to bolster China's favorable balance of trade and increase the U.S. trade deficit. The trade protectionist policy exhibited by the Chinese is similar to an economic policy known as ____________ that was followed during the 17th and 18th centuries. This policy resulted in a flow of money to the country that sold the most globally.

Denmark requires foreign companies that sell butter in Denmark to sell it in cubes, not tubs. This type of requirement is known as a:

The purchase of U.S.-based Anheuser-Busch by Belgian brewer InBev is an example of foreign direct investment.

The _____________ is the total value of a nation's exports compared to its imports measured over a specific period of time.

The main goal of the General Agreement on Tariffs and Trade (GATT) was to reduce trade restrictions among world nations.

American businesspersons often fail to adapt to foreign markets because they feel that American culture is superior to other cultures in the world.

International trade is not limited to multinational corporations. Small businesses do about 30% of all exporting out of the U.S.

One reason countries trade with other countries is that even technologically advanced nations cannot produce all the products their people want and need.

A fast-growing form of foreign direct investment is sovereign wealth funds (SWFs) . Why do these investments by governments with surplus cash flows worry trade experts?

A firm desiring to enter a foreign market with a limited investment should consider licensing.

For a firm to be considered a multinational corporation, which of the following conditions must be true?

Japanese automobile producers sold more of their Japanese production overseas than they sold in Japan. Their business strategy emphasizes:

A free-trade agreement is likely to result in:

With all its perception of opportunity, the expansion of global trade is still plagued by terrorism, nuclear proliferation, rogue states, and other issues.

McGowan Corporation of Ireland and Enomoto Enterprises based in Japan recently produced a new electric car with rechargeable batteries that can be driven at high speeds for long distances. They have shared the investment, each contributing important technological expertise to the effort. These firms entered into a(n) ____ to build this car.

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.