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Exam 3: Doing Business in Global Markets

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Question 151

True/False

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China and Russia present enormous trading opportunities.However,due to political risks in those counties,foreign direct investment is halted.

A) True
B) False

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Question 152

Multiple Choice

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

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

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

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Question 153

Multiple Choice

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Labor unions and businesses in the heavy equipment industry have asked the U.S.Congress to place a tax on imported equipment in order to make it more expensive.They hope that this will allow U.S.producers to be more competitive.The U.S.heavy equipment industry appears to be seeking a(n) :

You sell paint products and accessories for painters.Recently,you were in contact with merchants from India who have taken an interest in your products and are willing to talk more about entering into a contractual deal to purchase your goods.This opportunity may be just the thing to get your business over its slump,because you learned from your Introduction to Business class that very few barriers exist between U.S.and Indian markets. Unfortunately,several trade barriers currently exist between U.S.and India.Indian retailers will only buy product from Indian wholesalers.U.S.companies find it difficult to sell directly to Indian retailers.

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

An advantage of forming a joint venture is:

Since 1975,the U.S.has had a(n) ___________.

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

CAFTA permits the United States,Canada,and Mexico to reduce trade barriers with one another while maintaining independent trade agreements with other countries.

In 2007,the government of Saudi Arabia invested about $900 billion in western companies.This strategic global investment was considered a way for Saudi Arabia to expropriate others from investing in its nation. Expropriation refers to a government taking over the assets of a non-domestic company who is doing business in its nation.Saudi Arabia,in this example,created a sovereign wealth fund,where it invested government funds in foreign companies.Sovereign Wealth Funds are a form of foreign direct investment.

A firm may export everything it produces overseas and yet not be considered a multinational. Only firms that have manufacturing capacity or other physical presence in various nations can be called multinational.

Devaluation refers to a decline in the value of a nation's currency relative to other currencies.

Explain and provide at least one example of how socio-cultural differences can create trade difficulties in world markets.

An influential foreign government official approached your firm requesting a large sum of money.In return for this bribe,the official promises that your firm will receive preferential treatment in future government contracts.You refuse the request,explaining that the _________ Act of the United States prohibits you from making such payments.

Governments directly participate in global markets through sovereign wealth funds. Foreign investment in the U.S.indicates foreign investors' preferences over investment in other countries by investing in permanent property and businesses in the U.S.

The United States imports more products and services than any nation in the world.

The __________________ is a firm that has made sizeable investments and has a physical presence in several foreign countries as a manufacturer and marketer of products and services.

A complete ban on the import or export of a specific good is called an embargo.

In the Spotlight on Small Business topic,"Finding Cracks in the Great Wall," Mitch Free of MFG.com learned that lessons in doing business with other cultures are probably an unnecessary expense.

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: