Deck 4: Understanding the Global Context of Business

Question 1

What are products that are created domestically and transported for sale abroad?

A) Dumped goods
B) Exports
C) Imports
D) Buy backs
E) Domestic goods

Answer 1

B
Explanation:B)Exports are goods that are made in a country and sold in another country.

Question 2

Which of the following resulted from NAFTA?

A) Companies from other countries, such as Japan, have made fewer business investments in North America.
B) U.S. exports to Mexico have decreased.
C) Mexican imports to the United States have increased.
D) More jobs have been created than what was originally predicted.
E) More U.S. jobs were eliminated than what was originally predicted.

Answer 2

C
Explanation:C)Many positive predictions regarding what would result from NAFTA have materialized. Mexico can export cars without tariffs to North and South America, Europe and Japan.

Question 3

Under which of the following treaties are Canada, the United States, and Mexico gradually eliminating tariffs and all other trade barriers?

A) The EURO Agreement
B) The Pan-American Agreement
C) The North American Free Trade Agreement
D) The General Agreement on Tariffs and Trade
E) The G-3 Free Trade Agreement

Answer 3

C
Explanation:C)NAFTA removed some trade barriers between the United States, Canada, and Mexico in 1994.

Question 4

The primary purpose of the World Trade Organization is to impose tariffs on imported products.

Question 5

What are products that are created abroad and then transported and sold domestically?

A) Dumped goods
B) Exports
C) Imports
D) Buy backs
E) Domestic goods

Question 6

An import is a product made or grown abroad but sold domestically.

Question 7

Which of the following treaties sought to eliminate trade barriers such as tariffs and quotas?

A) United Nations Development Assistant Plan
B) North American Free Trade Agreement
C) General Agreement on Tariffs and Trade
D) General Agreement on Trade in Services
E) European Union Stability and Growth Pact

Question 8

Which organization was developed to promote economic and cultural cooperation among Asian countries?

A) ASEAN
B) UAS
C) EU
D) NAFTA
E) ECOWAS

Question 9

NAFTA regulates trade between the United States, Europe, and Japan.

Question 10

What caused manufacturing jobs to move from Mexico to China in the late 1990s?

A) Increases in Mexico's cost of living and wages
B) Modernization of facilities in China
C) Improved international travel abilities
D) Increased use of technology in China
E) Higher levels of education and professional jobs in Mexico

Question 11

Which organization created the classification of countries based on per capita income?

A) The World Bank
B) The World Trade Organization
C) The International Monetary Fund
D) The European Union
E) The North American Free Trade Agreement

Question 12

What organization was founded in 1967 for economic, political, social, and cultural cooperation in the Asia Pacific region?

A) SEATO
B) ASEAN
C) CENTO
D) OAS
E) WTO

Question 13

Where is the world's largest free marketplace?

A) North America
B) South America
C) Southeast Asia
D) Europe
E) Middle East

Question 14

How does globalization of business benefit shareholders of an organization?

A) Through easier and faster international travel
B) Through the elimination of dieses in developing nations
C) Through increased and improved profitability
D) Through lower taxes between trade partners
E) Through more distinct cultural heritage

Question 15

Which country is the world's largest marketplace and most stable economy?

A) The United States
B) Canada
C) Germany
D) Japan
E) China

Question 16

Which country in the Pacific Asia region has one of the world's largest economies?

A) South Korea
B) China
C) Indonesia
D) Japan
E) Taiwan

Question 17

Which of the following is the name for the economic value of all of the products that a country exports minus the economic value of its imports?

A) Balance of foreign competition
B) Balance of domestic competition
C) Balance of trade
D) Balance of payments
E) Balance of supply and demand

Question 18

The World Trade Organization (WTO)was created to encourage international trade.

Question 19

The purpose of the General Agreement on Tariffs and Trade is to reduce trade barriers.

Question 20

Globalization refers to the process by which countries around the world are becoming more self-sufficient.

Question 21

A comparative advantage exists when a country can produce something more cheaply and/or of higher quality than any other country.

Question 22

Why did the European Union develop the euro as its common currency?

A) To better compete with the U.S. dollar
B) To improve the integration of the economic system between member countries
C) To be able to outsource work to countries where wages are lower
D) To integrate a quality standard of production between member countries
E) To speed the issue of payment between member and nonmember countries

Question 23

When the value of one country's currency relative to that of another varies with market conditions, which of the following exists?

A) Floating exchange rate
B) Fixed exchange rate
C) Indexed exchange rate
D) Flat exchange rate
E) Balanced exchange rate

Question 24

The value of the U.S. dollar relative to the value of the British pound fluctuates with market conditions. What is this type of exchange rate?

A) Floating
B) Fixed
C) Indexed
D) Adjusted
E) Monitored

Question 25

With what type of exchange rate does the value of a country's currency remain constant relative to that of another country?

A) Floating
B) Indexed
C) Fixed
D) Adjusted
E) Deflated

Question 26

Which of the following refers to the situation when a country's imports exceed its exports?

A) Balance of payments
B) Balance of trade
C) Trade deficit
D) Trade surplus
E) Trade advantage

Question 27

The single largest trading partner of the United States is China.

Question 28

What is the result when a country can produce goods more efficiently or better than other nations?

A) Balance of trade deficit
B) Absolute advantage
C) Increased globalization
D) Comparative advantage
E) National competitive advantage

Question 29

National competitive advantage derives from four conditions, one of which is factor conditions. What do factor conditions include?

A) Customers, suppliers, and labor
B) Government quotas and subsidies
C) Product quality, productivity, and profits
D) Labor, capital, entrepreneurs, and physical resources
E) Strategies, structures, and rivalries

Question 30

Today, fixed exchange rates are the norm for most major nations of the world.

Question 31

The United States has large trade deficits with Japan, China, and Mexico. This means that the United States has imported more from them than what they have purchased from us.

Question 32

What is the common currency for nations who are members of the European Union?

A) Deutsche Mark
B) Euro
C) Dollar
D) Lira
E) Franc

Question 33

If the United States exports more to the Netherlands than it imports from the Netherlands, the United States has a trade deficit with the Netherlands.

Question 34

What condition will be created when gaining a national competitive advantage by developing strong local or regional suppliers?

A) Factor conditions
B) Strategies and structures
C) Demand conditions
D) Rivalries
E) Related and supporting industries

Question 35

Which of the following is the name for the overall flow of money into or out of a country?

A) Exchange rate
B) Trade rate
C) Balance of exchange
D) Balance of payments
E) Balance of trade

Question 36

Currently, a majority of U.S. imports come from Canada, Japan, Mexico, and China.

Question 37

Which of the following BEST describes a positive trade balance?

A) The economic condition in which a country's exports exceed its imports
B) The economic condition in which a country's imports exceed its exports
C) The economic condition in which a country's inflow of money exceeds its outflow
D) The economic condition in which a country's outflow of money exceeds its inflow
E) The economic condition in which a country's natural resources exceed its human resources

Question 38

What is the difference between balance of trade and balance of payments?

Question 39

What typically happens to a country's balance of trade as the value of its currency falls?

A) It improves.
B) It declines.
C) It remains the same.
D) It fluctuates drastically.
E) It fluctuates moderately.

Question 40

Which of the following exists when a country can produce something more cheaply and/or of higher quality than any other country can?

A) Monopolistic advantage
B) National competitive advantage
C) Resource advantage
D) Absolute advantage
E) Comparative advantage

Question 41

In assessing a country's national competitive advantage, what is meant by factor conditions?

Question 42

What are the four components of national competitive advantage?

Question 43

Which of the following is NOT considered an international organizational structure?

A) Independent agents
B) Licensing arrangements
C) Foreign direct investments
D) Branch office
E) Exporters

Question 44

Which of the following provides exclusive rights to produce a product for another firm, thereby avoiding transportation costs and tariffs?

A) Licensing arrangement
B) Strategic alliance
C) Foreign direct investment
D) Independent agent
E) Branch office

Question 45

Which of the following types of firms design, produce, and manufacture products in many nations?

A) Multinational firms
B) Importing firms
C) Domestic firms
D) International firms
E) Exporting firms

Question 46

Which of the following buys products in foreign markets and then sells them for resale in its home country?

A) Importer
B) Exporter
C) Multinational firm
D) International firm
E) Direct foreign investor

Question 47

Which of the following will allow one firm to use another firm's brand name, operating procedures or technology?

A) A foreign direct investment
B) A licensing arrangement
C) A branch office setup
D) A strategic alliance
E) An import-export relationship

Question 48

What is a difference between an international firm and a multinational firm?

A) Multinational firms design, produce, and market products in many nations, whereas international firms are based primarily in one nation.
B) International firms design, produce, and market products in many nations, whereas multinational firms are based primarily in one nation.
C) International and multinational firms are the same thing.
D) Multinational firms are concerned primarily with foreign markets, whereas international firms are concerned primarily with the domestic market.
E) International firms are concerned primarily with foreign markets, whereas multinational firms are concerned primarily with the domestic market.

Question 49

Which statement is true regarding independent agents?

A) They represent one firm at a time.
B) They usually specialize in a particular product.
C) They act as sales representatives.
D) They are usually based at domestic offices.
E) They do not monitor or address customer satisfaction.

Question 50

Discuss the differences between absolute advantage and comparative advantage.

Question 51

The practice of using suppliers in foreign countries to perform business processes that were previously done in the United States is called

A) outsourcing.
B) adapting.
C) offshoring.
D) exporting.
E) importing .

Question 52

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

A) Exporting arrangements
B) Strategic alliances
C) Importing arrangements
D) Licensing arrangements
E) Independent agents

Question 53

Ford, an American car company, purchased Volvo, which is based in Sweden. What is this an example of?

A) A multinational firm
B) An independent agency
C) A licensing arrangement
D) A foreign direct investment
E) A strategic alliance

Question 54

Which of the following denotes the international organization strategy of finding a partner in the country in which a company would like to conduct business?

A) Opening a branch office
B) Developing a strategic alliance
C) Forming an independent agency
D) Outsourcing
E) Investing directly in a foreign venture

Question 55

Which of the following organizations is a firm that makes products in one country and then distributes and sells them in others?

A) Importer
B) Exporter
C) Multinational firm
D) International firm
E) Direct foreign investor

Question 56

Explain why fluctuations in exchange rates have significant influence on the balance of trade.

Question 57

Why should companies conducting international operations be concerned about exchange rate fluctuations?

Question 58

Which of the following helps to create a more visible public presence in foreign countries and customers?

A) Developing a strategic alliance
B) Outsourcing
C) Licensing products
D) Investing directly in a foreign venture
E) Opening a local branch office

Question 59

Which of the following types of payments are usually received by an exporter as an ongoing payment calculated as a percentage of the license holder's sales?

A) Flat fees
B) Royalties
C) Agent fees
D) Subsidies
E) Direct investments

Question 60

Explain a floating exchange rate.

Question 61

Those cultures that place a higher value on social relationship, quality of life, and concern for others instead of money and assertiveness have which type of orientation behavior?

A) Uncertainty avoidance
B) Aggressive goal
C) Time
D) Passive goal
E) Power tolerance

Question 62

What is the shared system of symbols, beliefs, and values of a country known as?

A) Organizational structure
B) Culture
C) Rules
D) Norms
E) Leadership

Question 63

What are three basic levels of involvement available for a firm that decides to conduct business internationally?

Question 64

Explain how a firm may have more direct control with a branch office than it does over agents or license holders.

Question 65

Which of the following is a person's belief about the importance of an individual compared to the importance of a group?

A) Social orientation
B) Power orientation
C) Uncertainty orientation
D) Goal orientation
E) Time orientation

Question 66

Which of the following allows firms to focus on core activities and reduce cost by moving aspects of the business to areas where costs are low?

A) Outsourcing
B) Adapting
C) Offshoring
D) Exporting
E) Importing

Question 67

What are two specific reasons why a company might decide NOT to conduct business internationally?

Question 68

In a licensing arrangement, firms choose foreign organizations to manufacture their products in another country in return for a fee plus royalties.

Question 69

What is the advantage for a business who uses offshoring in their manufacturing process?

A) Decreased costs
B) Improved quality
C) Decreased production time
D) Increased employee moral
E) Decreased employee turnover

Question 70

Strategic alliances give firms greater control over foreign activities than do agents and licensees.

Question 71

Which of the following is an indication that people accept the authority of superiors simply because of their position in the organization?

A) Power respect
B) Power tolerance
C) Power acceptance
D) Power uncertainty
E) Uncertainty avoidance

Question 72

Cultural values and beliefs are often unspoken.

Question 73

If you have given another company in another country the right to produce your company's product, you are engaging in a licensing arrangement.

Question 74

Transportation costs have relatively little impact on a domestic firm's decision to go international when compared to other possible factors.

Question 75

The terms outsourcing and offshoring can be used interchangeably, as they have the same meaning.

Question 76

What type of societies tend to prefer reward systems that link pay with performance of individual employees?

A) Collectivist
B) Power respect
C) Power tolerance
D) Uncertainty avoidance
E) Individualistic

Question 77

A company with high demand for its product in a particular foreign market that is associated with high transportation costs would tend to arrange a strategic alliance over any other international organization structure.

Question 78

International firms conduct a good deal of their business abroad and may even maintain overseas manufacturing facilities.

Question 79

Which of the following indicates the belief people hold about power and authority in an organization?

A) Individualism
B) Social orientation
C) Collectivism
D) Power orientations
E) Uncertainty orientation

Question 80

Define licensing arrangement and strategic alliance and discuss their relative merits.