Question 1

Rhett spoke with a Korean company that said it might be interested in producing his products in their market. They would pay him a royalty for what they sold and would bear all the start-up expenses of this effort. This Korean company is proposing a(n)
A) subsidiary agreement.
B) joint venture.
C) export trading company.
D) licensing agreement.

Accepted Answer

Licensing is an agreement in which a producer allows a foreign company to produce its products in exchange for royalties.

Question 2

Rhett heard predictions that the value of the U.S. dollar is likely to increase substantially over the next six months. This should
A) hurt his overseas efforts since his prices will be very high.
B) stop overseas efforts because dollars will not be negotiable.
C) help his overseas efforts since his prices will be lower.
D) force him into accepting no other currency except the dollar.

Accepted Answer

An increase in the value of the dollar will make American goods more expensive because it takes more foreign currency to buy U.S. goods. Foreign customers will exchange more of their currency for U.S. dollars.

Question 3

Next year, in order to cut both time and cost in getting new styles to global markets, Rhett plans to ________ a few of his designer lines. Rhett will send his designs to manufacturers in India, Bangladesh, and Turkey who will produce the eyeglasses in facilities in their respective countries. This will not only reduce the cost of labor, it will help Rhett reach regional markets in a timely manner.
A) license
B) contract manufacture
C) franchise
D) subsidize

Accepted Answer

Contract manufacturing is when a foreign manufacturer produces and private-labels goods for a domestic company. Contract manufacturing enables a company to experiment in a new market without heavy start-up costs. It also can significantly reduce the cost of labor.

Question 4

Although he is confident of success, Rhett is concerned that social, cultural, and economic differences in other nations may create some problems. He believes he should adapt his approach to these differences rather than trying to force the "American way" on foreign consumers. Rhett's attitude suggests that he wants to avoid a(n) ________ approach to business.
A) ethnocentric
B) flexible
C) ethical
D) countercultural

Accepted Answer

Ethnocentricity is the belief that the American way of doing things is superior to everyone else's.

Question 5

At first, Rhett believed he should maintain all of his manufacturing within the United States and simply export his designer frames to foreign sellers. However, he lacked expertise in exporting. Rhett decided to see if the federal government could provide any help by contacting a(n)
A) World Trade Center.
B) Export Assistance Center.
C) Federal Reserve Bank.
D) U.S. Export Savings Bank.

Accepted Answer

Export Assistance Centers were established by the federal government to provide hands-on exporting assistance and trade-finance support to small and medium-sized businesses.

Question 6

The company was informed by the Taiwanese Ministry of Trade that they could only export 1.1 million pairs of eyeglasses to the Taiwanese market during a given year. The Taiwanese have imposed a(n)
A) revenue tariff.
B) embargo.
C) import quota.
D) limit order.

Accepted Answer

The term that describes the limiting of the number of products in certain categories that can be imported is an import quota.

Quiz 3: Doing Business in Global Markets

Rhett spoke with a Korean company that said it might be interested in producing his products in their market. They would pay him a royalty for what they sold and would bear all the start-up expenses of this effort. This Korean company is proposing a(n)

Rhett heard predictions that the value of the U.S. dollar is likely to increase substantially over the next six months. This should

At first, Rhett believed he should maintain all of his manufacturing within the United States and simply export his designer frames to foreign sellers. However, he lacked expertise in exporting. Rhett decided to see if the federal government could provide any help by contacting a(n)

The company was informed by the Taiwanese Ministry of Trade that they could only export 1.1 million pairs of eyeglasses to the Taiwanese market during a given year. The Taiwanese have imposed a(n)