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Exam 3: Doing Business in Global Markets

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Question 51

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The U.S. government is reducing Export Assistance Centers due to businesses' lack of interest in their support.

A) True
B) False

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Question 52

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In the past, foreign companies have adapted to U.S. culture more easily than U.S firms have adapted to foreign cultures.

A) True
B) False

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Question 53

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

The introduction of standardized international laws regulating business organizations has greatly simplified global trade.

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

The country of New Florentina requires that all imported beverages be contained in clear, well-labeled recyclable glass bottles. Several beverage producers refuse to trade with New Florentina because the cost of glass bottles cuts into their profits to the point where it just isn't worth it. New Florentina has created a nontariff barrier.

Recently the United States has experienced its highest trade deficits with China.

Japanese auto manufacturers, such as Toyota and Nissan, have invested billions of dollars in the United States by building new factories, warehouses, and offices. These investments increase "favorably" the balance of payments for the United States.

With respect to free trade, many U.S. citizens prefer "fair trade, not free trade."

Mini-Case Since he was five years old, Rhett Tenna struggled with poor eyesight. He suffered through all the names that went along with wearing eyeglasses for most of his young life. Rhett eventually switched from traditional eyeglasses to contact lens, but he always wondered why glasses were considered to be "ugly" and not fashionable. After graduation from college, Rhett set out on a lifelong goal: to make eye wear synonymous with high fashion. He opened a specialty store called "The Eyes Have It." His marketing plan was to remove the social stigma of wearing glasses, and replace it with a sense of flair and high fashion. From the day he opened his first store, Rhett's plan met with resounding success. Today, "The Eyes Have It" has grown from that single outlet to a medium-sized company with dozens of stores located in six states, and a manufacturing plant that turns out designer frames. A recent internal audit, however, suggested a problem that Rhett had not anticipated. The study indicated that the U.S. market is just about saturated and growth of "The Eyes Have It" stores will be very limited. The audit concerned Rhett until he recognized an untapped market existed overseas. If people all over the world have the same problem, the global market opportunities are fantastic! All in favor of going global say: "The Eyes Have It"! -Recently, Rhett contracted with Lon Ruise, a popular U.S. movie star to market his high-end sunglass line. Shortly after Rhett's company beginning selling the line, he heard that you could buy very good replicas in Malaysia. Which of the following statements describes a course of action that Rhett can take:

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

Global markets rely on the U.S. dollar as the universal currency.

Offshore outsourcing is another term used to describe the act of U.S. firms selling their domestically manufactured goods to foreign customers.

The growth of the Internet and e-commerce enables companies to enter global markets without using the traditional distribution channels.

One goal of the World Trade Organization (WTO) is to increase national subsidies on agricultural products.

An exchange rate is the value of one nation's currency relative to the currencies of other nations.

A major goal of the Mercosur common market consisting of several South American countries is to develop a common currency.

The All-Sports Gaming Company has avoided contract manufacturing abroad due to the significant start-up costs in buying land and setting up its own manufacturing plants.

Which of the following is considered when calculating a country's balance of payments?

The is the difference between money flowing into a country from exports, and money leaving the country for imports, plus money flows coming from other factors such as tourism, foreign aid, military expenditures, and foreign investment.