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Exam 3: Doing Business in Global Markets

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Question 61

Multiple Choice

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A favorable balance of trade occurs when the value of:

A) imports equal the value of exports.
B) the cash inflows equal the value of the cash outflows.
C) the value of imports is less than the value of exports.
D) the value of the dollar is greater than the value of the Euro.

E) B) and C)
F) A) and C)

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Question 62

Multiple Choice

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advantage in the production of coffee.

A) comparative
B) absolute
C) unprotected
D) progressive

E) A) and D)
F) All of the above

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Question 63

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While franchising is popular in the United States, it is not an accepted strategy for firms in the global market.

A major force that often impeded global trade occurs when government regulations limit the import of goods and services. We call this:

Successful multinational corporations disregard cultural differences between countries where they own property and perform business transactions.

Franchising is popular both domestically and internationally.

The purpose of forming strategic alliances is to share the costs of marketing new products and services to several countries.

When studying abroad last year, Blake found that his U.S. dollars did not stretch as far as he had hoped. Each time he exchanged U.S. dollars for euros, he gave up more U.S. dollars in exchange for less euros. The exchange rate indicates:

Sovereign Wealth Funds (a form of foreign direct investment) are investment funds controlled by governments that hold large stakes in foreign companies.

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

Last year, the nation of Kwansai reported that it had a favorable balance of trade even though it imported $11 billion worth of goods. This indicates that Kwansai:

The nation of Redland reported that its imports for the previous year were $4 billion greater than its exports. During the same period, Redland reported a favorable balance of payments. This information suggests:

Workers in the nation of Argenia prefer managers that forcefully tell employees what to do and how to do it. Conversely, employees in the U.S. prefer to participate in decision making in the workplace. This difference between Argenia workers and U.S. workers represents a management challenge for firms trading in the global market.

The president of Auto Parts of America Corporation recently testified before Congress, urging them to limit the flow of imported automobile parts into the United States. He contended that these imports were priced lower than foreign producers were charging for them in their own countries. He believes foreign producers are:

In order to prevent dumping, U.S. law stipulates that foreign firms selling similar products as domestic firms to U.S. customers must charge at least 10% more than what U.S. firms charge.

From a sociocultural perspective, foreign companies have experienced a good amount of success in adapting their products and services to the U.S. market.

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"! -Rhett heard predictions that the value of the U.S. dollar is likely to decline substantially over the next six months. This should:

The European Union created a single monetary unit to replace the national currencies of twelve member nations. This common currency is known as the:

Many U.S. companies fail to think globally.

Governments directly participate in global markets through sovereign wealth funds.