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Exam 3: Doing Business in Global Markets

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Question 41

True/False

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Sociocultural, economic, and legal/regulatory hurdles cause significant challenges in global trade.

A) True
B) False

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Question 42

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Johnny Appleseed and Company ships all of the apples from its orchards in the Pacific Northwest to a single buyer in Japan. The firm's entire profits are derived from this international transaction. Johnny Appleseed and Company is

A) an example of a multinational corporation.
B) not a multinational corporation.
C) contributing to the U.S. balance of trade deficit.
D) benefitting greatly from the establishment of NAFTA.

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

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Question 43

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The value of German exports coming to the United States is greater than the value of the goods Germany buys from the U.S. This results in a U.S. trade deficit with Germany.

One advantage of free trade is

Trade protectionism

Mini-Case Ever since he was five years old, Rhett Tenna has had poor eyesight and as an eyeglass wearer he suffered through all the names that went along with it. Rhett eventually switched from glasses to contacts, but he always wondered why his glasses were not fashionable. After graduation from college, Rhett set out on a lifelong goal: to make eyewear synonymous with 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 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)

Many U.S. companies fail to think globally.

________ tariffs are designed to raise money for the government.

________ is the practice of selling a product in foreign countries for a lower price than the good is sold in the producing country.

Countertrading is a form of exchange where firms will put certain products "on the counter" offering them to foreign customers at a cheaper price than what they would offer them to domestic customers.

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

The ________ represents the first attempt to establish a truly global mediation center to resolve international trade disputes.

An advantage of forming a joint venture is

Restrictive standards that detail exactly how a product must be sold in a country are examples of protective tariffs.

A concern with the second wave of offshore outsourcing is greater job loss for service-sector working Americans.

When it comes to ethics, successful American businesspeople are encouraged to follow the policy of "when in Rome, do as the Romans."

A disadvantage of licensing is

In 1999, the European Economic Community adopted a common currency known as the euro.

A corporation that manufactures or markets its products in many different countries and has multinational stock ownership and management can be classified as a multinational corporation.

Trade protectionism is the use of government regulations to encourage the import of goods and services.