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Exam 3: Doing Business in Global Markets

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Question 21

True/False

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A United States firm recently won a large contract with a company in Bangladesh by providing government officials and company officials with American cars and promises to provide monetary gifts in exchange for the business.Fortunately,U.S.Law,under the Foreign Corrupt Practices Act permits U.S.companies to operate in this manner. The Foreign Corrupt Practices Act defines bribery or payments to foreign businesses or the management of foreign businesses in exchange for business contracts as illegal.

A) True
B) False

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Question 22

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Some firms will practice "dumping" in order to gain a foothold in a new market. By offering products at a cheaper price than in domestic markets,foreign-based producers can attract customers who would have otherwise purchased domestically made goods.This strategy is illegal in the United States.

A) True
B) False

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Question 23

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The same proven management styles used by companies in their domestic operations can be employed in their foreign subsidiaries. In some countries management has more position power where they make unilateral decisions.In other countries,decision-making is a shared responsibility between management and workers.

Trade experts' concerns about trading with China include:

Currency fluctuations can be an advantage to firms trading in the global market.

Since the approval of the North American Free Trade Agreement (NAFTA),the value of U.S.exports to Mexico and Canada has increased.

The Ozark Bike Company recently entered into an agreement with a large Japanese retailer to distribute its bicycles in Japan.Ozark Bike Company sees itself in a favorable position because the Yen is gaining strength compared to the U.S.dollar making it cheaper for Japanese customers to buy U.S.products. A low value of the dollar means a dollar is traded for less foreign currency.A high value of the dollar means a dollar is trading for more foreign currency.When the U.S.dollar is losing strength against the foreign currency,it is cheaper for foreign customers to buy U.S.products.In this case,the customer will trade fewer yen for the value of the U.S.bicycles.

Technological differences can prevent some companies from doing business abroad.

The only deposits of a rare and sought after mineral known as Yuksporite are found in Russia.Since no other nation has deposits of Yuksporite,Russia has a(n) ___________ in this mineral.

According to Reaching Beyond our Borders box,the McDonald's Corporation is king of franchising due to its ability to adapt to other cultures.

In volume of exports,the three leading nations are:

The three countries participating in NAFTA are:

The U.S.government has announced a 5 million-pound annual limit on beef imported from Argentina.This type of trade restriction is called a(n) :

The principle of mercantilism encouraged nations to keep economics separate from politics. Mercantilism resulted in tariffs,which basically are taxes on imports,thus making imported goods more expensive to buy.This helps to achieve the economic goal of a favorable balance of trade.

______________ was an 18^th century belief that a nation should try to sell more goods to other nations than it buys from them.

A firm desiring to enter a foreign market with a limited investment should consider licensing. An advantage of licensing is that licensors spend little money to produce and market their products.These costs come from the licensee's pocket.

An American firm recently criticized a Chinese steel producer for charging a lower price for its steel in the United States than it charges in China.If proven to be true,the Chinese firm has engaged in ________.

People from other nations sometimes comment on the ethnocentric attitudes of U.S.business people.This indicates that American business people:

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 began 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?

The benefits of protective tariffs are: