Ch 3

licensing is a popular strategy because:
Select one:
a. It increases domestic market revenues
b. The licensee has incentive to work hard and succeed because he/she has borne the cost.
c. Licensees spend little or no money to produce and market their products
d. There are seldom any long-term contractual requirements

b. The licensee has incentive to work hard and succeed because he/she has borne the cost.

A__________ represents a long-term partnership between two or more companies established to help each firm build competitive market advantages, without sharing the cost of risk.
Select one:
a. multinational cooperative
b. joint venture
c. global franchise
d. strategic alliance

d. strategic alliance

An advantage of forming a joint venture is:
Select one:
a. no shared costs or risks
b. a perpetual arrangement
c. it’s a good strategy for entering new markets where you have never had a presence
d. it’s a great way to enter new markets without divulging any marketing or management strategy to the other member of the joint venture

c. it’s a good strategy for entering new markets where you have never had a presence

The world market is approximately ______________.
Select one:
a. 7 billion potential customers
b. 300 million potential customers
c. 1 billion potential customers
d. 30 billion potential customers

a. 7 billion potential customers

Reviewing the recent experience of the United States in global markets reveals that the U.S has:
Select one:
a. a merchandise trade surplus with the rest of the world.
b. a large trade deficit with China
c. avoided becoming a debtor nation.
d. attracted very little foreign direct investment

b. a large trade deficit with China

Since1975, the U.S. has had a(n) ____________.
Select one:
a. export surplus
b. import surplus
c. trade surplus
d. trade deficit

d. trade deficit

__________occurs when a country has a monopoly on producing a product or is able to produce it at a cost well below that of all other countries
Select one:
a. Comparative advantage
b. Absolute advantage
c. Complete advantage
d. Dumping advantage

b. Absolute advantage

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 _________.

Select one:
a. protectionism
b. a low labor cost strategy
c. dumping
d. exchange rate manipulation

c. dumping

A(n)__________ refers to a complete ban on importing or exporting of products from a specific country.
Select one:
a. absolute tariff
b. health quarantine
c. quota
d. embargo

d. embargo

Export trading companies:
Select one:
a. enter into joint ventures with firms wanting to export goods and services.
b. are government owned businesses that help companies go global.
c. connect sellers in the U.S. with buyers in other nations, and help with customs, documentation and payments
d. is similar to a corporation that sells franchises.

c. connect sellers in the U.S. with buyers in other nations, and help with customs, documentation and payments

Nike_________________ its products in foreign countries, where labor is cheap and production sites are owned by other companies. This strategy allows Nike to experiment in new markets without incurring large start-up costs involved with building their own production facilities.
Select one:
a. franchises
b. licenses globally
c. pays governments to market
d. contract manufactures

d. contract manufactures

Which of the following statements is the most accurate observation regarding multinational corporations?

Select one:
a. Rather than manage manufacturing and marketing facilities overseas, most multinational corporations attempt to enter global markets by exporting domestically produced goods
b. Most multinational corporations are small- to medium-sized firms
c. Because of political and economic concerns, most multinational corporations choose to ignore investment opportunities in China and Russia
d. Only those firms with a physical presence in different nations qualify as multinational corporations.

d. Only those firms with a physical presence in different nations qualify as multinational corporations.

Firms such as McDonald’s, Pizza Hut, and KFC, have entered the global market by offering investors the opportunity to buy:

Select one:
a. licensed trade offices
b. independent exporting companies
c. foreign subsidiaries
d. franchises

d. franchises

Which of the following statements best describes the theory of comparative advantage?
Select one:
a. The best way for a nation to ensure full employment is to be totally self-sufficient rather than relying on other nations to obtain goods and services
b. Each nation should produce those goods that it can produce more efficiently and effectively than other nations, and buy the goods it cannot produce efficiently from other nations.
c. The nation that has the largest reserves of gold and other natural resources will enjoy a position of comparative advantage in trade relationships.
d. A nation should produce those goods for which domestic demand is comparatively strong, and should import those goods for which domestic demand is comparatively weak.

b. Each nation should produce those goods that it can produce more efficiently and effectively than other nations, and buy the goods it cannot produce efficiently from other nations.

The European Union created a single monetary unit to replace the national currencies of 27 member nations. This common currency is known as the:
Select one:
a. e-dollar
b. pound
c. franc
d. euro

d. euro

A major advantage of licensing is:
Select one:
a. these arrangements almost always lead to a joint venture.
b. the bulk of the revenues gained by the licensee come back to the licensor.
c. your company name does not need to be associated with the product in a foreign country.
d. very little cost to the licensor.

d. very little cost to the licensor.

Companies may have several reasons for creating joint ventures. Which of the following statements is one reason why firms may decide to form a joint venture?

Select one:
a. They may wish to contract manufacture with each other
b. They will save time to market if they pool their technological know-how.
c. These arrangements are always less risky than strategic alliances.
d. These arrangements avoid the temptation to tap into marketing and management expertise of the parent companies

b. They will save time to market if they pool their technological know-how.

The largest importer in the global market today is:
Select one:
a. Japan
b. China
c. Germany
d. U.S.

d. U.S.

The 3 countries in NAFTA:
Select one:
a. Mexico, Brazil, Venezuela
b. Britain, France, Germany
c. Panama, Belize, Costa Rica
d. U.S., Canada, Mexico

d. U.S., Canada, Mexico

__________is an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell the parent company’s product or service to others in a given territory in a specified manner.

Select one:
a. franchising
b. contract manufacturing
c. import trading
d. export trading

a. franchising

__________is the practice of selling a product in foreign countries for a lower price than the good is sold in the producing country.
Select one:
a. Deflating
b. Countertrading
c. Inflating
d. dumping

d. dumping

An unfavorable balance of trade occurs when the value of:
Select one:
a. Imports equal the value of exports
b. Imports exceed the value of exports
c. Cash inflows are equal to the value of cash outflows
d. Exports exceed the value of imports

b. Imports exceed the value of exports

When a company’s strategy is __________ the firm makes arrangements for a foreign manufacturer to produce the product. The domestic company’s label and/or trademark are attached to the completed product.

Select one:
a. franchising
b. contract manufacturing
c. import trading
d. export trading

b. contract manufacturing

The fee paid to a firm in a licensing agreement that gives another firm the right to manufacture their product or use its trademark is called:
Select one:
a. a joint venture.
b. a royalty
c. a licensee.
d. an outsource agreement

b. a royalty

One advantage of free trade is:
Select one:
a. jobs are shifted to low-wage global markets.
b. service jobs are moved overseas
c. advanced production operations are built in low-wage countries
d. innovation for new products occurs which keeps firms competitively challenged

d. innovation for new products occurs which keeps firms competitively challenged

Currently boasting a $1.6 billion Ketchup brand, the H.J. Heinz Company is flying high with a 44%increase in its sales of Indonesian based ABC, a soy sauce company that it owns. ABC is a _____________ of Heinz.
Select one:
a. Licensee
b. Joint venture
c. export partner
d. foreign subsidiary

d. foreign subsidiary

A disadvantage of licensing is:
Select one:
a. very costly for the licensor.
b. the licensee can decide to end the contract at a moment’s notice.
c. . your company’s image is never permitted to be associated with the product, even though you are the developer.
d. the licensee may decide to use the expertise you have developed, break the agreement, and begin producing the product on his/her own.

d. the licensee may decide to use the expertise you have developed, break the agreement, and begin producing the product on his/her own.

A__________ is a partnership in which two or more companies (often from different countries) join together and share the risk and costs in order to undertake a major project.
Select one:
a. multinational cooperative
b. joint venture
c. franchisee transfer
d. recruit affiliation

b. joint venture

A form of foreign direct investment, where a domestic company purchases a company in a foreign country to produce a similar product or service is a:
Select one:
a. licensor
b. joint venture
c. foreign subsidiary
d. host company

c. foreign subsidiary

The_____________ is the total value of a nation’s exports compared to its imports measured over a specific period of time.

Select one:
a. balance of payments
b. balance of trade surplus
c. balance of trade deficit
d. balance of trade

d. balance of trade

Afavorable balance of trade occurs when the value of:
Select one:
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

c. the value of imports is less than the value of exports

A________ tariff is designed to raise the price of imported products so that domestic goods are more competitively priced.

Select one:
a. protective
b. restrictive
c. progressive
d. revenue

a. protective

In volume of exports, the three leading nations are:
Select one:
a. U.S., German & China
b. U.S., Japan, Canada
c. China, India, Japan
d. England, China, U.S.

a. U.S., German & China

________tariffs are designed to raise money for the government.

Select one:
a. regulatory
b. revenue
c. price
d. profit

b. revenue

The legislation that prohibits U.S. businesses from making "questionable" or "dubious" payments to foreign officials, to secure business contracts is the _____________.
Select one:
a. Foreign Corrupt Practices Act
b. Foreign Anti-Trust Act
c. Anti-Collusion Law
d. United Nation Proper Business Conduct Law

a. Foreign Corrupt Practices Act