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Exam 3: Doing Business in Global Markets

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Question 101

True/False

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Differences in electrical systems throughout the world can impair a U.S. firm's ability to sell its products to other countries.

A) True
B) False

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Question 102

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

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.

E) B) and D)
F) C) and D)

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Question 103

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__________ is the exchange of merchandise or services for other merchandise or services without the exchange of money.

Which of the following is an advantage of offshore outsourcing?

In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called:

The Tsingtao Brewing company pays a fee to AB-InBev for the right to brew and distribute Budweiser in China. Tsingtao is the licensor and the fee paid is a royalty.

Many foreign students in U.S. colleges and universities have discovered profitable opportunities by importing goods from their home countries into the United States.

Under mercantilism, the basic economic idea was to achieve a favorable balance of trade.

When a firm agrees to license its product, it gains notoriety but gives up all revenues.

Which of the following statements is a good prediction of future occurrences in global markets?

A disadvantage of creating a foreign subsidiary is the loss of control over technology and expertise used in the production of the product.

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 contacts, 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 eyewear 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 appeal of global marketing strategies is that they all involve the same amount of risk.

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:

Global trade includes the exchange of art, sports, and cultural events.

When entering a foreign market, Mountain Stream Brewery entered into an agreement with a local firm to brew and market Mountain Stream's beer. This is an example of:

According to the theory of mercantilism, a country should develop policies that encourage a favorable balance of trade.

Last year, the nation of Tigerland imported goods totaling $500 million and exported products totaling $386 million. Tigerland experienced a(n) :

Many business experts contend that __________ will likely be the growth market of the future.

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