ch3 PDF

ob -b ob -b ob -b -b -b
w.u w.u w.u .uob w.u

ob
ww ww ww www w w
h.c om h.c om h.co

m
h.c om .c om
b-b b-b - b b-b -bh
w .uch3
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w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
Student: ___________________________________________________________________________
m m m m
h.co h.co h.co h.co h.c om
b - b b- b b - b -b b-b
o .uo of how society chooses
o ob o
w w.u1. Global business is w
thewstudy w w.u to employ resources
w to.uproduce goods and services
w w w.u and
w w w w
distribute them for consumption among various competing groups and individuals. w
True False
h.c om h.com h.c om h.c om h.co

m
o b-b .uob
- b
.uo b-b o b-b .uo b- b
w w.u w w w.u w
w ww ww ww
2. Global business is any activity that seeks to provide goods and services to others across national borders
ww
while operating at a profit.
com
True False com com com om
h. h. h. h. h.c
.uo b-b o b-b .uo b-b .uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
3. One disadvantage of global business is that labor is more expensive overseas.
.com
True False .com .com h.c om h.c om
-bh b-b
h
b-b
h
b-b b-b
w .uob w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww
4. One advantage of engaging in business globally is the businesses have entirely new markets in which to sell
b .com
their products.
h bh .com b h .com b h.com b h .com
ob- False
.uTrue .uob
-
.uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
m
.co market is smaller bthan m m om om
5. The hglobal
b h.cothe American market.b h.co h.c -bh
.c
.uTrue
-
ob False .uob
-
.uob
- o b-b ob
w w w w.u w .u
ww ww ww ww ww
m m m m om
- b h.co says that technology
6. Friedman - b
o of the drivers of theh."flattening
his.cone - b co of the world".
- b h.co -bh
.c
ob ob ob ob ob
w.uTrue False w.u w.u w.u w .u
ww ww ww ww ww
om
.c is buying productsbfrom
.c om .c om om om
7. Exporting
-bh - h another country.ob-bh bh.c b-b
h.c
o b o b ob- .uo
w.uTrue False w.u w.u w.u w
ww ww ww ww ww
com
. is buying productsbfrom
. com . com h.co
m
h.c om
o b -bh
8. Importing
o b - h another country.ob-bh o b - b b-b
.u .u .u w.u .uo
www True False ww w ww w w w ww
w
m .com om om .com
bh.co bh h.c h.c h
.uo b - o b- ob-b ob-b .uo b- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
9. Free trade is the movement of goods and services among nations without political or economic trade barriers.
.com
True False .com .com .com .com
ob -bh -bh -bh -bh -bh
w.u .uob w.u
ob
w.u
ob
w.u
ob
ww www w w w w ww
10. Global business is not particularly competitive because the market is so big.
.com
True False
h h.com .comh h.com h.c om
.uo b-b .uob-b o b-b ob-
b
o b-b
w w w.u w.u w.u
ww ww w w ww w w
11. Small businesses account for most of U.S. exports.

.com
True hFalse h.co
m
h.c om h.c om h.co
m
o b-b .uob
-b
w w.u w w w.u w
w ww ww ww ww
12. Economics tells us that it is a poor idea to trade globally.
.com
True bhFalse bh.c
om
bh.c
om h.c om h.c om
.uob
-
.uob
-
.uob- .uo b-b .uo b-b
w w w ww w w
w ww w ww ww
13. Global trade

m is the exchange of.cgoods
m and services across.cnational
m borders.
.c o
True-bhFalse o o h.c om h.c om
ob -bh -bh b-b b-b
w.u w .uob w.u
ob
w.u
o
w .uo
ww ww ww ww ww
14. Comparative advantage theory states that some countries have a monopoly on producing a specific product.
.com
True-bhFalse bh .com b h .com b h.com b h .com
- - - -
w .uob w .uob w .uob w .uob w .uob
ww ww ww ww ww
15. Comparative
om advantage theory states that a country should osell to other countries those products that it
h
produces
b .cmost effectively and h .com
efficiently.
b b h .c m b h .com b h .com
ob- False
.uTrue .uob
-
.uob
-
.uob
-
.uob
-
w w w w w w w w w w
w w w w w
b h .com b h .com b h .com b h .com b h .com

16.
obAbsolute
- advantage occurs
ob-when a country has .aumonopoly
ob- on producing a specific
- product or is able otob-
w .uproduce it more w .uthan
efficiently all other w
countries. w.uob w.u
ww ww ww ww ww
True False
m om om om om
bh.co h.c h.c bh.c h.c
o b - o b-b o b-b ob- .uo b-b
w w.u17. Global trade onlywincludes
w.u the trade of manufactured
w w.u goods. w.u w
w w w ww ww
True False
bh .com h.c om h .com h.co

m
h.com
o b- .uo b-b .uo b- b
o b - b
.uo b-b
w w.u18. Every country haswawcomparative w wsomething. w w.u w
w w advantage
w in w ww
True False
m .com om om .com
bh.co bh h.c h.c h
.uo b - o b- o b-b ob-b .uob- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
19. Many Middle Eastern countries have a comparative advantage in the production of oil.
.com
True False
h .com
h .com .com .c om
b-b b-b -bh b-b
h -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
20. The balance of trade is a nation's ratio of imports to exports.
.com
True False
h .com
h .com
h h.com h.c om
.uo b-b .uo b-b o b-b ob-
b
o b-b
w w w.u w.u w.u
ww ww w w ww w w
21. A trade surplus occurs when the value of the country's exports exceeds that of its imports.
.com
True hFalse h.co
m
h.co
m
h.co
m
h.co
m
o b-b .uob
-b
w w.u w w w.u w
w ww ww ww ww
22. A trade deficit occurs when the value of the country's imports exceeds that of its exports.
.com
True bhFalse bh.c
om
bh.c
om
bh.c
om h.c om
.uob
-
.uob
-
.u ob- .u ob- .uo b-b
w w w ww ww w
w ww w w ww
23. The balance

m of payments is the.cdifference
m between money leaving
m the country and .money
m coming into a
country.
b h .c o
b h o
b h .c o
b h c o
b h .com
ob- ob- ob- ob- ob-
w.uTrue False w.u w.u w.u w.u
ww ww ww ww ww
om
.c is the practice of selling
.c om .c om om om
b -bh
24. Dumping
b -bh products in a foreign
b-bhcountry at lower prices
b bh.cthose charged in theb-bh.c
-than
o o o o o
w w.uproducing country. ww.u w w.u w w.u w w.u
w True False w w w w
h .com h .com h .com h.c om .c om

-
obThe
b - b
obexports - b b-b -bh
w.u25. gray market .uto
refers
w targeted to .uobcitizens.
senior
w w.u
o
w .u ob
ww True False ww ww ww ww
h.com h .com h.c om h.c om .c om

o b-b o b- b
o b-b b-b b -bh
w.u26. The gray market refers
w.uto the flow of goodswinwa.udistribution channel or w.uo other than those w
channels .u o
w w w w w w w ww intended
by the manufacturer.
True False
m om om om om
.uo b -
.uo b-b .uo b-b ob- .uo b-b
w w w w.u w
ww ww ww ww ww
27. The goal of effective global trade is to have more money flowing into the country than flowing out of the
country.
.com
True False
h .com
h .com h .comh h.com
.uo b-b .uo b-b .uo b-b o b-b .uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
.uo b - o b- o b-b o b-b .uo b- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
28. Every year since 1976 the U.S. has had a favorable balance of trade.
.com
True False
h .com
h .com h.c om .c om
b-b b-b -bh b-b -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
29. The U.S. is the world's largest exporting nation.
.com
True False
h .com
h h .com h.com h.c om
.uo b-b .uo b-b o b- b
ob-
b
o b-b
w w w.u w.u w.u
ww ww w w ww w w
30. In 2007 the top trading partner of the U.S. was China.
.com
True hFalse
b b h.com b h .com h.c om h.co
m
ob - -
.uob
-
.uob o b-b .uo b- b
w w.u w w w.u w
w ww ww ww ww
31. Trade protectionism is the use of government regulations to expand the import of goods and services.
.com
True bhFalse bh.c
om
bh.c
om
bh.c
om h.c om
.uob
-
.uob
-
.uob- .u ob- .uo b-b
w w w ww ww w
w ww w w ww
32. A tariff is
ma tax on imported goods.
.c o
True-bhFalse bh .com h.c om h.c om h.c om
ob -
.uob o b-b o b-b .uo b-b
w.u w w.u w.u w
ww ww ww ww ww
33. Retail tariffs are designed to raise m

the retail price of importedmproducts so that domesticmgoods will be more
h .com priced.
competitively
b b h .co b h .co b h.co b h .com
ob- ob- ob- ob- ob-
w.uTrue False w.u w.u w.u w.u
ww ww ww ww ww
com
. tariffs are designedbh . com . com h.c om .c om
o -bh
34.bRevenue
ob -bh
- to raise money for theobgovernment. o b-b ob -bh
.u .u .u w.u .u
w ww True False ww w ww w ww ww
w

35.
obThe
- U. S. published theoHarmonized
- Tariff Schedule,
- which includes tariff costs
- for every product from -
w .uevery country. w .u b w .uob w .uob w .uob
ww ww ww ww ww
True False
m om om om om
o b - o b-b o b-b ob- o b-b
w w.u36. An embargo is a moderate
w w.u slowing of the import
w w.uor export of a certainwproducts
w.u with a particularwcountry.
w.u
w w w w w
True False

m
h.com
o b- uo b-b .uo b- b
o b - b
o b-b
w w.u37. Nontariff barriersware
w.restrictive standards w wdetail
that exactly how a w w.u must be sold in a country.
product w w.u
w w w w w
True False
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
38. Keiretsu are "corporate families" in Japan.
.com
True False
h .com
h h.co
m
h.c om .c om
b-b b-b - b b-b -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
39. GATT is an agreement signed by many countries to reduce the restrictions on trade with one another.
.com
True False
h .comh .com h .com
bh h.c om
.uo b-b .uo b-b o b-b ob- o b-b
w w w.u w.u w.u
ww ww w w ww w w
40. The WTO is an organization that mediates trade disputes between countries and also sets policies in place to
encourage m
.cotrade. .com .com .com .com
b h b h b h b h bh
ob- False
.uTrue .uob
-
.uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
m m m om om
h.co market is also called
41. Abcommon b h.coa trading bloc. bh.co h.c h.c
-
ob False
.uTrue .uob
-
.uob
-
.uo b-b .uo b-b
w w w w w
ww ww ww ww ww
m m m m m
42. A- b h.co market is a regional
common - b
o
h.cgroup of countries that
- b .co a common externalbtariff,
hhave - h.co no internal tariffs -and
b h.co
ob b
.uofacilitate ob ob ob
ww.uthe coordination of laws
w wto exchange among
ww.u member countries. ww.u w w.u
w True False w w w w
b h .com bh .com b h .com b h.com b h .com

-
obThe - - b- -
w .u43. .uob of six trading partners
EU began as anwalliance w .uobin the late 1950s andwby
.uo2007 .uobof
had grown to a group
w
ww 25 countries, with several
ww more poised to join.ww ww ww
True False
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
.u ob .uo b-b o b-b ob
ww w w w.u ww
.u
w ww ww ww
44. OPEC is an organization consisting of 12 oil-producing countries, working collectively for oilwinterests.
True False
h.c om h .com h.c om h.com .c om
b-b b- b b-b b-b b -bh
w .uo w .uo w .uo w.u
o
w .u o
ww ww ww w w ww
45. NAFTA is an agreement signed by the U.S., Canada and Brazil to reduce or eliminate tariffs on goods and
to encourage trade between the countries.
True Falseom om om om om
bh.c bh.c bh.c bh.c bh.c
.u ob- .u ob- .u ob- ob- ob-
ww ww ww w.u ww
.u
w w w ww w
46. GATT established an international forum for negotiating mutual reductions in trade restrictions.
.com
True False
h .com h .com h .com h h.c om
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
.uo b - o b- ob-b o b-b .uo b- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
47. The Uruguay Round established the World Trade Organization.
.com
True False
h .comh .com h.c om .c om
b-b b-b -bh b-b -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
48. The goal of a quota is to prevent other countries from flooding the market with products, thereby driving
om
down the.cprice.
h h.com h .com h.com h .com
b b b b b
ob- False
uTrue uob
-
uob
-
uob
-
uob
-
w. w. w. w. w.
ww ww ww ww ww
b h .comrequires companies
49. Denmark
b hto om butter in cubes, nothtubs.
.csell b .comThis type of policybhis.ccalled
om an embargo.
bh .com
ob- False
.uTrue .uob
-
.uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
m m m om om
h.co is a type of non-tariff
50. Abkeiretsu b h.cobarrier. bh.co h.c h.c
.uTrue
-
ob False .uob
-
.uo b-
.uo b-b .uo b-b
w w w w w
ww ww ww ww ww
m m m om om
h.co is an example of-abcommon
51. Mercosur
b h.co market. b h.co h.c h.c
ob - ob ob - o b-b .uo b-b
ww ww ww ww ww
.c om .c om .c om .c om .c om
o -bh of the mission of OPEC
52. Part
b ob -bhis to seek ways and means
o b-bhof ensuring the stabilization
o b -bh of prices in o b -bh
w.uinternational oil markets.
w.u w.u w.u w.u
bh .com b h .com b h .com b h .com b h .com

-
obOne - b- - -
w.u53. objective of w .uobis to promote conditions
NAFTA w .uoof fair competition .uob Canada, the U.S. and
between
w w .uob
ww Mexico. ww ww ww ww
True False
o
w .u o
ww ww ww w w ww
54. Opponents of the ratification of NAFTA included organized labor unions.
True False
m om om om om
.uo b -
w w w w.u w
ww ww ww ww ww
55. The strategy for reaching global markets with the least amount of risk is contract manufacturing.
True False
m
h.com
.uo b- .uo b-b .uo b- b
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
.uo b - o b- o b-b ob-b .uo b- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
56. Licensing refers to selling the right to manufacture a product or use a trademark to a foreign company for a
fee.
ob- False
True ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
bh com fee is called abroyalty.

57. The .licensing
h.com b h .com b h.com h.c om
ob- False
uTrue uob
- o b- ob- o b-b
w . w . w.u w.u w.u
ww ww w w ww w w
b h .com agreement is b
58. A franchising com
anh.arrangement whereby someone
b h .comwith a good idea bforh.acobusiness
m sells to othersh.com
b
-
obrights
the to use the business - and sell the product
obname obor- service in a given territory.
ob- ob-
w.u w . u w . u w . u w . u
b h .com b h.com bh.co

m
h.c om h.c om
o b- uo b- o b-
.uo b-b .uo b-b
w w.u59. A person who buys
w wa .franchise is called a franchisor.
w w.u w w
w True False w w ww ww
b h .com bh .com b h .com b h .com b h .com

-
obContract b- - b- goods to which a domestic
-
w .u60. w .uoinvolves
manufacturing .uob production of private
a foreign company's
w w .uolabel w .uob
ww company then attaches ww its own brand name orwtrademark.
w ww ww
True False
.c om .com h.c om .com h.c om

ob -bh ob-
bh
b-b b- b h
b-b
w.u w.u w .uo w .uo w .uo
ww ww ww ww ww
61. A joint venture is a long-term partnership between two or more companies established to help each
company build competitive market advantages.
True False om om om om om
.c .c h.c h.c .c
ob -bh ob -bh b-b b-b b -bh
.u .u .uo w.u
o .u o
w ww ww
w
ww
w
ww ww
w
62. One benefit of a joint venture is that the firms involved can share technology.
True False
com com com om om
h. h. h. h.c -bh
.c
.uo b-b .uo b-b .uo b-b o b-b ob
w w w w.u w .u
ww ww ww w w ww
63. A Redfield investment means that a company will enter into a country and build factories and offices on its
own. .com .com .com .com .com
bh b h b h b h b h
ob- False
w.u w.u w.u w.u w.u
ww ww ww ww ww
b h .com alliance is a long-term

64. A strategic
b h .com
partnership between two
b h
mmore companies established
.coor bh .com to help each bh.com
ob-
.ucompany build competitive b- advantages. .uob-
.uomarket .uob
-
.uob
-
w w w w w
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
65. Foreign direct investment is the buying of permanent property and businesses in foreign nations.
.com
True False
h h .com .com .com .c om
b-b b-b -bh b-b
h -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
66. A foreign subsidiary is a company that is owned in the home country by a foreign company.
.com
True False
h .com
h .com h .com
bh h.c om
w w w.u w.u w.u
ww ww w w ww w w
67. When a host government takes over a foreign subsidiary in a country it is called expropriation.
.com
True hFalse h.co
m
h.co
m
h.co
m
h.co
m
o b-b .uob
-b
w w.u w w w.u w
w ww ww ww ww
68. A multinational corporation is an organization that markets products worldwide, but manufactures these
products
m home country.
.cinothe .com .com .com .com
b h b h bh b h b h
ob- False
.uTrue .uob
-
.uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
m m m m om
b h.co can work well for
69. Licensing bh.co companies that have
small b .co up with a new product.
hcome b h.co h.c
ob - ob - ob - ob -
.uo b-b
ww ww ww ww ww
.c om .c om om om om
-bh 95 percent of the exporters
70. Over
b b -bh in the U.S. are very
b bh.cbusinesses.
-large b -bh
.c
b-b
h.c
.u o .uo .uo .u o .uo
www True False ww w ww w ww w ww
w
. com . com . com . com . com

o -bh
71.bFranchising
ob -bh in that where franchising
differs from licensing
o b -bh is for a single product,
o b -bh licensing allows theobuse
-bh
w.uof an entire concept including
w.u the label, how thewgood
w.u is manufactured orwmade
w.u and the look and feel wof.u
the
ww business. ww w w ww
True False
h.c om h .com h.c om h.c om .c om
o
w .u o
ww ww ww w w ww
72. One advantage of franchising is that the product or service is made and sold in exactly the same way
throughout the world.
.com
True False
h .com
h .com
h .com
bh h.c om
.uo b-b .uo b-b .uo b-b ob- .uo b-b
w w w w.u w
ww ww ww ww ww
73. One disadvantage of contract manufacturing is that intellectual property and copyright laws are different in
b .com
every country.
h b h .com b h .com bh .com b h .com
ob- False
uTrue uob
-
uob
-
uob
-
uob
-
w. w. w. w. w.
ww ww ww ww ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
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ob
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74. Companies that engage in partnerships (such as joint ventures) grow more slowly than their counterpart
companies m do not.
.cothat .com .com .com .com
b h b h b h b h b h
ob- False
w.u w.u w.u w.u w.u
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75. Joint.cventures
h h omgovernments as a condition
.cby h .com of doing businessbhin.ctheir
om country. h.c om
b b b b-b
ob- False
uTrue uob
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uob
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76. Theh.difference between a joint
b h com and a strategicballiance
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h
m
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bh .com
ob- sharing costs, risks,
.uinvolve b-
.uomanagement .uob
-
or even profits. .uob
-
.uob
-
w w w w w

m
h.c om h.c om
o b- o b- .uo b- o same size. b-b .uo b-b
w w.u77. To be successful, w
the .firms
w u entering a strategic
w walliance need to be roughly.uthe
w w w
w True False w w w ww

-
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w .u78. w .uob is an especially w
a foreign subsidiary .uob
good .uothat
strategy for smaller firms
w w .uob
ww marketplace. ww ww ww ww
True False

ob -bh ob-
bh
b-b b- b h
b-b
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79. Culture refers to the set of values, beliefs, rules and institutions held to by a specific group of people.
True False
m om om om om
bh.co -bh
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.uob
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ww w w w.u w .u
w ww ww ww
80. Ethnocentricity is an attitude that one's own culture is superior to all others. ww
True False
o
w .u o
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81. Power distance is the extent to which the less powerful members of organizations and institutions (like the
family) accept and expect that power is distributed unequally.
True Falseom om om om om
bh.c bh.c bh.c bh.c bh.c
.u ob- .u ob- .u ob- ob- ob-
ww ww ww w.u ww
.u
w w w ww w
82. Global marketing is the term used to describe selling the same product in different ways in the world,
depending mthe culture and customs
.coon .com
of the country. .com .com .com
bh b h b h bh b h
ob- False
uTrue uob
-
uob
-
uob
-
uob
-
w. w. w. w. w.
ww ww ww ww ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
83. The exchange rate is the value of one nation's currency relative to the currencies of other countries.
.com
True False
h h.com .com .com .c om
b-b b-b -bh b-b
h -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
84. Bartering is the exchange of merchandise for other merchandise or service for money.
.com
True False
h .com
h .com h .com
bh h.c om
w w w.u w.u w.u
ww ww w w ww w w
85. Countertrading is a complex for of bartering, which occurs between two people in the same country.
.com
True hFalse h.co
m
h.co
m
h.co
m
h.co
m
o b-b .uob
-b
w w.u w w w.u w
w ww ww ww ww
86. The Foreign Corrupt Practices Act of 1977 prohibits "questionable" or "dubious" payments to foreign
officials
m business contracts.
cosecure
.to .com .com .com .com
b h b h bh b h b h
ob- False
.uTrue .uob
-
.uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
m m m om om
b h.co
87. Countertrading is used in theb .co
hcurrency markets. b h.co h.c h.c
ob - ob - ob - o b-b .uo b-b
ww ww ww ww ww
.c om om
h.c domestic business. -bh.c om .com h.c om
ob -bh business is far easier
88. Global
o b -bthan ob b- b h
b-b
w.uTrue False w.u w.u w .uo w .uo
ww ww ww ww ww
. com . com h. com h.c om .c om

o -bh can be religious implications
89.bThere
ob -bh of global business
o b -bdecisions. o b-b ob -bh
.u .u .u w.u .u
www True False ww w ww w ww ww
w

90.
obA- sound philosophy to.uadopt
ob- in global markets .isuoalways
b- assume that what.uworks
ob- in the U.S. will work -
w .uaround the world since w
the U.S. leads the w
marketplace on so many fronts. w w .uob
ww ww ww ww ww
True False
m om om om om
w w.u91. All large U.S. companies
w w.u always think globally.
w w.u w.u w
w w w ww ww
True False

m
h.c om
o b- o b-b o b- b
o b - b
.uo b-b
w w.u92. Global financial markets
w w.u do not have a common
w w.uworldwide currency. ww.u w
w w w w ww
True False
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
93. The old saying "When in Rome, do as the Romans do" applies to American businesses conducting business
globally..com .com .com .com .com
b h b h bh b h b h
ob- False
w.u w.u w.u w.u w.u
ww ww ww ww ww
b .com refers to any activity

94. __________
h b h.com b h .comand services to others
that seeks to provide goods
b h om national bordersh.com
.cacross b
. ob- operating at a profit.
while
u . u ob- . u ob- . u ob- . u ob-
w w w w w
ww ________________________________________
ww ww ww ww
b h .com b h.com b h .com h.c om h.co

m
.u95.
-
ob__________ ob-
is selling.uproducts .uob
to another country. - o b-b .uo b- b
w w w w.u w
ww ________________________________________
ww ww ww ww

m
h.c om h.c om
o b- o b- .uo b-
.uo b-b .uo b-b
w w.u96. __________ is buying
ww.uproducts from another
w
country.
w w w
w ________________________________________
w w ww ww

-
ob__________ - - b- -
w .u97. w .uob of goods and services
is the movement w .uobamong nations without
w .uopolitical or economic w .uob
trade
ww barriers. ww ww ww ww
________________________________________

ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww ww ww
98. Friedman discusses __________ as being one of the main drivers of the phenomenon that he calls the
"flattening of the world".
________________________________________
om om om om om
.c .c h.c h.c .c
.u .u .uo w.u
o .u o
www ww
w
ww
w
ww ww
w
99. __________ is the exchange of goods and services across national borders.
________________________________________
com com com om om
h. h. h. h.c -bh
.c
.uo b-b .uo b-b .uo b-b o b-b ob
w w w w.u w .u
ww ww ww w w ww
100. __________ theory states that a country should sell to other countries those products that it produces most
effectively m efficiently and buy.from
.coand com other countries those om
.cproducts it cannot produce.coasmeffectively or bh.com
bh b h b h b h
ob-
efficiently.
.uob
-
.u________________________________________ .uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
bh .com b h .com b h .com bh .com b h .com

ob-A country has a(n) __________
.u101. .uob
- -
if it has a monopoly
.uob on producing a specific
- -
.uobproduct or is able towproduce
.uob
w w w w
ww it more efficiently than
ww all other countries. ww ww ww
________________________________________
m .com om om .com
bh.co bh h.c h.c h
.uo b - ob- o b-b ob-b .uo b- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
102. Most absolute advantage situations involve __________ that one country has and other do not have.
.com .com
________________________________________
h h .com .com .c om
b-b b-b -bh b-b
h -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
103. One example of __________ theory is England selling wool and France selling wine.
.com .com
________________________________________
h h .com h .com bh h.c om
w w w.u w.u w.u
ww ww w w ww w w
104. The __________ is a nation's ratio of exports to imports.

m m m om m
h.co h.co
________________________________________ h.co h.c h.co
o b-b .uob
-b
w w.u w w w.u w
w ww ww ww ww
105. A __________ occurs when the value of the country's exports exceeds that of its imports.
om om om om om
bh.c bh.c
________________________________________
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h.c
.uob .uob .u ob- .u ob- .uo
w w w ww ww w
w ww w w ww
106. A __________
m occurs when the value
m of the country's importsm exceeds that of its .exports.
b .c o
b . c o
________________________________________
h h b h .c o
b h com h.c om
ob- -
.uob
- ob - ob .uo b-b
w.u w w.u w.u w
ww ww ww ww ww
107. The __________

m is the differencembetween money coming into a country (from exports) and money
leaving
b h .cocountry
the (for imports).
b h .co b h .com b h.com b h .com
ob- ob- ob- ob- ob-
w.u________________________________________
w.u w.u w.u w.u
ww ww ww ww ww
bh. com com

h. selling products in a foreign
. com . com . com
108.
o b -__________ is the practice
o b -bof o b -bh country at lowerob -bh than those chargedoin
prices b -bh
w.uthe producing country. w.u w.u w.u w.u
ww ________________________________________
ww ww ww ww
h.com h .com h.c om h.c om .c om

o b-b o b- b
o b-b b-b b -bh
w.u109. The __________wrefers
w.u to the flow of goods win.ua distribution channelwor uo
w.channels w
other than those .u o
w w w w w w ww intended
by the manufacturer.
________________________________________
m om om om om
.uo b -
w w w w.u w
ww ww ww ww ww
110. __________ is the use of government regulations to limit the import of goods and services.
________________________________________
m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
111. A(n) __________ is a tax on imports.
.com .com
________________________________________
h h h.co
m
h.c om .c om
b-b b-b - b b-b -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
112. A publication by the U.S. government that lists the tariffs and quotas for every imported good is called the
b .com
__________.
h b h.com b h .com b h.com b h .com
ob- -
u________________________________________
uob uob
-
uob
-
uob
-
w. w. w. w. w.
ww ww ww ww ww
113. A(n)
h om
.c__________ .com of products in certain
limits thehnumber h
m
.cocategories that a nationh omimport.
.ccan h.co
m
b b b b b
ob- .uob
-
.u________________________________________ .uob
-
.uob
-
.uo b-
w w w w w
ww ww ww ww ww
o m m m m m
- b h.c__________
114. A(n)
- b h.coban on the import or-bexport
is a complete h.co of a certain product- b
o stopping of all tradeh.co
hor.cthe b
. ob a particular country..uob
with
u . u ob . u ob . u ob-
w w w w w
ww ________________________________________
ww ww ww ww

ob-__________ are restrictive
.u115.
-
.uob standards that detail ob- how a product must
.uexactly
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.uobbe sold in a country.w.uob
-
w w w w
ww ________________________________________
ww ww ww ww

ob-The __________ is an
.u116. b-
.uoagreement signed by w
many
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.uobcountries to reduce the ob-
.urestrictions on trade with ob-
.uone
w w w w
ww another. ww ww ww ww
________________________________________
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
ww w w w.u ww
.u
w ww ww ww
117. The __________ mediates trade disputes between countries and also sets policies in place towencourage
trade.
________________________________________
com com com com om
h. h. h. h. .c
b-b b-b b-b b-b b -bh
o
w .u o
ww ww ww w w ww
118. A(n) __________ is a regional group of countries that have a common external tariff, no internal tariffs
b .com
and the coordination
h b h .com exchange amongbmember
of laws to facilitate
h .com countries. b h .com b h .com
ob- ob-
________________________________________ ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
h om
119. The.c__________ .comamong European member
is an agreement
h h .comcountries to eventually
h
m all barriers to .com
.coreduce
b b b b bh
.u ob- and become unified.uboth
trade ob-economically and politically.
.u ob- . u ob- .u ob-
w w w w w
ww ________________________________________
ww ww ww ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
120. __________ is an organization, consisting of 12 oil-producing countries, to work collectively for oil
interests..com .com .com .com .com
b h b h bh b h b h
ob- ob-
________________________________________ ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
h om
121. The.c__________ .comsigned by the U.S.,bMexico
is an agreement
h h .com and Canada to reduce
h.coormeliminate tariffs onbh.com
b b b
ob- and to encourage trade
.ugoods
-
.uobbetween the countries..uob
-
.uob
-
.uob
-
w w w w w
ww ________________________________________
ww ww ww ww
b h .com b h.com b h .com b h .com bh.co

m
ob-__________ tariffs are
.u122. b-
.uodesigned to raise money ob-the government. .uob-
.ufor .uo b-
w w w w w
ww ________________________________________
ww ww ww ww

m
h.c om h.c om
o b- b-
o is to prevent other countries
o b- o b-b o b-b
w w.u123. The goal of a __________
w w.u w w.u from flooding the.umarket
w w with products, thereby
w w.u
w driving down the price.
w w w w
________________________________________
.c om h.co
m
h.c om h.c om h.c om
ob -bh o b- b
o b-b o b-b b-b
w .u w.u w.u w.u w .uo
w w w w
w caused many countrieswto establish embargoes. w
124. __________ have w ww
________________________________________

ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww
125. The __________ of the GATT established the World Trade Organization.ww ww
________________________________________
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
ww w w w.u w .u
w ww ww ww
126. The euro continues to climb/fall (circle one) as compared to the dollar. ww
________________________________________
o
w .u o
ww ww ww w w ww
127. __________ refers to selling the right to manufacture a product or use a trademark to a foreign company
for a fee.
.com .com
________________________________________
h h .com
h .com
bh h.c om
w w w w.u w
ww ww ww ww ww
128. A(n) __________ is an arrangement whereby someone with a good idea for a business sells to others the
b h comthe business name band
rights to.use
h omthe product or service
.csell b h oma given territory. h.com
.cin b b h .com
ob- -
u________________________________________
uob uob
-
uob
-
uob
-
w. w. w. w. w.
ww ww ww ww ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
129. __________ involves a foreign company's production of private label goods to which a domestic company
b .comits own brand name

then attaches
h b h
or m
.cotrademark. bh .com b h .com b h .com
ob- ob-
________________________________________ ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
130. A(n)
h om
.c__________ .comin which two or more
is a partnership
h h om
.ccompanies .comproject for a
undertake a major
h h .com
b b b b b
ob- time period. .uob-
.uspecified .uob
-
.uob
-
.uob
-
w w w w w
ww ________________________________________
ww ww ww ww
b h .com b h.com b h .com b h .com bh .com

ob-A(n) __________ means
.u131.
-
.uobthat a company willwenter
-
.uob into a country and w .uob
build -
factories ob-
and offices on.uits
w w w
ww own. ww ww ww ww
________________________________________

m
h.c om h.c om
o b- .uo b- .uo b-
.uo b-b.uo b-b
w w.u132. A(n) __________
w w w w w w w w
w w is a long-term partnership
w between two or more w
companies established to help
w each
________________________________________
m m
.c o h.co h.c om h.c om h.c om
ob -bh b- b b-b b-b b-b
w .u w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww
133. __________ is the buying of permanent property and businesses in foreign nations.
________________________________________
. com com
. com h. com h. h.c om
ob -bh ob -bh b-b b-b b-b
ww ww ww ww ww
134. A(n) __________ is a company that is owned in a foreign country by the home company.
________________________________________
om om om om om
.c .c h.c h.c .c
.u .u .uo w.u
o .u o
www ww
w
ww
w
ww ww
w
135. When a host government takes over a foreign subsidiary in a country it is called a(n) __________.
________________________________________
com com com com om
h. h. h. h. .c
b-b b-b b-b b-b b -bh
o
w .u o
ww ww ww w w ww
136. A(n) __________ is an organization that manufactures and markets products in many different countries; it
b .com stock ownership

has multinational
h b h commultinational management.
.and b h .com b h .com b h .com
ob- ob-
________________________________________ ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
h om for reaching global

137. The.cstrategy
h
m
.comarkets .comcommitment is __________.
requiring the most
h h .com h.c om
b b b b b-b
. ob- -
u________________________________________
uob . uob
-
. uob
-
.uo
w w w w. w
ww ww ww ww ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
138. Another name for contract manufacturing is __________.
.com .com
________________________________________
h h .com h.c om .c om
b-b b-b -bh b-b -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
139. The country where the parent firm is located is called the __________ country.
om om
________________________________________ om om om
bh.c bh.c bh.c bh.c b-b
h.c
.u ob- .u ob- .uob
-
.uob
- o
ww ww ww ww w w.u
w w w w w
140. Only firms that have __________ capacity or some other __________ in different nations can truly be
b .com
called multinational.
h b h.com b h .com b h .com bh .com
ob- .uob
-
.u________________________________________ .uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
m m m m m
- b h.co
141. __________ refers to the set
- b .covalues, beliefs, rules band
hof -
o
h.cinstitutions .co
held to bybahspecific
-
group of people.
- b h.co
ob .uob
.u________________________________________ .uob .uob .uob
w w w w w
ww ww ww ww ww
o m m m m om
b h.cattitude
142.-The that one's own bh.co is superior to all -others
culture b h.cois called __________.b h.co h.c
ob ob- ob ob -
.uo b-b
w.u________________________________________
w.u w.u w.u w
ww ww ww ww ww
om om om om om
b bh.c
143.-__________ is the term used
b
.c
-bh to describe selling the
b bh.c product in essentially
-same b
h.csame way everywhere
-bthe b -bh
.c
o o o o o
w.uin the world. w.u w.u w.u w.u
ww ________________________________________
ww ww ww ww

ob-The __________ is the
.u144. b-
.uovalue of one nation's
-
currency
-
.uob relative to the currencies
.uob of other countries. .uob
-
w w w w w
ww ________________________________________
ww ww ww ww

o b-b o b- b
o b-b b-b b -bh
w.u145. __________ refers
wto.uthe exchange of merchandise
w.u for merchandise w .uo for service with nowmoney
orwservice .u o
w w w w w w w ww
involved.
________________________________________
m om om om om
.uo b -
.uob-b .uo b-b ob- .uo b-b
w w w w.u w
ww ww ww ww ww
146. __________ is a complex form of bartering in which several countries may be involved, each trading
goods for goods or services for services.
.com .com
________________________________________
h h .com h .com h h.com
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
147. Both McDonald's and Coca-Cola offended Muslims in Saudi Arabia by putting __________ on their
b .com
packaging.
h b h .com bh .com b h .com b h .com
ob- ob-
________________________________________ ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
bh .com the __________ bishconsidered

148. Globally, .com b h .com and most stable form
the world's dominant
b h.coofmcurrency. h.c om
ob- -
u________________________________________
uob uob
-
uob
- o b-b
w . w . w. w. w.u
ww ww ww ww w w
b .com businesspeople are

149. American
h b h com to follow __________
.required b h .com laws and regulations
b h .cinom
conducting business h.com
b
.u ob-
globally. . u ob- . uob- . u ob- . uob-
w w w w w
ww ________________________________________
ww ww ww ww

m
h.c om h.c om
o b- o b- o b- o b-b o b-b
w w.u150. __________ referswwto.uany activity that seeks
w wto.uprovide goods and services
w w.u to others across national
w w.uborders
w while operating at awprofit. w w w
A. Global business
B. Global management
C. Global
h om
.ceconomics h .com h.c om h.c om h.c om
b b b-b b-b b-b
ob- ob- o o .uo
w.uD. Multinational management
w.u w.u w.u w
ww ww ww ww ww
om om om om om
b bh.c of the following bis-b
151.-Which .c
anhadvantage to engaging-b
b
.c
inhbusiness globally?
b -bh
.c
b-b
h.c
o o o o .uo
w.uA. Businesses have entirely
w.u new markets in which .usell their products w.u
wto w
ww B. The cost of laborwiswhigher overseas ww ww ww
C. There are cultural challenges in international business
D. All of the
omabove are advantages tooengaging
m in business globally
om om om
.c .c h.c h.c .c
.u .u .uo w.u
o .u o
w ww ww
w
ww
w
ww ww
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152. __________ refers to selling products to another country.
A. Demandom
h . c h . com h . com h.com .c om
B. Importing
- b - b - b b-b -bh
w .uC.obExporting w .uob w .uob w.u
o
w .u ob
ww D. Expropriation ww ww w w ww
m om om om om
o b -
.uo b-b o b-b ob- .uo b-b
w w.u153. __________ is the
w wmovement w.u among nations without
of goods andwservices w w.u political or economic
w wtrade
w w w w w
barriers.
A. Exporting
bh .com
B. Importing
h.c om h .com h.co
m
h.com
- trade
C. Free
.uD.obGlobal trade .uo b-b .uo b- b
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
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154. Which of the following statements about global trade and why companies trade globally is most accurate?
h om companies cite global
A. Many.cU.S.
h
m
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as a link to future
h h .com h .com
b
- U.S. population makes b b b b
B. The
.uC.obAmericans buy billions ob-up a small portion of.uthe
.uof
-
obworld's population
. u ob- . u ob-
w w w
dollars worth ofwgoods
w made in other countries w w
ww ww ww ww
D. All of the above are true
m .com .com .com om

bh.co b h b h b h h.c
o b -
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w w.u155. A country has a(n)
w w__________ advantagew wit.uhas a monopoly on producing
if w w.u a specific productwor
w.isu able
w w w w w
to produce it more efficiently than all other countries.
A. Country
b h .com
B. Efficiency
b h.com b h .com h.c om h.co
m
-
.uC.obAbsolute .uob
-
.uob
- o b-b .uo b- b
w w w w.u w
ww D. Comparative ww ww ww ww

m
h.c om h.c om
156.b-
o Which of the following b-
o is an advantage of free.utrade?
o b-
.uo b-b .uo b-b
w w.uA. Productivity growswwhen
w.u countries produce w w w w w w
w w w goods and services in which
w they have a comparative
w advantage
B. Domestic workers can lost their jobs as a consequence of increased imports
C. Moving operations overseas often means the loss of service jobs and growing numbers of white-collar jobs
omabove are advantages
of.cthe om om om om
D. Allbh bh.c bh.c bh.c bh.c
ob- ob- ob- ob- ob-
w.u ww
.u w.u w.u ww
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157. Most absolute

m advantage situationsm involve __________.cthat
mone country has and .others
m do not have.
A. Natural
b h . c oresources bh . c o
b h o
b h c o
b h .com
- - - - -
w .uB.obMonopolistic competition
w .uob w .uob w .uob w .uob
ww C. Inexpensive labor ww ww ww ww
D. Brain drain
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
ww w w w.u w .u
w ww ww
158. The balance of trade is ____________________. ww ww
A. The number used in countertrade to be sure the trade is fair
B. A nation's ratio of exports to imports
h .comof a country's exports
h .com h .com h.com .c om
C. b
The
- b value b- b - b b-b -bh
w .uD.o The value of a country's
w .uoimports w .uob w.u
o
w .u ob
w w w w w w w w ww
bh . com b h .com b h . com b h . com b h . com

159.-__________ exists when -products are sold in a country
- below what it cost otobproduct
- the product. ob-
w .uA.obPerfect competition w.uob w .uob w .u w.u
ww ww
B. Monopolistic competition
ww ww ww
C. A gray market
.com
D. Dumping
h h.c om h .com h.co
m
h.com
.uo b-b .uo b-b .uo b- b
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
160. The flow of goods in a distribution channel other than those intended by the manufacturer is called a(n)
b .com
__________________________.
- market
A. Blue - - - -
w .uB.obGray market w .uob w .uob w .uob w .uob
ww ww ww ww ww
C. Black market
D. Senior market
m .com .com .com om
.uo b -
w w w.u w.u w.u
ww ww w w ww w w
161. Since 1976 the U.S. has bought more goods from other nations than it has sold to other nations. This is
called a(n) _____________________.
b .com
A. Countertrade
h b h.com b h .com b h .com bh .com
- - - - -
w.uB.obFavorable balance ofwpayments
.uob w .uob w .uob w .uob
ww C. Favorable balance wwof trade ww ww ww
D. Trade deficit

m
h.c om h.c om
o b- .uo b- .uo b-
.uo b-b .uo b-b
w w.u162. Two key indicators
w wof w w w w w
w w the effectiveness of
w global trade are ____________________.
w ww
A. The amount of countertrade and the balance of payments
B. The cost of labor and raw materials
C. The b .com of payments andbthe
balance
h h .co m
balance of trade b h .com h.c om h.c om
-
.uD.obThe balance of trade and b- balance of countertrade
.uothe .uob
- o b-b .uo b-b
w w w w.u w
ww ww ww ww ww
m m m m m
b h.co
163.-__________ h.co
is the use of -government
b h.cothe import of goods-and
regulations to-blimit b
o
h.cservices. - b h.co
ob ob ob ob ob
w w.uA. Trade deficit w w.u w w.u w w.u w w.u
w B. Trade balancing w w w w
C. Trade protectionism
D. Trade advancement
m m m m m
bh .co .co .co .co .c o
ob- -bh ob-
bh
ob-
bh -bh
. u .uob w.u w.u .u ob
w ww ww
w
ww ww ww
w
164. A(n) __________ is a tax on imports.
A. Gross domestic
m product
h .co h .com h.c om h.com .c om
B. bImport
- b quota - b b-b b-b -bh
w .uC.o Export quotient w .uob w .uo w.u
o
w .u ob
ww D. Tariff ww ww w w ww
m om om om om
w w.u165. The __________wincludes
w.u tariff costs for every
w w.uproduct from every country.
w.u w
w w
A. Vocalized Tariff Schedule
w ww ww
B. Harmonized Import Schedule
bh .com Tariff Schedulebh.com

C. Harmonized
b h .com bh.co
m
h.com
.u
-
D.obHarmonized ob-
Export Schedule
.u .uo b- o b -
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
.uo b - ob- o b-b o b-b .uo b- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
166. Which of the following is a type of trade protectionism?
A. Import m
.coquotas .com .com om om
b h b h bh h.c -bh
.c
-
B. Tariffs
.uC.obEmbargoes .uob
-
.uob
- o b-b ob
w w w w.u w .u
ww ww ww ww ww
D. All of the above are types of trade protectionism
m .com .com .com om

o b - o b- o b- ob- o b-b
w w.u167. Which of the following
w w.u is the organizationwthat
w.uworks collectively forwoil
w.uinterests? w w.u
w w w w w
A. NAFTA
B. Mercosur
C. OPEC
b h .com b h.com h.c om h.c om h.co
m
-
.uD.obWTO .uob
-
w w w w.u w
ww ww ww ww ww
b .com
168. Ahfirm may decide to compete
b h om
.cin bh .com
a global market by __________ .com its product or bh.com
the right to manufacture
b h
- trademark to a foreign
obits - - - -
w .uuse w .uobcompany for a fee. w.uob w .uob w .uob
ww A. Franchising ww ww ww ww
B. Licensing
C. Exporting
om om om om om
bh.cforeign direct investment
D. Using bh.c bh.c bh.c bh.c
ob- ob- ob- ob- ob-
w.u ww
.u w.u w.u ww
.u
ww w ww ww w
169. Over __________

m percent of the m exporters in the U.S. are smallm and medium-size .businesses.
A. 95-bh . c o
bh . c o
b h . c o
b h com b h .com
- - - -
w .uB.ob75 w .uob w .uob w .uob w .uob
ww C. 50 ww ww ww ww
D. 15
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
ww w w w.u ww
.u
w ww ww ww w is called
170. A company that develops a product concept and sells other the rights to make and sell the product
a(n) ____________________.
A. Franchisee
B. b h .com
Exporter
b b h .com b h .com b h .com b h .com
- - - - -
w .uC.o Franchisor w .uob w .uob w .uob w .uob
ww D. Importer ww ww ww ww
m om om om om
o b - o b-b o b-b ob- o b-b
w w.u171. One of the disadvantages
w w.u of __________ iswthat
w.uintellectual propertywand
w.ucopyright laws are different
w w.u in
w every country.
w w w w
A. Contract manufacturing
bh .com
B. Exporting
b h .com b h .com bh.co
m
h.com
-
C. Importing
.uD.obForeign direct investment
.uob
-
.uo b- o b -
.uo b-b
w w w w w w.u w
w w ww w w ww
m .com om om .com
bh.co bh h.c h.c h
.uo b - ob- ob-b o b-b .uo b- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
172. Which of the following statements is a benefit of international joint ventures?
A. Shared m
.cotechnology .com .com .com .com
- b h - b h bh b h b h
B. Shared marketing and management
.uC.obEntry into markets where
.uob
expertise
. u ob- . u ob- . u ob-
w w foreign companies w w w
ww ww wware often not allowed unless
ww their goods are produced
ww locally
D. All of the above are benefits of international joint ventures
m .com .com .com om

w w.u173. Which of the following
w w.u statements about strategic
w w.u alliances is most true?
w.u w.u
w w w ww w w
A. It is a long-term partnership between two or more companies to help each company build competitive market
advantages
b h .com
B. Strategic
b .com to markets, capital
alliances can providehaccess
b h .com
and technical expertise h.com
b bh .com
- - b- between the firms - -
w.uC.obUsually risks, costs, w .uob
management or profits are not
w .uoshared w .uob w .uob
ww D. All of the aboveware w true of strategic alliances
ww ww ww

m
h.c om h.c om
b-
174.
o __________ is an attitude b-
o that one's own culture b-
ois superior to all others..uo b-b .uo b-b
w w.uA. Ethnocentricity ww.u w w.u w w
w w w ww ww
B. Superior ethnicity
C. Cultural supremacy
om elitism h.co
m om om om
bh.c
D. Sociocultural b b-b
h.c
b-b
h.c
b-b
h.c
ob- .uo b- o o .uo
w.u w w.u w.u w
ww ww ww ww ww
175. Which m of the following is one of m Hofstede's five dimensionsmof culture?

A. Power
b h . c o
distance bh . c o
b h .co b h.com h.c om
-
.uB.obUncertainty avoidance .uob
-
.uob
-
.uob
-
.uo b-b
w w w w w
ww C. Long-term vs. short-term ww orientation ww ww ww
D. All of the above are dimensions of culture according to Hofstede
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
ww w w w.u ww
.u
w ww ww
176. Why is the exchange rate important in global markets? ww w
A. If the value of the dollar is high, the products of foreign producers are more expensive because it takes more
dollars to buy m them
B. bTo b h .cothe
earn highest amount of
b h .comthe trading currency
profit b h comremain low and stable
.must b h .com b h .com
- - - - -
w .uob
.uC.o Labor costs can varywconsiderably as currency .uob shift
values
w w.uob w .uob
ww D. The exchange rate wwis unimportant in globalwmarkets
w ww ww
m om om om om
o b - o b-b b-b
uoengaging in global business. ob- .uo b-b
w w.u177. Define global business
w w.u and list the advantages
w w.of w.u w
w w w ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
178. Why should countries trade globally?
h.c om h.c om h.co
m
h.c om .c om
b-b b-b - b b-b -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
m .com .com .com om

.uo b -
w w w.u w.u w.u
ww ww w w ww w w
179. Explain the difference between comparative advantage and absolute advantage.

m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww

m
h.c om h.c om
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
180. Explain the two key indicators that measure the effectiveness of global trade.
.c om h.co
m
w .u w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww

ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww ww ww
181. Define trade protectionism and list three specific types.
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
ww w w w.u w .u
w ww ww ww ww

o
w .u o
ww ww ww
182. List the six different strategies for reaching global markets. w w ww
m om om om om
.uo b -
w w w w.u w
ww ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
183. List and define Hofstede's five dimensions of culture.
h.c om h.c om h.co
m
h.c om .c om
b-b b-b - b b-b -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
m .com .com .com om

.uo b -
w w w.u w.u w.u
ww ww w w ww w w

m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww

m
h.c om h.c om
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
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m
w .u w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww

ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww ww ww
m om om om om
bh.co -bh
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-
ww w w w.u w .u
w ww ww ww ww

o
w .u o
ww ww ww w w ww
m om om om om
.uo b -
w w w w.u w
ww ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
h.c om h.c om h.co

m
h.c om .c om
b-b b-b b b-b -bh
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w
o
w.u
o
w .uob w.u
o
w.u ob
ww w w ww ww ww
b h .com b h.com b h .com b h.com b h .com

- - - - -
w .u1.o(p.b 72) Global businesswis.uthe
obstudy uob to employ resources
of how society .chooses
w w.uotob produce goods andwservices
.uob
ww and distribute themwfor w consumption among variousww competing groups andwwindividuals. ww
FALSE

m
b-b
o - Chapter 03 #1 .uob
- b
w w.uDias ww w w.u w
w Learning Goal: Define globalwbusiness ww ww ww
Level of Learning: Knows basic terms and facts
b h . com b h. com bh . com b h . com b h . com

2. (p.
ob-72) Global business is.uany
.uwhile obactivity
- that seeks to provide
.uob
- goods and services to
.uob
others
- across national borders
.uob
-
w operating at a profit.
w w w w
ww TRUE
ww ww ww ww
b h .com bh.co
m
ob- -Chapter 03 #2
.uDias .uo b- o b-b o b-b .uo b-b
w w w.u w.u w
ww ww
Learning Goal: Define global business
Level of Learning: Knows basic terms and facts ww ww ww
m
.co disadvantage of global o m m
.co expensive overseas.bh.co m om
3. (p. -72)
b hOne bh.cbusiness is that labor -isbhmore h.c
ob ob - ob ob- .uo b-b
w.uFALSE w.u w.u w.u w
ww ww ww ww ww
m om om om om
h.co
Dias - Chapter 03 #3
.c h.c h.c .c
b
- -bh b-b b-b -bh
.uob .u ob
Level of Learning: Understands concepts and principles
.uo w.u
o .u ob
w ww ww
w
ww
w
Rationale: Businesses can save on the costs of labor by producing overseas, which is an advantage.
ww ww
w
4. (p. 72) Oneom advantage of engaging inobusiness globally is the businesses have entirely new markets in which to om
h .cproducts. h .c m h .com h .com .c
sellbtheir
o - b
o b - b
o b- b
o b - b
ob -bh
.u .u .u .u .u
w ww TRUE ww w ww w ww ww
w w
m om om om om
h.co
b h.c h.c bh.c h.c
b -
.uo .uo b-b .uo b-b ob- .uo b-b
w Level of Learning: Understands concepts and principles
w w w.u w
ww ww ww ww ww
Rationale: Engaging in global business has many advantages for businesses including exposure to entirely new markets in which to sell their products.

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
5. (p. 72) The global market is smaller than the American market.
FALSE .com .com .com om om
h h -bh h.c -bh
.c
.uo b-b o b-b .uob o b-b ob
w w.u w w.u w .u
ww w w ww ww ww
Learning Goal: Understand the importance of global trade
m
.com .com .com om
w w.u w w.u w w.u w.u w.u
w w that technology is one of
6. (p. 73) Friedman says ww of the world".
w the drivers of the "flattening w w
TRUE

m
o b-b .uob
- b
w w.uDias - Chapter 03 #6 w w w.u w
w ww
Learning Goal: Understand the importance of global trade ww ww ww
b h .com b h.com bh .com h.c om h.c om

-
.u7.o(p.b 73) Exporting is buying b-
.uoproducts
-
from another country.
.uob .uo b-b .uo b-b
w w w w w
ww FALSE ww ww ww ww
.c om h.co
m
-bh
ob b- b b-b b-b b-b
w
.u w .uo w.u
o
w.u
o
w .uo
ww ww
ww ww ww
8. (p. 74) Importing is buying productsofrom another country. om

TRUE b h .com bh .c m h.c h.com h.c om
.uo b- b- .uo b-b .uo .uo b- b
.uo b-b
w w w w w
ww ww ww ww ww
m om om om om
h.co
.c h.c h.c .c
b -bh
- b-b b-b -bh
.uob .u ob .uo w.u
o .u ob
w ww ww
w
ww
w
ww ww
w
9. (p. 74) Free trade is the movement of goods and services among nations without political or economic trade
barriers.
TRUE b h .com b h .com b h .com b h .com b h .com
.uo b- b- .uo b- .uo b- b-o .uo
w w w w.u w
ww ww ww w w ww
m om om om om
h.co h.c
b h.c bh.c h.c
.uo b -
w w w w.u w
ww ww ww ww ww
10. (p. 74) Global business is not particularly competitive because the market is so big.
FALSE
m
h.com
o b - b
.uo b-b
w w w w.u w
ww Dias - Chapter 03 #10 ww ww w w ww
Rationale: U.S. companies face aggressive competition from exporters in such countries as Germany, Japan and China.
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
11. (p. 74) Small businesses account for most of U.S. exports.
FALSE .com om om om om
bh bh.c bh.c b-b
h.c -bh
.c
.u ob- .uob
- ob- o ob
ww ww w.u w.u w .u
w w ww ww ww
m .com
.com .com om
h.co h h h
Rationale: Today in the U.S., small businesses account for only about 29 percent of exports while generating about half of the private-sector commerce.
b b b b h.c
.uo b -
w w w.u w.u w.u
ww ww w w ww w w
12. (p. 74) Economics tells us that it is a poor idea to trade globally.
FALSE
m
o b-b .uob
- b
w w.u w w w.u w
w Dias - Chapter 03 #12 ww ww ww ww
.com .com m om om
Rationale: In an economic sense, there are several reasons why countries trade with other countries: to produce all of the products that its people want and need, to
b h b h h.co h.c
meet the needs of the people of other countries and to enable each nation to produce what it is most capable of producing and to buy what it needs.
b h.c
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
13. (p. 74) Global trade is the exchange of goods and services across national borders.
TRUE
.c om h.co
m
w .u w .uo w.u
o
w.u
o
w .uo
ww Dias - Chapter 03 #13 ww ww ww ww
Learning Goal: Discuss the roles of comparative and absolute advantage in global trade

ob(p.- 74) Comparative advantage
.u14.
-
.uob theory states thatwsome
- -
.uobcountries have a monopoly
.uob on producing a specific
.uob
-
w w w w
ww product. ww ww ww ww
FALSE
h .com .c om h.c om h.c om .c om
- b -bh b-b b-b -bh
w.uob w .u ob
w .uo w.u
o
w .u ob
w w Dias - Chapter 03 #14 ww ww ww ww
h.c om .com h.c om h.c om om

b-b b- b h
b-b b - bh.c b-b
o o o o o
w.u15. (p. 74) Comparativewadvantage
w.u theory states that a.ucountry should sell to other
w w.u countries those products
w.uthat it
ww produces most effectively
w and efficiently. ww ww ww
TRUE
m om om om om
o
.uDiasb - o b-b o b-b ob- .uo b-b
w - Chapter 03 #15 w.u w.u w.u w
ww w w
w of comparative and absolute advantage
Learning Goal: Discuss the roles w in global trade ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
16. (p. 75) Absolute advantage occurs when a country has a monopoly on producing a specific product or is able
to produce
b h .coitmmore efficiently than
b h .all m countries.
coother bh .com b h .com b h .com
ob-
TRUE ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
.uo b .uo o b- ob- o b-b
w w w.u w.u w.u
ww ww w w ww w w
17. (p. 74) Global trade only includes the trade of manufactured goods.
FALSE m m m
h.c o h.co h.c o h.c om h.co
m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww
.com .com h.co
m
h.c om
Rationale: Global trade is the exchange of goods and services across national borders. Exchanges between and among countries involve more than goods and service,
b h b h b h.c om
.uo b- o b- .uo b-
however. Countries also exchange art, sports, cultural events, medical advances, space exploration and labor.
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
18. (p. 75) Every country has a comparative advantage in something.
TRUE m m m
.c o h.co h.c o h.c om h.c om
w .u w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww
om .com om .com
Rationale: Every country has a comparative advantage in something. Comparative advantage theory has been the guiding principle supporting the idea of free
.c h.c h.c om
-bh
economic exchange.
ob ob-
bh
b-b b- b h
b-b
ww ww ww ww ww
19. (p. 75) Many Middle Eastern countries have a comparative advantage in the production of oil.
FALSE m m m m
h.co .c o h.c o h.c o .c om
- b -bh b-b b-b -bh
.uob .u ob .uo w.u
o .u ob
www ww
w
ww
w
ww ww
w
om .com om om
Rationale: Many Middle Eastern countries have an absolute advantage in the production of oil. Most absolute advantage situations involve natural resources that one
h.c h h.c h.c .c om
b-b
country has and others do not have.
b- b b-b b-b b -bh
o
w .u o
ww ww ww w w ww
20. (p. 76) The balance of trade is a nation's ratio of imports to exports.
FALSE m m m
h.co h.c o h.c o om om
- b b-b b-b bh.c b-b
h.c
.uo b .uo .uo ob- .uo
w w w w.u w
ww Dias - Chapter 03 #20
ww ww ww ww
Learning Goal: Discuss the two indicators for measuring global trade

m
h.c om
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
21. (p. 76) A trade surplus occurs when the value of the country's exports exceeds that of its imports.
TRUE .com .com .com .com .c om
h h -bh h -bh
w w.u w w.u w .u
ww w w ww ww ww
m
.com .com .com om
w w.u w w.u w w.u w w.u w w.u
w w occurs when the valuewof the country's imports exceeds
22. (p. 76) A trade deficit w that of its exports.w
TRUE

m
o b-b .uob
- b
w ww ww
Learning Goal: Discuss the two indicators for measuring global trade ww ww
b h .com b h.com bh .com b h .com b h .com

ob(p.- 76) The balance of payments
.u23.
- -
.uob is the differencewbetween
.uob money leaving w
- and money comingob
theucountry
. ob
-
.u into
w w w
ww a country. ww ww ww ww
FALSE
b h .com bh.co
m
ob- -Chapter 03 #23
.uDias .uo b-
.uo b-b o b-b .uo b-b
w w w w.u w
ww w
w indicators for measuring global trade
Learning Goal: Discuss the two w w ww ww
com
24.b(p.-b78)h.Dumping is the practice . com com
bh. country at lowerbprices
. com
. com
o ob -bhof selling products inob
a -foreign
o -bh than those chargedobin-bh
w.uthe producing country. w.u w.u w.u w.u
ww TRUE ww ww ww ww

b
ob- -Chapter 03 #24 b- b - b b-b -bh
w.uDias
Learning Goal: Discuss the two w .uofor
indicators measuring global trade w .uob w.u
o
w .u ob
ww Level of Learning: Knows basic ww terms and facts ww ww ww
m
co gray market refersbtoh.exports
co m co m om om
25. (p.b78)h.The targeted to senior
b h.citizens. h.c -bh
.c
ob
.uFALSE
-
.uob
-
.uob
- o b-b ob
w w w w.u w .u
ww ww ww w w ww
m om om om om
h.co
h.c
b h.c bh.c h.c
.uo b -
.uo b-b
.uo b-b ob- .uo b-b
w w w w.u w
ww ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
26. (p. 78) The gray market refers to the flow of goods in a distribution channel or channels other than those
intended.cby
h omthe manufacturer.
h .com h .com h .com h .com
b b b b b
ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w w.u w.u w.u
ww ww w w ww w w
27. (p. 77) The goal of effective global trade is to have more money flowing into the country than flowing out of
the country.m
TRUE b h .co b h.com b h .com b h .com bh .com
ob - - - - -
w.u w .uob w .uob w.u
ob
w .uob
w w ww ww ww ww
.com .com m om om
b h b h
bh.co h.c h.c
b- b- b- b-b b-b
Rationale: The goal of effective global trade is always to have more money flowing into the country than flowing out of the country, in other words a favorable balance
.uo o .uo .uo .uo
w of payments. w.u w w w
ww w w ww ww ww
28. (p. 77) Every

m year since 1976 the.cU.S.
mhas had a favorable balance
m of trade.
FALSE .c o o .c o h.c om h.c om
-bh
ob -bh -bh b-b b-b
w.u w .uob w.u
ob
w.u
o
w .uo
ww ww ww ww ww
om .com
.c h.c om .com h.c om
-bh h h
b b-b b b-b
ob ob- .uo .uo b-
Rationale: Every year since 1976 the U.S. has bought more goods from other nations than it has sold to other nations. This is called a trade deficit or unfavorable
.uo
w.u
balance of trade. w.u w w w
ww ww ww ww ww
29. (p. 77) ThemU.S. is the world's largestmexporting nation.

TRUE h .co h .co h .com h.c om .c om
ob - b - b
ob - b b-b -bh
w.u w.u w .uob w.u
o
w .u ob
w w ww ww ww ww
h.c om .com
h h.c om h.c om .c om
b-b b- b b-b b-b
Rationale: The U.S. is the world's largest exporting nation because the U.S. exports the largest volume of goods globally in an absolute sense. b -bh
o
w .u o
ww ww ww w w ww
30. (p. 77; Figure 3.3) In 2007 the top trading partner of the U.S. was China.
FALSE om om om om om
h.c h.c h.c bh.c h.c
w w w w.u w
ww ww ww ww ww
bh .com h.c om .com h.co

Rationale: Canada is the number one trading partner of the U.S., with a total value of exports and imports at $46.22 billion in 2007.
h
m
h.c om
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
31. (p. 79) Trade protectionism is the use of government regulations to expand the import of goods and services.
FALSE .com .com .com .com .c om
h h -bh h -bh
w w.u w w.u w .u
ww w w ww ww ww
Learning Goal: Describe different types of trade protections and trade agreements
m
.com .com .com om
w w.u w w.u w w.u w.u w.u
w 32. (p. 79) A tariff is awtax on imported goods. w ww w w
TRUE

m
o b-b .uob
- b
w ww ww
Learning Goal: Describe different types of trade protections and trade agreements ww ww

ob(p.- 79) Retail tariffs are .designed
.u33. uob
- to raise the retail price
-
.uob of imported products
-
.uosobthat domestic goodswwill
-
.uobbe
w w w w
ww more competitivelywpriced. w ww ww ww
FALSE
b h .com bh.co
m
ob- -Chapter 03 #33
.uDias .uo b-
w w w w.u w
ww w
w types of trade protections and trade
Learning Goal: Describe different w
w agreements ww ww
com
34.b(p.-b79)h.Revenue tariffs are designed
. com . . com com h.c om
o ob -bh to raise money for
o b bhgovernment.
-the o b -bh b-b
.u .u .u .u .uo
w ww TRUE ww w ww w ww w ww
w
m om om om om
h.co
b -bh
.c h.c h.c -bh
.c
.uob
- b
.u o .uo b-b o b-b ob
ww
w w w.u w .u
w ww ww ww ww
35. (p. 79) The U. S. published the Harmonized Tariff Schedule, which includes tariff costs for every product from
.com
everybcountry.
h b h .com b h .com b h .com b h .com
ob-
.uTRUE .uob
-
.uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
m om om om om
h.co
h.c
b h.c bh.c h.c
.uo b -
.uo b-b
.uo b-b ob- .uo b-b
w w w w.u w
ww ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
36. (p. 79) An embargo is a moderate slowing of the import or export of a certain products with a particular
country..com .com .com .com .com
b h b h b h b h b h
ob-
FALSE ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w w.u w.u w.u
ww ww w w ww w w
37. (p. 79) Nontariff barriers are restrictive standards that detail exactly how a product must be sold in a country.
TRUE m m m m m
h.c o h.co h.c o h.c o h.co
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww

m
h.c om h.c om
o b- o b- o b-
.uo b-b .uo b-b
w w.u38. (p. 80) Keiretsu are w w.u
"corporate families" in w.u
Japan.
w w w
w w w ww ww
TRUE
b h .com bh.co
m
ob- -Chapter 03 #38
.uDias .uo b-
w w w w.u w
ww w
w agreements ww ww
com
39.b(p.-b80)h.GATT is an agreement
com
h. by many countries-bto com
h.reduce the restrictions-bonh.trade with one another.-bh. com com
b -bsigned b
.u o .uo .uo .uob .uob
w ww TRUE ww w ww w ww w ww w
m om om om om
h.co
b -bh
.c h.c h.c -bh
.c
.uob
- b
ww
w w w.u w .u
w ww ww ww ww
40. (p. 81) The WTO is an organization that mediates trade disputes between countries and also sets policies in
com
placebtoh.encourage trade. b h .com b h .com b h .com b h .com
ob-
.uTRUE .uob
-
.uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
m om om om om
h.co
h.c
b h.c bh.c h.c
.uo b -
.uo b-b
.uo b-b ob- .uo b-b
w w w w.u w
ww ww ww ww ww
41. (p. 81) A common market is also called a trading bloc.
TRUE .com .com .com m om
h h h h.co h.c
.uo b-b .uo b-b .uo b- b
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m
.com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
42. (p. 81) A common market is a regional group of countries that have a common external tariff, no internal
tariffs and m coordination of laws.ctoom
.cothe .commember countries.bh.com
facilitate exchange among .com
b h b h bh b h
ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w w.u w.u w.u
ww ww w w ww w w
43. (p. 82) The EU began as an alliance of six trading partners in the late 1950s and by 2007 had grown to a group
of 25 countries, m with several more .poised
m to join.
TRUE b h . c o
b h c o
b h .com b h .com bh .com
ob - - - - -
ob
w .uob
w w ww ww ww ww
.com .com m om om
h
b b h bh.co h.c h.c
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
44. (p. 84) OPEC is an organization consisting of 12 oil-producing countries, working collectively for oil
interests.
TRUEh.com h.co
m
h.co
m
h.co
m
h.c om
-b b-b b-b b-b b-b
w .uob w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww
om .com
ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww ww
45. (p. 84) NAFTA is an agreement signed by the U.S., Canada and Brazil to reduce or eliminate tariffs on goods ww
and to encourage trade between the countries.
FALSE com m m m m
-b h. h.co -b h.co h.co
-b h.co -b -b
.uob w.u
ob
w.u
ob
w.u
ob
w.u
ob
www w w ww w w w w
o b-b o b- b
o o b-b b-b ob -bh
w w.u w w.u w w.u w w.u w .u
w 46. (p. 80) GATT established
w an international forum
w for negotiating mutual ww
w reductions in trade restrictions.
TRUE
m om om om om
o
ww w
Learning Goal: Describe different
w
w agreements ww ww
Rationale: The member countries agreed to negotiate to create monetary and trade agreements that might facilitate the exchange of goods, services, ideas and cultural
programs.

m
h.c om
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
47. (p. 60) The Uruguay Round established the World Trade Organization.
TRUE .com .com .com om om
h h -bh h.c -bh
.c
w w.u w w.u w .u
ww w w ww ww ww
m .com
.com .com om
h.co h h h
Rationale: In 1986, the Uruguay Round of the GATT was convened to specifically deal with the renegotiation of trade agreements. It also established the World Trade
b b b b h.c
.uo b -
Organization.
w w w.u w.u w.u
ww ww w w ww w w
48. (p. 79) The goal of a quota is to prevent other countries from flooding the market with products, thereby
b .comthe price.
driving down
h b h .com b h .com b h .com bh .com
ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
.com .com
b h b h bh.co
m
h.c om h.c om
.uo b- o b-
.uo b-
.uo b-b .uo b-b
w w.u
Rationale: An import quota limits the number of products in certain categories that a nation can import. The goal of a quota is to prevent other countries from flooding
w w w
ww w
the market with products, thereby driving down the price.
w ww ww ww
49. (p. 79) Denmark

b h .com requires companies
bh
to sell butter in cubes, c
.com b h .not
omtubs. This type of policy
b h .cois
mcalled an embargo. .com
bh
FALSE
ob- ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
om .com
-bh ob-
bh
ob b-b b- b h
b-b
w.u w.u .uo .uo .uo
Rationale: A non-tariff barrier is a restrictive standard that details exactly how a product must be sold in a country, such as the way butter is sold in Denmark.
w w w
ww ww ww ww ww
50. (p. 80) A keiretsu is a type of non-tariff barrier.
TRUEh.com h.co
m
h.c om h.c om .c om
ob-
b -b b-b b-b -bh
. u .uob .uo w.u
o .u ob
www ww
w
ww
w
ww ww
w
om .com
h.c h h.c om h.c om .c om
b-b b- b b-b b-b
Rationale: An example of non-tariff barriers is Japan's keiretsu. Under keiretsu, major companies built "corporate families" that forged semipermanent tie s with
b -bh
w .uo .uo
suppliers, customers and distributors with full support of the government.
w w .uo w.u
o
w .u o
ww ww ww w w ww
51. (p. 81) Mercosur is an example of a common market.
TRUEh.com h.co
m
h.c om om om
b-b b-b b-b bh.c b-b
h.c
.uo .uo .uo ob- .uo
w w w w.u w
ww ww ww ww ww
.com
bh h.c om h .com h.co
m
h.com
.uo .uo b-b
Rationale: The South American Common Market (called Mercosur) is a common market.
b- .uo b- b
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
52. (p. 84) Part of the mission of OPEC is to seek ways and means of ensuring the stabilization of prices in
b .comoil markets.
international
TRUE - - - - -
w .uob .uob w .uob w .uob .uob
w w
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w.u w.u
Rationale: The mission of OPEC includes seeking ways and means of ensuring the stabilization of prices in international oil markets.
w w.u
ww ww w w ww w w
53. (p. 84) One objective of NAFTA is to promote conditions of fair competition between Canada, the U.S. and
Mexico.
ob-
.uTRUE .uob
-
.uob
-
.uob
-
.uob
-
w w w w w
ww ww ww ww ww
.com .com m om om
b h b h
bh.co h.c h.c
b- b-
.uo o .uo b-
.uo b-b .uo b-b
w w.u w w w
Rationale: The North American Free Trade Agreement (NAFTA) has as one objective to promote conditions of fair competition in the free trade area including
ww Canada, the U.S. and Mexico.w w ww ww ww
b com
54. (p. 85)h.Opponents
bh .com
of the ratification of NAFTA included h
b .com labor unions. bh.com
organized h.c om
ob-
.uTRUE .uob
-
.uob
-
.uob
-
.uo b-b
w w w w w
ww ww ww ww ww
om
.c .com h.c om .com h.c om
-bh h h
b b-b b b-b
ob ob-
.uo .uo b- .uo
w.u w.u w
Rationale: Opponents of the ratification of NAFTA were led primarily by organized labor unions. w w
ww ww ww ww ww
55. (p. 86; Figurem3.5) The strategy for reachingm global markets with the
m least amount of risk .iscocontract
m
h .
manufacturing.c o h . c o h . c o h .c om
ob-
b
ob-
b
ob-
b
ob-
b
ob -bh
w.uFALSE w.u w.u w.u w .u
ww ww ww ww ww
om
h.c h .com h.c om h.c om .c om
b-b b
Learning Goal: Discuss the different strategies for reaching global markets
b- b-b b-b b -bh
w .uo .uo
w w .uo w.u
o
w .u o
ww ww ww w w ww
56. (p. 86) Licensing refers to selling the right to manufacture a product or use a trademark to a foreign company
for a fee..com .com .com .com .com
b h b h b h b h b h
ob-
uTRUE uob
-
uob
-
uob
-
uob
-
w. w. w. w. w.
ww ww ww ww ww
bh .com h.c om
h .com h.co
m
h.com
b- b-b
.uo .uo .uo b- b
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
57. (p. 86) The licensing fee is called a royalty.
TRUE .com .com m om om
h h h.co h.c -bh
.c
.uo b-b o b-b .uob
- b
o b-b ob
w w.u w w.u w .u
ww w w ww ww ww
m
.com .com .com om
o b - o b- o b- o ob- b-b
w w agreement is an arrangement
58. (p. 86) A franchising w w a good idea for a business
whereby someone with w sells to
others the rights to use the business name and sell the product or service in a given territory.
TRUE m m m m m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww

m
h.c om h.c om
o b- .uo b- .uo b-
.uo b-b .uo b-b
w w.u59. (p. 86) A person who
w w
buys a franchise is called
w wfranchisor.
a w w
w w w ww ww
FALSE
b h .com bh.co
m
h.com h.c om h.c om
ob- -Chapter 03 #59
.uDias .uo b-
w w w w.u w
ww w w
w strategies for reaching global markets
Learning Goal: Discuss the different w ww ww
com
60.b(p.-b90)h.Contract manufacturing . com . com
h. goods to which a -bh. com com
o o b -bhinvolves a foreign company's
o b-bh production of private
o b -blabel ob
w w.udomestic company then w
.u
wattaches its own brand w w.uor trademark.
name w w.u w w.u
w TRUE w w w w
h .com h .com h .com h.com .c om

b
ob- -Chapter 03 #60 - b - b b-b -bh
w.uDias
Learning Goal: Discuss the w
different
.uob for reaching global marketsw.uob
strategies w.u
o
w .u ob
ww Level of Learning: Knows basicww terms and facts ww ww ww
m
cojoint venture is a long-term m m m m
61. (p.b90)h.A
- - b h.co partnership between
- b .co or more companies bestablished
htwo - h.co to help each bh.co
-
ob
.ucompany b
.uomarket
build competitive advantages. .uob .uob .uob
w w w w w
bh . com b h .com b h . com bh.c

om h.c om
Diasb- -Chapter 03 #61 -
o Goal: Discuss the different strategies
.uLearning
- ob- .uo b-b
w w w.u w
ww Level of Learning: Knows basic
ww terms and facts ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
62. (p. 91) One benefit of a joint venture is that the firms involved can share technology.
h h -bh h -bh
w w.u w w.u w .u
ww w w ww ww ww
m
.com .com .com om
o b - o b- o b- oob- b-b
w 63. (p. 91) A Redfieldwinvestment means that a company
w w
will enter into a country and build factorieswand offices
on its own.
FALSE
com
h. h.com h.c om h.c om h.co
m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww

m
h.c om h.c om
o b- o b- o .uo b-
.uo b-b b-b
w w.u64. (p. 91) A strategic alliance
w w.u is a long-term partnership
w w.u between two or more
w wcompanies established to
w whelp each
w w w w w
TRUE
.c om h.co
m
w .u w .uo w.u
o
w.u
o
w .uo

ob(p.- 92) Foreign direct investment
.u65. .uob
-
is the buying of .uob
-
permanent property and .uob
-
businesses in foreign .uob
nations.
-
w w w w w
ww TRUE ww ww ww ww

b
w.uDias
Learning Goal: Discuss the w
different
strategies w.u
o
w .u ob
m
coforeign subsidiary isbahcompany
.co m .cohome country by a foreign m m om
66. (p.b92)h.A
- -
that is owned b
-
inhthe
- b h.co company. -bh
.c
ob
.uFALSE .uob .uob .uob .u ob
w w w w w
ww ww ww ww ww
m om om om om
h.co
h.c
b h.c bh.c h.c
.uo b -
.uo b-b
.uo b-b ob- .uo b-b
w w w w.u w
ww ww ww ww ww
67. (p. 92) When a host government takes over a foreign subsidiary in a country it is called expropriation.
TRUE .com .com .com .com om
h h h h h.c
w w w w.u w
ww ww ww w w ww
m
.com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
68. (p. 93) A multinational corporation is an organization that markets products worldwide, but manufactures
b .com in the home country.

these products
ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w w.u w.u w.u
ww ww w w ww w w
69. (p. 87) Licensing can work well for small companies that have come up with a new product.
TRUE m m m m m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww
.com .com h.co
m
h.c om
Rationale: Licensing is selling the right to manufacture a product or use a trademark to a foreign company for a fee. This ca n work well for small companies that have
b h b h b h.c om
.uo b- o b- .uo b-
come up with a new product. A licensing agreement would allow a company to produce and sell the new product overseas.
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
70. (p. 87) Over 95 percent of the exporters in the U.S. are very large businesses.
FALSE m m m
w .u w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww
om .com
Rationale: Over 95 percent of the exporters in the U.S. are small and medium-size businesses.
ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww ww
71. (p. 88) Franchising differs from licensing in that where franchising is for a single product, licensing allows the ww
use of an entire concept including the label, how the good is manufactured or made and the look and feel of the
business.com com com com com
FALSE b h . b h . b h . b h . b h .
o b- b- o b- .uo b- b- o o
w w.u w.u w w.u w.u
w ww ww ww ww
om .com
b-b b
b- b-b b-b b -bh
o
w .u o
Rationale: Franchising is different from licensing in that where licensing might be for a single product, franchising allows the use of an entire concept including the
ww ww ww
label, how the good is manufactured or made and the look and feel of the business.
w w ww
72. (p. 89) One

h . comadvantage of franchising
h .
is that the product or service
com h . com is made and soldbhin.cexactly
om the same way h.com
throughout
b the world. b b b
.u ob- . u ob- . u ob- . u ob- . u ob-
www FALSE ww w ww w ww ww w w
.com
m
h.c om
b- b-b
.uo .uo .uo b- b
o b - b
.uo b-b
w Level of Learning: Understands concepts and principles
w w w.u w
ww ww ww w w ww
Rationale: Franchisors have to be careful to adapt their product or service to the countries they serve. For example, KFC's first 11 Hong Kong outlets failed within two
years. Apparently the chicken was too greasy and eating with fingers was too messy for the fastidious people of Hong Kong.
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
73. (p. 90) One disadvantage of contract manufacturing is that intellectual property and copyright laws are
m country.
different.cinoevery .com .com .com .com
TRUE - b h - b h - bh - b h - b h
w .uob .uob w .uob w .uob .uob w w
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w.u w.u w.u
Rationale: Contract manufacturing involves a foreign company's production of private label goods to which a domestic company then attaches its own brand name or
w
ww and sell it itself.
ww w w ww w w
trademark. One disadvantage is that intellectual property and copyright laws are different in every country, so it is possible that the manufacturer can copy the product
c om om
h.cpartnerships (such as -joint om om om
74. (p.-b90)h.Companies
b
that engage
b -bin b bh.cventures) grow moreb -b h.c than their counterpart
slowly
b-bh
.c
o o o o o
w.ucompanies that do not. w.u w.u w.u w.u
b h .com b h.com bh .com h.c om h.c om

ob- -Chapter
Dias
.uLearning
03 #74 -
-
.uo b-b .uo b-b
w w
Goal: Discuss the different strategies w w
ww Level of Learning: Understandswwconcepts and principles ww ww ww
Rationale: According to Coopers & Lybrand, companies that engage in partnerships grow much faster than their counterpart companies that do not.

75.
ob(p.- 90 - 91) Joint ventures.ucan
obbe
- mandated by governments
- as a condition of doing
- business in their country.
-
w .uTRUE w w .uob w .uob w .uob
ww ww ww ww ww

-bh h h
b b-b b b-b
ob ob-
.uo .uo b- .uo
w.u w.u
Level of Learning: Understands concepts and principles w w w
ww ww ww ww ww
Rationale: Joint ventures can even be mandated by governments as a condition of doing business in their country. It's often hard to gain entry into China, but a greeing
to a joint venture with a Chinese firm can help a company gain such entry.
b h . com b h . com b h . com b h . com b h . com

76.b(p.- 91) The difference between
b- a joint venture and.ua ostrategic
b- alliance is that typically
- a joint venture does not
-
w
o
.uinvolve sharing costs, w .uomanagement
risks, or even profits.
w w .uob w .uob
ww FALSE
ww ww ww ww

b-b
o - Chapter 03 #76 b- b b-b b-b b -bh
w .uDias .uo for reaching global marketsw.uo
wstrategies w.u
o
w .u o
ww w
Learning Goal: Discuss the different
w concepts and principles
Level of Learning: Understands ww w w ww
Rationale: Unlike joint ventures, strategic alliances do not typically involve sharing costs, risks, management or even profits.

ob(p.- 91) To be successful,.uthe
.u77.
-
obfirms entering a strategic -
.uoballiance need to be roughly
-
.uob the same size. w.uob
-
w w w w

m
h.c om
.uo b- .uo b-b
.uo b- b
o b - b
.uo b-b
w w w w.u w
ww ww
ww w
Rationale: Strategic alliances can be flexible and they can be effective between firms of vastly different size.
w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
78. (p. 92) Creating a foreign subsidiary is an especially good strategy for smaller firms that want to enter the
b .com
global marketplace.
ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w.u w.u w.u
Rationale: A foreign subsidiary is a company that is owned in a foreign country by the home company (called the parent company). Obviously, creating a subsidiary
w
ww ww w w ww w w
might not be the best course of action for a smaller business; however, as a small company grows, this option for global business might be feasible.
79. (p. 94) Culture

b h .com refers to the setbof
h.cvalues,
om beliefs, rules andh.institutions
b com held to by a specific
b h .com group of people.bh.com
ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
.com
Learning Goal: 7
b h b h.com bh.co
m
h.c om h.c om
.uo b- o b-
.uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
80. (p. 94) Ethnocentricity is an attitude that one's own culture is superior to all others.
TRUE m m m
w .u w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww
Learning Goal: 7

ob-
.u81. . uob
-
. uob
-
.uob
-
. uob
-
w (p. 95; Figure 3.6) Power w w w w
ww ww distance is the extent to
wwwhich the less powerfulwmembers
w of organizationswand
w
institutions (like the family) accept and expect that power is distributed unequally.
TRUE
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
ww w w w.u w .u
Learning Goal: 7
h.c om h .com h.c om .c h.c om om

o b-b o b- b
o o b-b ob -bh b-b
w.u82. (p. 96) Global marketing
w.uis the term used to describe
w.u selling the same product
w.u in different ways in w u
w.world,
the
ww ww ww
depending on the culture and customs of the country. ww w
FALSE
m om om om om
.uo b -
w w w w.u w
Learning Goal: 7
ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
83. (p. 98) The exchange rate is the value of one nation's currency relative to the currencies of other countries.
h h -bh h -bh
w w.u w w.u w .u
ww w w ww ww ww
Learning Goal: 7
m
.com .com .com om
w 84. (p. 99) Bartering iswthe exchange of merchandise
w for other merchandisewor service for money. w
FALSE

m
o b-b .uob
- b
w Learning Goal: 7 ww ww ww ww
b h .com b h.com b h .com b h .com b h .com

ob(p.- 99) Countertrading is.uaocomplex
.u85. b- for of bartering, b- occurs between two
.uowhich
-
.uobpeople in the same country.
.uob
-
w w w w w
.c om h.co
m
-bh
ob b- b b-b b-b b-b
w
Learning Goal: 7
.u w .uo w.u
o
w.u
o
w .uo
ww ww
ww ww ww
86. (p. 100) The

mForeign Corrupt Practices Act of 1977 prohibits "questionable" or "dubious" payments to foreign om
h cosecure
.to h .com h .com h.com .c
officials
ob - b business contracts.
ob - b
o b- b
o b - b
o b -bh
.u .u .u .u .u
w ww TRUE ww w ww w ww ww w w
m om om om om
h.co
b -bh
.c h.c h.c -bh
.c
.uob
-
Learning Goal: 7
ww
w w w.u w .u
w ww ww ww ww
87. (p. 99) Countertrading is used in the currency markets.
FALSE h .com h .com h .com h.c om .c om
b- b b- b b- b b-b b -bh
o
w .u o
ww ww ww w w ww
Learning Goal: 7
m om om om om
h.co h.c
b h.c bh.c h.c
- b-b b-b ob-
Rationale: Countertrading is a complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.
.uo b .uo .uo .uo b-b
w w w w.u w
ww ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
88. (p. 93) Global business is far easier than domestic business.
FALSE .com .com .com om om
h h -bh h.c -bh
.c
w w.u w w.u w .u
ww w w ww ww ww
Learning Goal: 7
m .com
.com .com om
h.co h h h
Rationale: The hurdles for business are higher and more complex in global markets than in domestic ones. Global businesses mu st deal with differences in
b b b b h.c
.uo b -
.uo b- o b-
sociocultural forces, economic and financial forces, legal and regulatory forces and physical and environmental forces.ob- o b-b
w w w.u w.u w.u
ww ww w w ww w w
89. (p. 94) There can be religious implications of global business decisions.
TRUE .com .com .com om m
h -bh h h.c h.co
o b-b .uob .uo b-b o b-b .uo b- b
w w.u w w w.u w
w ww ww ww ww
Learning Goal: 7
.com .com m om om
b h b h h.co
Rationale: Religion is an important part of any society's culture and can have a significant impact on business operations.
b h.c h.c
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
90. (p. 96) A sound philosophy to adopt in global markets is always assume that what works in the U.S. will work
around the world since the U.S. leads the marketplace on so many fronts.
m m m m m
FALSE
-bh.co h.co b h.co h.co
-b h.co -b -b
ob ob- ob ob ob
ww.u w . u w.u w.u w.u
w ww w w w w ww
Learning Goal: 7
om .com
-bh ob-
bh
b-b b- b h
Rationale: A sound philosophy to adopt in global markets is this: Never assume that what works in one country will work in an other.
ob b-b
ww ww ww ww ww
91. (p. 97) All large U.S. companies always think globally.
FALSE m m
h.co .c o h.c om h.c om .c om
- b -bh b-b b-b -bh
.uob .u ob .uo w.u
o .u ob
www ww
w
ww
w
ww ww
w
Learning Goal: 7
om .com
Rationale: The truth is that many U.S. companies often fail to think globally.
o
w .u o
ww ww ww
92. (p. 98) Global financial markets do not have a common worldwide currency. w w ww
TRUE
m om om om om
.uo b -
w w w w.u w
Learning Goal: 7
ww ww ww ww
Rationale: Global financial markets unfortunately do not have a common worldwide currency. Mexicans shop with pesos, South Koreans with won, Japanese with yen
.com
and Americans with dollars.
m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
93. (p. 100) The old saying "When in Rome, do as the Romans do" applies to American businesses conducting
business.c
h om
globally.
h .com h .com h .com h .com
b b b b b
ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
Learning Goal: 7
b h b h b h h.c
- b-
w w.u w.u w.u
Rationale: In global markets, no central system of law exists. American businesspeople are required to follow U.S. laws and regulations in conducting business
w
ww globally. ww w w ww w w
94. (p. 72) __________ refers to any activity

b h .com b h.com that seeks to provide
b h
goods and services to others
.com b h .com across national bh.com
borders
ob- while operating at.uaoprofit.
b- - - -
w.uGlobal business w w .uob w .uob w .uob
ww w w w w w w w w
h .com
b b h.com bh.co
m
h.c om h.c om
b-
.uo o b- .uo b-
.uo b-b .uo b-b
w w.u
Level of Learning: Knows basic terms and facts w w w
ww w w ww ww ww
95. (p. 73) __________

m is selling products m to another country. .com
Exporting .c o . c o h.c om h.c om
ob-bh -bh -bh b-b b-b
w.u w .uob w.u
ob
w.u
o
w .uo
ww ww ww ww ww
om .com
-bh h h
b b-b b b-b
ob ob- .uo .uo b- .uo
w.u w.u w w w
ww ww ww ww ww
96. (p. 74) __________ is buying products from another country.
Importing
m om om om om
bh.co -bh
.c h.c h.c -bh
.c
.uob
-
ww w w w.u w .u
h.c om h .com h.c om .c h.c om om

o b-b o b- b
o o b-b ob -bh b-b
w.u97. (p. 74) __________wiswthe
.u movement of goods and
w.uservices among nations .u
wwithout w.u trade
political or economic
ww barriers. w ww ww ww
Free trade
m om om om om
.uo b -
w w w w.u w
ww Dias - Chapter 03 #97 ww
ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
98. (p. 73) Friedman discusses __________ as being one of the main drivers of the phenomenon that he calls the
"flattening
b h .coofmthe world". b h .com b h .com b h .com b h .com
ob-
technology ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w.u w.u
Rationale: Friedman discusses technology as being one of the main drivers of the phenomenon that he calls the "flattening of the world".
w w.u
ww ww w w ww w w
99. (p. 74) __________ is the exchange of goods and services across national borders.
b .com
Globalhtrade
b h.com b h .com b h .com bh.co
m
ob - - - - -
ob
w .uo b
w w ww ww ww ww
.com
b h b h.com bh.co
m
h.c om h.c om
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww
100. (p. 74) __________ theory states that a country should sell to other countries those products that it produces ww
most effectively and efficiently and buy from other countries those products it cannot produce as effectively or
efficiently.
Comparative
ob- advantage ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
om .com
-bh ob-
bh
ob b-b b- b h
b-b
ww ww ww ww ww
101. (p. 75) A country has a(n) __________ if it has a monopoly on producing a specific product or is able to
produce it more m efficiently than all.cother
m countries.
absolute
b h . c o
advantage b h o
b h .com b h .com b h .com
ob- ob- ob- ob- ob-
w.u w.u w.u w.u w.u
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h.c om
Level of Learning: Knows basic terms and facts h .com h.c om h.c om .c om
o
w .u o
ww ww ww w w ww
102. (p. 75) Most absolute advantage situations involve __________ that one country has and other do not have.
natural resources
m om om om om
.uo b -
w w w w.u w
Rationale: Most absolute advantage situations involve natural resources that one country has and others do not have. Absolute advantage can also be difficult to
bh .com h.c om
sustain if conditions change or resources are discovered elsewhere.
h .com h.co
m
h.c om
o b - b
.uo b-b
w w w w.u w
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m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
103. (p. 74 - 75) One example of __________ theory is England selling wool and France selling wine.
comparative
h .comadvantage .com h .com .com .c om
b-b b-b -bh b-b
h -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
m .com
.com .com om
h.co h h h
Rationale: Comparative advantage theory states that a country should sell to other countries those products that it produces most effectively and efficiently and buy
b b b b h.c
.uo b -
.uo b- o b- ob-
from other countries those products it cannot produce as effectively or efficiently. Examples might be England selling wool and France selling wine. o b-b
w w w.u w.u w.u
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104. (p. 76) The __________ is a nation's ratio of exports to imports.
balance .of m
cotrade .com .com om m
h -bh h h.c h.co
w w.u w w w.u w
w ww ww ww ww
.com .com m om om
b h b h bh.co h.c h.c
o b- o b- o o b- o b-b b-b
w w occurs when the value
105. (p. 76) A __________ w of the country's exportswexceeds that of its imports.
w
trade surplus
.c om h.co
m
w .u w .uo w.u
o
w.u
o
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ww
Learning Goal: Discuss the two indicators for measuring global tradeww ww ww

ob-(p. 76) A __________ .occurs
.u106.
-
uob when the value ofwthe b-
.uocountry's imports exceeds -
.uobthat of its exports. w.uob
-
w w w
ww trade deficit ww ww ww ww
m om om om om
bh.co -bh
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b-b b-b
-
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.u .uo w.u
o .u ob
www ww
w
ww
w
ww ww
w
107. (p. 76) The

m __________ is the difference between money coming into a country (fromoexports) and money
leaving
b h .cocountry
the (for h
imports).
b .com b h .com b h .c m b h .com
ob- of payments .uob-
.ubalance .uob
-
.uob
-
.uob
-
w w w w w w w w w w
w w w w w
m om om om om
h.co
b h.c h.c bh.c h.c
- b-b
.uo b .uo .uo b-b ob- .uo b-b
w Level of Learning: Knows basic terms and facts
w w w.u w
ww ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
108. (p. 78) __________ is the practice of selling products in a foreign country at lower prices than those charged
b .com country.
in the producing
ob-
Dumping ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w w.u w.u w.u
ww ww w w ww w w
109. (p. 78) The __________ refers to the flow of goods in a distribution channel or channels other than those
intended by m the manufacturer.
gray-b h .
market c o
b h.com b h .com b h .com bh .com
o b b- .uo b- .uo b- o b- .uo
w w.u w w w.u w
w ww ww ww ww
.com .com m om om
h
b b h bh.co h.c h.c
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
110. (p. 79) __________ is the use of government regulations to limit the import of goods and services.
Trade protectionism
.c om h.co
m
w .u w .uo w.u
o
w.u
o
w .uo
b h .com b h .com b h .com b h.com h.c om

ob-(p. 79) A(n) __________
.u111.
-
.uoisb a tax on imports. w.uob
-
.uo b- .uo b-b
w w w w
ww tariff ww ww ww ww
h .com h .com h .com h.com .c om

b
w.uDias
Learning Goal: Describe different w .uofob
types trade protections and trade w .uob
agreements w.u
o
w .u ob
m m m m m
112. (p.
- b h79).cAo publication by the-U.S.
b
o
h.cgovernment that lists bthe
-
o and quotas for every
h.ctariffs - b h.coimported good is -bh.co
ob ob ob ob ob
w w.ucalled the __________. w w.u w w.u w w.u w w.u
w Harmonized TariffwSchedule w w w

om h.c om
Diasb- -Chapter 03 #112
.uofob
o Goal: Describe different types
.uLearning
-
.uob
- ob- .uo b-b
w w trade protections and trade agreements
w w.u w

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
113. (p. 79) A(n) __________ limits the number of products in certain categories that a nation can import.
.com
import quota
h .com h .com .com .c om
b-b b-b -bh b-b
h -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
m
.com .com .com om
o b - o b- o b- ob-
o b-b
w w
114. (p. 79) A(n) __________ is a complete banwon the import or export ofwa certain product or the stopping
w of all
trade with a particular country.
embargo m
h.c o h.com h.c om h.c om h.co
m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww

m
h.c om h.c om
o b- o b- uo o b- o b-b b-b
w w.u115. (p. 79) __________ware
w.urestrictive standards w w.detail
that exactly how a w.u must be sold in a country.
product
w w w.u
w w w w w
Non-tariff barriers
b h .com bh.co
m
ob- -Chapter 03 #115
.uDias .uo b-
w w w w.u w
ww w
w agreements ww ww
. com h. com . h. com . com com

116.
ob -(p.bh80) The __________ oisban
-bagreement o b-bhcountries to reduce othe
signed by many b -brestrictions on trade with
o b -bh
w.uone another. w.u ww
.u
ww
.u
ww
.u
ww General Agreement wwon Tariffs and Trade w w w

b
w.uDias
Learning Goal: Describe different w .uofob
types trade protections and trade w .uob
agreements w.u
o
w .u ob
m
o __________ mediates m m m m
117. (p.
- b h81).cThe - b h.cotrade disputes between
- b .co
hcountries and also sets b
- h.co in place to
policies
- b h.co
ob ob ob ob ob
w w.uencourage trade. w w.u w w.u w w.u w w.u
w World Trade Organization
w w w w

om h.c om
Diasb- -Chapter 03 #117
.uofob
o Goal: Describe different types
.uLearning
-
.uob
- ob- .uo b-b
w w trade protections and trade agreements
w w.u w

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
118. (p. 81) A(n) __________ is a regional group of countries that have a common external tariff, no internal
tariffs and m coordination of laws.ctoom
.cothe .commember countries.bh.com
facilitate exchange among .com
b h b h bh b h
ob-
common market ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w w.u w.u w.u
ww ww w w ww w w
119. (p. 82) The __________ is an agreement among European member countries to eventually reduce all barriers
to trade and m become unified both economically
m and politically. m
European
b h . c o
Union b h. c o
b h .co b h .com bh .com
ob - - - - -
ob
w .uob
w w ww ww ww ww
.com .com m om om
h
b b h bh.co h.c h.c
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
120. (p. 84) __________ is an organization, consisting of 12 oil-producing countries, to work collectively for oil
interests.
OPECh.com om om om om
b bh.c bh.c bh.c bh.c
ob- ob- ob- ob- ob-
w.u ww
.u w.u w.u ww
.u
ww w ww ww w
om .com
ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww
121. (p. 84) The __________ is an agreement signed by the U.S., Mexico and Canada to reduce or eliminate ww ww
tariffs on goods and to encourage trade between the countries.
North American
com Free Trade Agreementcom com com om
. . h. h. .c
.u .u .uo w.u
o .u o
www ww
w
ww
w
ww ww
w
o b-b o b- b
o o b-b b-b ob -bh
w 122. (p. 79) __________
w tariffs are designed to w
raise money for the government.
w ww
Revenue
m om om om om
o
ww w
Learning Goal: Describe different
w
w agreements ww ww
Rationale: Revenue tariffs are designed to raise money for the government. Revenue tariffs are also commonly used by developing countries to help infant industries
compete in global markets.

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
123. (p. 79) The goal of a __________ is to prevent other countries from flooding the market with products,
b .com down the price.bh.com

thereby driving
h b h .com b h .com b h .com
ob-
quota ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w.u w.u
Rationale: The goal of a quota is to prevent other countries from flooding the market with products, thereby driving down the price.
w w.u
ww ww w w ww w w
124. (p. 79) __________ have caused many countries to establish embargoes.
Political om
h.cdisagreements h.co
m
h.co
m
h.c om h.co
m
o b-b .uob
-b
w w.u w w w.u w
w ww ww ww ww
.com .com
b h b h bh.co
m
h.c om h.c om
.uo b- o b- .uo b-
.uo b-b .uo b-b
Rationale: Political disagreements have caused many countries to establish embargoes. The goal of an embargo generally is to get a country to change its policies.
w w.u w w w
ww w w ww ww ww
125. (p. 80) The __________ of the GATT established the World Trade Organization.
Uruguay Round m m m
w .u w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww
om .com om .com
Rationale: The Uruguay Round established the World Trade Organization, which on January 1, 1995, assumed the primary ta sk of mediating future trade disputes.
.c h.c h.c om
ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww
126. (p. 83) The euro continues to climb/fall (circle one) as compared to the dollar. ww ww
climb
- b -bh b-b b-b -bh
w.uob w .u ob
w .uo w.u
o
w .u ob
Rationale: The euro continues to climb as compared to the dollar.

o b-b o b- b b-b b-b b -bh
w.u127. (p. 86) __________wrefers .uo
w.u to selling the rightwtowmanufacture a product or
.uoa trademark to a foreign
wuse w .u o
w w w w w w ww
company for a fee.
Licensing
m om om om om
.uo b -
w w w w.u w

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww www w w
128. (p. 88) A(n) __________ is an arrangement whereby someone with a good idea for a business sells to others
h om
the rights.cto omsell the product or service
use the business name.cand
h h .comin a given territory.h .com h .com
b b b b b
ob-
franchising agreement ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
m .com .com .com om
bh.co
b h b h b h h.c
- b-
w w w.u w.u w.u
ww ww w w ww w w
129. (p. 90) __________ involves a foreign company's production of private label goods to which a domestic
company then m attaches its own brand name
m or trademark. .com
Contract
b h . c o
manufacturing b h. c o
b h b h .com bh .com
ob- ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
.com .com m om om
h
b b h bh.co h.c h.c
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
130. (p. 90) A(n) __________ is a partnership in which two or more companies undertake a major project for a
specified time period.
b .com
joint venture
h bh .com b h .com b h .com b h .com
-
ob - - - -
w.u w .uob w.u
ob
w.u
ob
w .uob
ww ww ww ww ww
om .com
ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww ww
131. (p. 91) A(n) __________ means that a company will enter into a country and build factories and offices on its ww
own.
Greenfield investment
.com .com .com .com .com
-bh -bh -bh -bh -bh
.uob w.u
ob
w.u
ob
w.u
ob
w.u
ob
www w w ww w w w w
o b-b o b- b
o o b-b b-b ob -bh
w 132. (p. 91) A(n) __________
w is a long-term partnership
w between two or more ww
w companies established to help each
strategic alliance
m m
h.co h.c o h.com om om
- b b-b b-b bh.c b-b
h.c
.uo b .uo .uo ob- .uo
w w w w.u w
ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
133. (p. 92) __________ is the buying of permanent property and businesses in foreign nations.
com investment
Foreign.direct
h .com h .com .com .c om
b-b b-b -bh b-b
h -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
m
.com .com .com om
w w
134. (p. 92) A(n) __________ is a company thatwis owned in a foreign country
w by the home company.
w
foreign subsidiary

m
o b-b .uob
- b
w ww ww
Learning Goal: Discuss the different strategies for reaching global markets ww ww

ob-(p. 92) When a host government
.u135. .uob
- takes over a foreign -
.uobsubsidiary in a country
-
.uitobis called a(n) __________.
.uob
-
w w w w w
ww expropriation ww ww ww ww
.c om h.co
m
-bh
ob b- b b-b b-b b-b
w
.u w .uo w.u
o
w.u
o
w .uo
ww ww
ww ww ww
136. (p. 93) A(n) __________ is an organization that manufactures and markets products inomany different
h
countries;
b .coit m
has multinational h
stock
b
om
.cownership and h .commanagement.
multinational
b b h.c m b h .com
ob-
.umultinational .uob
corporation
-
.uob
-
.uob
-
.uob
-
w w w w w w w w w w
w w w w w
m om om om om
h.co
b -bh
.c h.c h.c -bh
.c
.uob
- b
ww
w w w.u w .u
w ww ww ww ww
137. (p. 86; Figure 3.5) The strategy for reaching global markets requiring the most commitment is __________.
foreign .com investment
bhdirect bh.c
om
bh.c
om
bh.c
om .c om
- ob- ob- - -bh
w .uob .u .u .uob .u ob
w w w ww w ww w ww ww
w
m om om om om
h.co h.c
b h.c bh.c h.c
- b-b b-b ob-
Rationale: Figure 3.5 shows that foreign direct investment is the strategy that has the most commitment, control, risk and profit potential.
.uo b .uo .uo .uo b-b
w w w w.u w
ww ww ww ww ww

m
h.com
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
138. (p. 90) Another name for contract manufacturing is __________.
outsourcing
h .com .com h .com h.c om .c om
b-b b-b -bh b-b -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
m .com
.com .com om
h.co h h h
Rationale: Contract manufacturing involves a foreign company's production of private label goods to which a domestic company then attaches its own brand name or
b b b b h.c
.uo b -
.uo b-
trademark. The practice is also known as outsourcing. o b- ob- o b-b
w w w.u w.u w.u
ww ww w w ww w w
139. (p. 92) The country where the parent firm is located is called the __________ country.
home .com .com .com .com m
h -bh h h h.co
w w.u w w w.u w
w ww ww ww ww
.com .com m om om
b h b h h.co h.c
Rationale: The country where the parent firm is located is called the home country. The foreign country where the subsidiary is located is called the host country.
b h.c
.uo b- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
140. (p. 93) Only firms that have __________ capacity or some other __________ in different nations can truly be
called multinational.
m physical presence m m m m
h.co
manufacturing;
-b h.co b h.co h.co
-b h.co -b -b
ob ob- ob ob ob
ww.u w . u w.u w.u w.u
w ww w w w w ww
om .com
-bh ob-
bh
b-b b- b h
Rationale: Only firms that have manufacturing capacity or some other physical presence in different nations can truly be called multinational.
ob b-b
ww ww ww ww ww
141. (p. 94) __________ refers to the set of values, beliefs, rules and institutions held to by a specific group of
people.
Culture
ob - - ob - - -
w.u w.u w .uob w.u
ob
w.u
ob
w w ww ww ww ww
Learning Goal: 7
h.c om
Level of Learning: Knows basic terms and facts h .com h.c om h.c om .c om
o
w .u o
ww ww ww w w ww
142. (p. 94) The attitude that one's own culture is superior to all others is called __________.
ethnocentricity
m om om om om
.uo b -
w w w w.u w
Learning Goal: 7

m
h.c om
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
143. (p. 96) __________ is the term used to describe selling the same product in essentially the same way
everywhere
b h .comin the world.
b h .com bh .com b h .com b h .com
- marketing
Global - - - -
w .uob .uobw .uob w .uob w .uob w
ww ww ww ww ww
m .com .com .com om
bh.co
Learning Goal: 7
b h b h b h h.c
- b-
w w w.u w.u w.u
ww ww w w ww w w
144. (p. 98) The __________ is the value of one nation's currency relative to the currencies of other countries.
exchange rate m m m m m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww
Learning Goal: 7

m
h.c om h.c om
o b- o b- o o b- o b-b b-b
w w.u145. (p. 99) __________wrefers
w.u to the exchange ofwmerchandise
w.u for w.uor service for servicewwith
merchandise
w w.uno
w w w w w
money involved.
Bartering
.c om h.co
m
w .u w .uo w.u
o
w.u
o
w .uo
Learning Goal: 7

ob-(p. 99) __________ is .aucomplex
.u146. ob- form of bartering
-
.uoinb which several countries b-
.uomay be involved, each uob
-
.trading
w w w w w
ww goods for goods or w w
services for services. ww ww ww
Countertrading
- b -bh b-b b-b -bh
w.uob w .u ob
w .uo w.u
o
w .u ob
w w Dias - Chapter 03 #146 ww ww ww ww
Learning Goal: 7
h.c om .com h.c om h.c om om

b-b b- b h
b-b b - bh.c b-b
o o o o o
w.u147. (p. 94) Both McDonald's
w.u and Coca-Cola offended
w.uMuslims in Saudi Arabia
w.uby putting __________
won
.u their
ww packaging. ww ww ww ww
the Saudi Arabian flag
m om om om om
o
.uDiasb -
w - Chapter 03 #147 w w w.u w
ww Learning Goal: 7 ww ww ww ww
Rationale: Both McDonald's and Coca-Cola offended Muslims in Saudi Arabia by putting the Saudi Arabian flag on their packaging. The flag's design contains a
passage from the Koran and Muslims feel their holy writ should never be wadded up and thrown away.

m
h.c om
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
148. (p. 98) Globally, the __________ is considered the world's dominant and most stable form of currency.
U.S. dollar
h .com .com h .com .com .c om
b-b b-b -bh b-b
h -bh
w .uo w.u
o
w .uob w.u
o
w .u ob
ww w w ww ww ww
Learning Goal: 7
m .com
.com .com om
h.co h h h
Rationale: Globally, the U.S. dollar is considered the world's dominant and most stable form of currency. This doesn't mean, however, that the dollar always retains the
b b b b h.c
.uo b -
.uo b- o b-
same market value. In fact, in recent years, the euro has been more valuable than the dollar. ob- o b-b
w w w.u w.u w.u
ww ww w w ww w w
149. (p. 100) American businesspeople are required to follow __________ laws and regulations in conducting
business.c
h om
globally.
h.com h .com h .com h .com
b b b b b
ob-
U.S. ob- ob- ob- ob-
w.u w.u w.u w.u w.u
ww ww ww ww ww
.com
Learning Goal: 7
b h b h.com bh.co
m
h.c om h.c om
.uo b- o b-
.uo b-
.uo b-b .uo b-b
w w.u
Rationale: American businesspeople are required to follow U.S. laws and regulations in conducting business globally.
w w w
ww w w ww ww ww
150. (p. 72) __________ refers to any activity that seeks to provide goods and services to others across national
b .comoperating at a profit.
bordershwhile
bh .com b h .com b h .com b h .com
- - - - -
w .uA.obGlobal business w.uob w .uob w .uob w .uob
ww B. Global management ww ww ww ww
C. Global economics
D. Multinational management
ob -bh ob-
bh
b-b b- b h
b-b
ww ww ww ww
h .com h .com h .com h .com .c om

ob-
b - b
ob-
b - b -bh
w.u151. (p. 72) Which of the w .uob is an advantagewto.uengaging
following in business .uob
globally?
w w .u ob
ww A. Businesses havewentirely
w ww
new markets in which to sell their products
ww ww
B. The cost of labor is higher overseas
C. There care
h . omcultural challengesbin
h .international
com business
h .com h.c om .c om
b
D.obAll
- of the above are advantages
ob- to engaging in business
b
ob- globally o b-b ob -bh
w .u w .u w .u w.u w .u
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m om om om om
h.co
b h.c h.c bh.c h.c
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.uo b .uo .uo b-b ob- .uo b-b
w w w w.u
Rationale: Global business is here to stay. It refers to any activity that seeks to provide goods and services to others acro ss national borders while operating at a profit.
w
ww ww ww ww ww
Businesses large and small are finding many advantages to engaging in business globally. Businesses have entirely new markets in which to sell their products and they
can save on the costs of labor by producing overseas.

m
h.c om
o b - b
.uo b-b
w w w w.u w
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m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
152. (p. 73) __________ refers to selling products to another country.
A. Demand
- b
B. Importing - b - b b-b -bh
w .uC.obExporting w .uob w .uob w.u
o
w .u ob
ww ww ww ww ww
D. Expropriation
m .com .com .com om

.uDiasb -
o - Chapter 03 #152 .uo b- o b- ob- o b-b
w w w.u w.u w.u
ww ww
w w ww w w
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b bh74).c__________ is the bmovement
153.-(p. -bh
.c of goods and services
b
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b
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w.utrade barriers. w.u w.u w.u w.u
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C. Free trade m
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b h .cotrade b h.com bh .com b h .com b h .com
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w .uob w.u
ob
w .uob w .uob w .uob
ww w w ww ww ww
om
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ob -bh
b- b b-b b-b b-b
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o
w.u
o
w .uo
ww ww ww ww ww
154. (p. 72) Which of the following statements about global trade and why companies trade globally is most
accurate?
A. Many h om companies cite global
.cU.S. h
m
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as a link to hfuture h.com h .com
- b - b - b b b
.uB.obThe U.S. populationwmakes
.uob up a small portion w obworld's
of.uthe population .uob- .uob
-
w w w
ww C. Americans buy billions
ww of dollars worth ofwgoods w made in other countries ww ww
D. All of the above are true

b
ob- -Chapter 03 #154 ob -bh b-b b-b b -bh
w.uDias w .u w .uo w.u
o
w .u o
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Learning Goal: Understand the importance of global trade ww ww ww
Rationale: It is hard to find a major U.S. company that does not cite global expansion as a link to its future growth. The U.S. is a market of over 300 million people, but
there are over 6 billion potential customers in the 193 countries that make up the global market. Today Americans buy billions of dollars' worth of goo ds from countries
h.c om
such as India, Vietnam and China.
h .com h.c om h.c om .c om
o
w .u o
ww ww ww w w ww
155. (p. 75) A country has a(n) __________ advantage if it has a monopoly on producing a specific product or is
able to produce it more efficiently than all other countries.
A. Country
-
B. Efficiency - - - -
w .uC.obAbsolute w .uob w .uob w .uob w .uob
ww ww ww ww ww
D. Comparative

m
h.c om
b-
o - Chapter 03 #155
.uDias .uo b-b .uo b- b
o b - b
.uo b-b
w w w w.u w
ww ww ww
w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
156. (p. 75) Which of the following is an advantage of free trade?
b h .com grows when countries

A. Productivity
b h .com b h .com in which they have
produce goods and services
b h om
a.ccomparative advantage .com
bh
B.ob -
Domestic workers can lost - jobs as a consequence
obtheir ob- of increased imports.uob- ob-
w . u w . u w . u . u
ww C. Moving operations wwoverseas often means the ww numbers of white-collar
wwloss of service jobs andwgrowing ww
w jobs
D. All of the above are advantages
m .com .com .com om

.uDiasb -
w w w.u w.u w.u
ww ww w
w ww w w
Rationale: Figure 3.2 lists the pros and cons of free trade. The only choice that is an advantage is "A": productivity grows when countries produce goods and services
in which they have a comparative advantage.

m
o b-b .uob
- b
o b-b
.uo has and others do w .uo b-b b- b
w w.u157. (p. 75) Most absolute
w w w.u __________ that one
wadvantage situations involve w w
country w not have.
w w w w w
A. Natural resources
b h .com labor
C. Inexpensive
b h.com bh.co
m
h.c om h.c om
- drain
D.obBrain
.u ob- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww ww ww ww ww
.c om h.co
m
ob -bh b- b
b-b b-b b-b
w .u w .uo w.u
o
w.u
Rationale: Most absolute advantage situations involve natural resources that one country has and others do not have. o
w .uo
ww ww ww ww ww
158. (p. 76) The balance of trade is ____________________.
b .com used in countertrade
A. Thehnumber
bh .cotombe sure the trade isbfair
h .com b h.com h.c om
-
.uB.obA nation's ratio of exports
-
.uobto imports .uob
-
.uo b- .uo b-b
w w w w w
ww C. The value of a country's
ww exports ww ww ww
D. The value of a country's imports

b
ob- -Chapter 03 #158 ob -bh o b-b o b-b ob -bh
w.uDias w .u w.u w.u w .u
w w ww
Learning Goal: Discuss the two ww
indicators for measuring global trade ww ww

159.-(p. 78) __________ exists when
- products are sold in a-country below what it ocost
- to product the product. -
w .uA.obPerfect competition w.uob w .uob w .u b w .uob
ww ww ww ww ww
C. A gray market
.com
D. Dumping
h h.c om h.c om
bh.c
om h.c om
w w w w.u w
ww ww ww ww ww
.com om .com m om
bh h.c h h.co h.c
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
160. (p. 78) The flow of goods in a distribution channel other than those intended by the manufacturer is called
b .com
a(n) __________________________.
- market
A. Blue - - - -
w .uB.obGray market w.uob w .uob w .uob w .uob
ww ww ww ww ww
C. Black market
D. Senior market
m .com .com .com om
.uo b -
w w w.u w.u w.u
ww Dias - Chapter 03 #160 ww w w ww w w
h.c om h.com h .com h .com h .com

b-b - b
uobhas bought more goods
o (p. 77) Since 1976 the .U.S.
.u161.
b
b- other nations than.uitohas
.uofrom
b
b- sold to other nations. b-
.uoThis
b
w w w w w
ww is called a(n) _____________________.
ww ww ww ww
A. Countertrade
B. Favorable balance of payments
h .combalance of trade bh.com
C. Favorable
b bh.co
m
h.c om h.c om
ob- ob- .uo b-
.uo b-b .uo b-b
w.uD. Trade deficit w.u w w w
ww ww ww ww ww
.c om
h.co
m
ob -bh b- b
b-b b-b b-b
w .u .uo
w w.u
o
w.u
o
w .uo
ww ww ww ww ww
Rationale: Since 1976 the U.S. has bought more goods from other nations than it has sold to other nations. Th is is called a trade deficit or unfavorable balance of
trade.
om om om om om
bh76).cTwo key indicatorsbof
162.-(p.
b
h.ceffectiveness of global
-bthe b
.c
b -bh
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h.c
o o o o .uo
w.uA. The amount of countertrade
ww
.u and the balance ofwpayments
.u
ww
.u w
ww B. The cost of laborwand raw materials w w w ww
C. The balance of payments and the balance of trade
D. The balance
om of trade and the balance
omof countertrade om om om
.c .c h.c h.c .c
.u .u .uo w.u
o .u o
w ww ww
w
ww
w
ww ww
w
h.c om .com h.c om h.c om
Rationale: In measuring the effectiveness of global trade, nations carefully follow two key indicators: balance of trade and balance of payments.
h .c om
o
w .u o
ww ww ww w w ww
163. (p. 79) __________ is the use of government regulations to limit the import of goods and services.
A. Trade deficit
om
B. Trade.cbalancing
h h .com h .com h .com h .com
b
- protectionism
C. Trade - b - b -b - b
w .uD.obTrade advancement w.uob w .uob w .uob w .uob
ww ww ww ww ww
h .com
b h.c om h .com h.co
m
h.c om
.uo b- .uo b-b .uo
Learning Goal: Describe different types of trade protections and trade agreements b- b
o b - b
.uo b-b
w w
Level of Learning: Knows basic terms and facts w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
164. (p. 79) A(n) __________ is a tax on imports.
h om
A. Gross.cdomestic product
h .com h .com h.c om .c om
- b
B. Import quota - b - b b-b -bh
w .uC.obExport quotient w .uob w .uob w.u
o
w .u ob
ww ww ww ww ww
D. Tariff
m .com .com .com om

.uDiasb -
w w w.u w.u w.u
ww ww w
w ww w w
om om om om h.co
m
b bh79).cThe __________ includes
165.-(p.
b
.c
-bh tariff costs for every
b -b h.c from every country.
product
b -bh
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b- b
o o o o .uo
w.uA. Vocalized Tariff Schedule
w.u w.u w.u w
ww B. Harmonized Import ww Schedule ww ww ww
C. Harmonized Tariff Schedule
D. Harmonizedom Export Schedule om om om om
h.c h.c h.c h.c h.c
.uo b-b o b-b .uo b-b .uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
.c om h.co
m
.u
w 166. (p. 79) Which of the w .uo uo
w.protectionism? w.u
o
w .uo
w w w w following is a type of w
trade
w ww ww
A. Import quotas
B. Tariffs
b h .com
C. Embargoes
bh .com b h .com b h.com h.c om
-
.uD.obAll of the above are types
-
.uobof trade protectionism.uob
-
.uo b- .uo b-b
w w w w w
ww ww ww ww ww
m
om om om om
h.co -bh
.c
b h.c h.c -bh
.c
.uob
- ob
.u .uo b-b o b-b ob
ww w w w.u w .u
Rationale: Trade protectionism is the use of government regulations to limit the import of goods and services. Import quotas, tariffs and embargoes are all types of
w ww
government regulations that limit trade--trade protectionism. ww ww ww
167. (p. h om of the followinghis.cthe

.cWhich
84) omorganization that works
h .com .com
collectively for oil interests?
h .c om
- b - b - b - b -bh
w .uA.obNAFTA w .uob w .uob w .uob w .u ob
ww B. Mercosur ww ww ww ww
C. OPEC
D. WTO
m om om om om
.uo b -
w w w w.u w
ww ww ww ww
.com om .com m om
Rationale: OPEC or the Organization of the Petroleum Exporting Countries is an organization, consisting of 12 oil-producing countries, to work collectively for oil
h
interests.
b h.c h h.co h.c
o b - b
.uo b-b
w w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
168. (p. 86) A firm may decide to compete in a global market by __________ the right to manufacture its product
h om
or use its.ctrademark .com for a fee.
to a foreign company
h h .com h .com h .com
- b
A. Franchising - b - b - b - b
w .uB.obLicensing w .uob w .uob w .uob w .uob
ww ww ww ww ww
C. Exporting
D. Using foreign direct investment
m .com .com .com om
.uo b -
w w w.u w.u w.u
h.c om h.com h .com h .com h .com

b-b
o (p. 87) Over __________
.u169. b- b
.uopercent
- b
.uinobthe U.S. are small and
of the exporters ob-
b
.umedium-size businesses. .uob
- b
w w w w w
ww A. 95 ww ww ww ww
B. 75
C. 50
D. 15 b h .com b h.com bh.co
m
h.c om h.c om
.uob
- o b- .uo b-
.uo b-b .uo b-b
w w.u w w w
ww w w ww ww ww
om m
.c h.co h.c om h.c om h.c om
ob -bh
b- b b-b b-b b-b
w .u w .uo w.u
o
w.u
o
w .uo
ww ww ww ww ww
170. (p. 88) A company that develops a product concept and sells other the rights to make and sell the product is
called a(n) ____________________.
b .com
A. Franchisee
h bh .com b h .com b h.com b h .com
- - - - -
w .uB.obExporter w .uob w .uob w .uob w .uob
ww C. Franchisor ww ww ww ww
D. Importer

b
ob- -Chapter 03 #170 ob -bh o b-b o b-b ob -bh
w.uDias w .u .u w.u .u
ww ww strategies for reaching global w
Learning Goal: Discuss the different
ww
markets ww ww
w

171.
b-(p. 90) One of the disadvantages
- of __________ is othat
- intellectual property and-copyright laws are different
-
w .uinoevery country. w .uob w .u b w .uob w .uob
ww ww ww ww ww
A. Contract manufacturing
B. Exporting
bh .com
C. Importing
b h .com h.c om
bh.c
om h.c om
-
D.obForeign
.u ob-
direct investment
.u .uo b-b ob- .uo b-b
w w w w.u w
ww ww ww ww ww
bh .com h.c om
h .com h.co
m
h.com
b- b-b
.uo .uo .uo b- b
o b - b
.uo b-b
w w w w.u
Rationale: One of the major disadvantages of contract manufacturing is that intellectual property and copyright laws are different in every countryAs global trade
w
ww ww ww
becomes more important, a worldwide standard for intellectual property laws will become more of a necessity.
w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
172. (p. 91) Which of the following statements is a benefit of international joint ventures?
A. Shared m
.cotechnology .com .com .com .com
- b h - b h bh b h b h
B. Shared marketing and management
.uC.obEntry into markets where.uob
expertise
. u ob- . u ob- . u ob-
w w foreign companies w w w
ww ww wware often not allowed unless
ww their goods are produced
ww locally
D. All of the above are benefits of international joint ventures
m .com .com .com om

.uDiasb -
w w w.u w.u w.u
ww ww w
w ww w w
Rationale: The benefits of international joint ventures are all of the choices in the question as well as shared risk.

ob-(p. 91) Which of the following
.u173.
- -
.uob statements aboutw.strategic
uob alliances is most uob
.true?
-
.uob
-
w w w w
ww A. It is a long-termwpartnership
w ww
between two or w company build competitive
more companies to helpweach ww market
advantages
B. Strategic alliances can provide access to markets, capital and technical expertise
m costs, management
.corisks, .coormprofits are not shared om the firms
.cbetween .com om
C. Usually
b h b h bh b h h.c
-
.uD.obAll of the above are true
-
.uoofb strategic alliances .uob
-
.uob
-
.uo b-b
w w w w w
ww ww ww ww ww
om
.c h.co
m
ob -bh
b- b b-b b-b b-b
w w .uo
.u w.u
o
w.u
o
w .uo
Rationale: A strategic alliance is a long-term partnership between two or more companies established to help each company build competitive market advantages. Such
ww ww ww ww ww
alliances can provide access to markets, capital and technical expertise. Unlike joint ventures, however, such alliances do not typically involve sharing costs, risks,
management or even profits.
b h .com b h .com b h .com b h.com h.c om

174.-(p. 94) __________ is anoattitude
.uA.obEthnocentricity .u b
- - is superior to all others.
that one's own culture
.uob .uob
-
.uo b-b
w w w w w
ww ww ww ww ww
B. Superior ethnicity
C. Cultural supremacy
.com elitism
D. Sociocultural
bh .c om h.c om h.c om .c om
ob- ob -bh b-b b-b b -bh
. u .u .uo w.u
o .u o
w ww ww
w
ww
w
ww ww
w
Learning Goal: 7
om
h.c h .com h.c om h.com .c om
o b-b o b- b
o o b-b b-b ob -bh
w w of the following is one
175. (p. 95; Figure 3.6) Which w of Hofstede's five dimensions
w of culture? ww
A. Power distance
B. Uncertainty avoidance
h .com vs. short-term orientation
C. Long-term
b b h .com b h .com bh.c
om h.c om
ob- .uob
- ob- ob- .uo b-b
w.uD. All of the above are w
dimensions w.u to Hofstede
of culture according w.u w
ww ww ww ww ww
.com
m
h.c om
b-
Learning Goal: 7
.uo .uo b-b .uo b- b
o b - b
.uo b-b
w Level of Learning: Knows basic terms and facts
w w w.u w
ww ww ww w w ww
m .com om om .com
bh.co bh h.c h.c h
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
176. (p. 98) Why is the exchange rate important in global markets?
b h com of the dollar is high,

A. If the.value
b h omproducts of foreign hproducers
.cthe b .com are more expensive
b h
m
.cobecause it takes more .com
bh
. ob- to buy them
dollars
u . u ob- . u ob- . u ob- . u ob-
w w w w and stable w
ww B. To earn the highest wwamount of profit the trading
ww currency must remain low
ww ww
C. Labor costs can vary considerably as currency values shift
D. The exchange rate is unimportant in global markets
m .com .com .com om
.uo b -
w w w.u w.u w.u
Learning Goal: 7
Rationale: The exchange rate is the value of one nation's currency relative to the currencies of other countries. Changes in a nation's exchange rates can have
h.c om .com h.c om
important implications in global markets. Labor costs can vary considerably as currency values shift.
h h.c om h.co
m
o b-b .uob
- b
w w.u w w w.u w
w ww ww ww ww
177. Define global business and list the advantages of engaging in global business.
b .com refers to any activity

Globalhbusiness
b h
m seeks to provide goods
.cothat bh .comand services to others
b h om national borders h.com
.cacross b
. u ob- operating at a profit.
while
. uob-
Businesses large and small
. u b- finding many advantages
oare . u ob- to engaging in business
. u ob-
w ww entirely new markets w w w costs of
ww globally. Businesseswhave wwin which to sell their products
ww and they can save on ww the
labor by producing overseas.
b h .com bh.co
m
.uDias .uo b- o b-b o b-b .uo b-b
w w w.u w.u w
ww ww ww ww ww
178. Why should
m countries trade globally?
m
b h .co b h .co b h .com b h.com b h .com
b-
.uInoan b-
.uoare ob-
.ucountries ob-
.ucountries. b-
.uonot
w economic sense, there
w several reasons why
w trade with other
w First, no nation,
w
ww even a technologically
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the needs of their own people. Third,osome nations have an abundance of natural resources and a lack of
h .comknow-how, whilebothers
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179. Explain the difference between comparative advantage and absolute advantage.
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om
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182. List the six different strategies for reaching global markets.
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w 183. List and definewHofstede's five dimensions
w of culture. ww ww
1. Power distance-the
m extent to whichom the less powerful members of organizations and institutions accept and
expectb h .copower
that is distributed h.c
unequally.
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- ob- individuals are integrated -
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ww 3. Masculinity versus wwfemininity refers to the w w
distribution of roles betweenwwthe genders, which is another
ww
fundamental issue for any society to which a range of solutions are found.
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h .comorientation versusbshort-term
5. Long-term
b h .c m orientation: Values b h
m
.coassociated with h
long-term
b .c orientation are thriftbh.com
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w .uand Values
w .uassociated with w .uoorientation
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w .uotradition,
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social
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ww one's "face". ww ww ww
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ww 183 Dias - Chapter 03
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27 Learning Goal: 7
b
7
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Learning
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Goal: Define global business
b h b h .com h.c om h.co
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ob-Learning Goal: Describe different
46
.u44
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utrade o b-b .uo b- b
w w . . w.u w
ww wwthe different strategies for reaching
Learning Goal: Discuss
ww global markets ww ww
15 Learning Goal: Discuss the roles of comparative and absolute advantage in global trade
22 Learning Goal: Discuss the two indicators for measuring global trade
m
.coGoal: Understand the importance m
.coof global trade .com om om
15 Learning
b h b h bh h.c h.c
ob-Level of Learning: Knows basic
.u111
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.uo b-b .uo b-b
w w w w w
ww 65 Level of Learning: Understands
ww ww
concepts and principles ww ww
1 Rationale: A foreign subsidiary is a company that is owned in a foreign country by the home company (called the parent company). Obviou
sly, creating a subsidiary might not be the best course of action for a smaller business; however, as a small company grows, this option for
h .c om might be feasible.
global business
h .c om h .c om h .c om h .com
b
1 -Rationale: A non-tariff barriero b b
is a-restrictive standard that detailsoexactly b
- how a product must be soldobin-a country, such as the way butter - b
.uob sold in Denmark. .u b .u b .uob
is
w w w w .u w
ww 1
ww ww ww ww
Rationale: A sound philosophy to adopt in global markets is this: Never assume that what works in one country will work in another.
1 Rationale: A strategic alliance is a long-term partnership between two or more companies established to help each company build competiti
ve marketm advantages. Such alliances can provide
mrisks,access to markets, capital andm technical expertise. Unlike joint ventures,
m however, such al
.
liances
h c o
do not typically involve sharingh . c o
costs, management or evenh . c o
profits. .c
h . c o om
o b -b o b -b o b -b o b -b o b -bh
w.u 1 Rationale: w.u & Lybrand, companiesw
According to Coopers
w.u in partnerships grow much
that engage u than their counterpart companies
w.faster w.u that
ww do not. ww w ww ww
1 Rationale: American businesspeople are required to follow U.S. laws and regulations in conducting business globally.
1 Rationale: An example of non-tariff barriers is Japan's keiretsu. Under keiretsu, major companies built "corporate families" that forged sem
bh .comties with suppliers, customers

ipermanent
b h omdistributors with full support.cofothe
.cand b h
mgovernment.
b h .com b h.co
m
-
o1 b Rationale: An import quota.limits -
b the number of products in certain - - -
w.u her countries from flooding uomarket
w the uobcategories
w.driving
with products, thereby down the price. w.u
ob The goal of a quota is to prevent
that a nation can import.
w.u
obot
w w w w w w w w w w
1 Rationale: Both McDonald's and Coca-Cola offended Muslims in Saudi Arabia by putting the Saudi Arabian flag on their packaging. The fl
ag's design contains a passage from the Koran and Muslims feel their holy writ should never be wadded up and thrown away.
1
h . omBusinesses can save on the costsoofmlabor by producing overseas, which
Rationale:
c h . c h . c om is an advantage. h . com h .com
b
1 -Rationale: Canada is the numberboneb
- trading partner of the U.S., owith b
-a total value of exports and importsb b
.uo1 b Rationale: Comparative advantage
.uo theory states that a country u b sell to other countries those
.should ob- at $46.22 billion in 2007..uob-
.uproducts
w w w w ww
that it produces most effectively
ww and efficiently andw
w ww it cannot produce as effectively
buy from other countries those products wwor efficiently. Examples might w be England selli
ng wool and France selling wine.
1 Rationale: Contract manufacturing involves a foreign company's production of private label goods to which a domestic company then attac
hes its
h ombrand name or trademark.hOne
.cown m
.codisadvantage com and copyright laws are
is that intellectual.property
h h .comin every country, so it ibh.com
different
b b
b-s possible that the manufacturer bcan- copy the product and sell it itself.
b- b b- b b-
w .uo1 w .uo .uo
w production of private labelwgoods .uo
w to which a domestic companyw .uo
ww ww
Rationale: Contract manufacturing
ww
involves a foreign company's
hes its own brand name or trademark. The practice is also known as outsourcing.
w ww then attac
1 Rationale: Countertrading is a complex form of bartering in which several countries may be involved, each trading goods for goods or servi
ces for services.
m m m m
1
co
bh. Engaging in global business co
bh.has many advantages for businesses co
bh. including exposure to entirely co
h. markets in which to sell thei-bh.
bnew com
b -Rationale: b - b - b -
w
o
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w .u o
w .u o
w .uob w
ww 1 ww has a comparative advantagewinwsomething. Comparative advantage
Rationale: Every country wwtheory has been the guiding principle
ww supporti
ng the idea of free economic exchange.
1 Rationale: Every year since 1976 the U.S. has bought more goods from other nations than it has sold to other nations. This is called a trade
.corom
deficit
h
unfavorable balance of trade. .com
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1 Rationale: Figure 3.2 lists the pros and cons of free trade. The only choice that is an advantage is "A": productivity grows when countries p
roduce goods
m and services in which they havema comparative advantage. m m
.co .co .co .co .c om
b 1 bh
-Rationale: -bh direct investment is the strategy
Figure 3.5 shows that foreign
b b -bhthat has the most commitment,-control,
b bh risk and profit potential.
b -bh
o o o o o
w.u 1 Rationale: Franchisingwiswdifferent
.u from licensing in that wherew.ulicensing might be for a singlew .u franchising allows the usewof.uan enti
product,
ww ww or made and the look and feel
re concept includingwthe label, how the good is manufactured wwof the business. ww
1 Rationale: Franchisors have to be careful to adapt their product or service to the countries they serve. For example, KFC's first 11 Hong Ko
ng outlets failed within two years. Apparently the chicken was too greasy and eating with fingers was too messy for the fastidious people of
h Hong om
.cKong. h .com h .com h .com h.co
m
- b - b - b -b - b
o1 b Rationale: Friedman discusses b
otechnology as being one of the main obdrivers of the phenomenon that ohebcalls the "flattening of the world".
uob
w w.u 1 Rationale: Global business
w w.isuhere to stay. It refers to anywactivity
w.u that seeks to provide goodswand
w.uservices to others across nationalw w.borders
w w w w w
while operating at a profit. Businesses large and small are finding many advantages to engaging in business globally. Businesses have entir
ely new markets in which to sell their products and they can save on the costs of labor by producing overseas.
1 mGlobal financial markets unfortunately
Rationale:
.coJapanese om do not have a commonhworldwide
om currency. Mexicans shop ompesos, South Koreans w h.com
with
- bhwon,
ith bh.c with dollars.
with yen and Americans b .c bh.c b
.uo1 b Rationale: Global trade iswthe ob- of goods and services .across
.uexchange
-
uob national borders. Exchanges ob- and among countries involve
.ubetween
-
.uobmo
w w w w
ww ww however. Countries also exchange
re than goods and service, ww art, sports, cultural events, medical
ww advances, space explorationwand
w labor.
1 Rationale: Globally, the U.S. dollar is considered the world's dominant and most stable form of currency. This doesn't mean, however, that
the dollar always retains the same market value. In fact, in recent years, the euro has been more valuable than the dollar.
m m m m m
1
- b h.co the
Rationale: In 1986, the Uruguay Round
- b h.ofcothe GATT was convened to-bspecifically
h.co deal with the renegotiation
- b h.cofotrade agreements. It also -ebh.co
ob stablished World Trade ob
Organization. ob ob ob
w.u 1 w .u w .u .u
ww to produce all of the products w .u
ww ww sense, there are several reasons
Rationale: In an economic
wwwhy countries trade with otherwcountries: ww that its p
eople want and need, to meet the needs of the people of other countries and to enable each nation to produce what it is most capable of prod
ucing and to buy what it needs.
1 Rationale:m
In global markets, no central system
m of law exists. American businesspeople
m are required to follow.cU.S.
mlaws and regulations in
h.co business globally.
conducting h.co h.co h o .c om
o b -b o b-b o b -b o b -b o b -bh
w.u 1 Rationale: In measuring the.u
w.u carefully follow two key indicators:
w effectiveness of global trade,wnations w.u balance of trade and balance
wof.upaym
ww ents. ww w ww ww
1 Rationale: It is hard to find a major U.S. company that does not cite global expansion as a link to its future growth. The U.S. is a market of
over 300 million people, but there are over 6 billion potential customers in the 193 countries that make up the global market. Today Americ
ans buyo
. c m of dollars' worth of goods ofrom
billions
. c m countries such as India, Vietnam
. c omand China. . c om . com
b h
1 -Rationale: Joint ventures can even bh b h b h b h
b-beventure
.uob y into China, but agreeingwto.uaojoint
mandated by governments asb
with a Chinese w .ucan
firm
-condition of doing business inotheir
o a help .u b
a company gain suchwentry.
- country. It's often hard to gainoentr
.u b
-
w w
ww 1 ww ww ww ww
Rationale: Licensing is selling the right to manufacture a product or use a trademark to a foreign company for a fee. This can work well for
small companies that have come up with a new product. A licensing agreement would allow a company to produce and sell the new produc
t overseas.
m
o Many Middle Eastern countries m
.cohave an absolute advantagebinhthe m
.coproduction of oil. Most absolute o m
situations involve h.co
m
1
- h.cresources
Rationale:
b - b hand - - b h.cadvantage b
ob natural that one ob
country has others do not have. ob ob ob-
w.u 1 .u
wwadvantage situations involve natural
.u
ww resources that one country haswand
.u
w others do not have. w.u
ww Rationale: Most absolute
w w w ww
1 Rationale: Most absolute advantage situations involve natural resources that one country has and others do not have. Absolute advantage ca
n also be difficult to sustain if conditions change or resources are discovered elsewhere.
1
h .com
Rationale:
h .coofmcontract
One of the major disadvantages
. om property
manufacturing is thatcintellectual
h h
m are different in every c .com
. omore
property and copyrightclaws
- b
ountryAs global trade becomes more
- b important, a worldwide standard
- b
for intellectual laws will
- b
become of a necessity. -bh
w .uo1 b Rationale: Only firms thatwhave b
.uomanufacturing ob
w.uother physical presence in w
capacity or some
ob ob
w.u nations can truly be calledwmultination
different w.u
ww al. w w w w w w
1 Rationale: OPEC or the Organization of the Petroleum Exporting Countries is an organization, consisting of 12 oil-producing countries, to
work collectively for oil interests.
m m m om om
1 h.co Opponents of the ratification
Rationale: h.ofcoNAFTA were led primarily byhorganized
.co labor unions. bh.c h.c
.uo1 b-b b-b
uothe exporters in the U.S. are small
.uo b-b ob- o b-b
w Rationale: Over 95 percent .of
w w w.u
and medium-size businesses.
w.u
ww 1 Rationale: Political w
w w w
disagreements have caused many countries
w w
w goal of an embargo generally iswto get a country
to establish embargoes. The
to change its policies.
1 Rationale: Religion is an important part of any society's culture and can have a significant impact on business operations.
m m m m m
1
- b h.co Revenue tariffs are designed
Rationale:
- b h.tocoraise money for the government.
- b
o
h.cRevenue - b
o by developing countrie h.co
h.cused
tariffs are also commonly
b
ob s to help infant industries compete
ob in global markets. ob ob ob-
w.u 1 w .u .u
wwother nations than it has soldwtowother
.u
w nations. This is called a tradewdeficit
w or u .u
ww wwthe U.S. has bought more goodswfrom
Rationale: Since 1976 w
nfavorable balance of trade.
1 Rationale: Strategic alliances can be flexible and they can be effective between firms of vastly different size.
1 .comThe benefits of international .joint
Rationale:
h h com ventures are all of the choices.c
h
mquestion as well as shared risk.
inothe
h .com h .com
.uo b-b ob-b o b-b o b-b .uo b- b
w w.u w.u w.u w
ww ww ww ww ww
ob
ww ww ww w ww w w
1 Rationale: The country where the parent firm is located is called the home country. The foreign country where the subsidiary is located is c
alled the host
m country. m m m
bh .co .co .co .co .com
1 -Rationale: -bhas compared to the dollar.
The euro continues to climb
b- b h
b- b h
ob-
b h
w .uo1 b Rationale: The exchangewrate b
.uisothe w .uorelative
value of one nation's currency to the currencies of w .uocountries.
other w
Changes in a nation's.u
exchan
ww ww implications in global markets.
ge rates can have important ww Labor costs can vary considerablyww as currency values shift. ww
1 Rationale: The goal of a quota is to prevent other countries from flooding the market with products, thereby driving down the price.
1 Rationale:m
The goal of effective global tradem
is always to have more money flowing
m into the country than flowing out of the country, in oth
m
h.coa favorable balance of payments.
er words h.co h.co h.co h.c om
.uo1 b-b o b-b b-b
.uoin global markets than in domestic ob-
b
.uowit b-b
w w.uforces,are
Rationale: The hurdles for business higher and more complex
wforces, .u ones. Global businesses mustwdeal
wand
ww w w
h differences in sociocultural economic and w w
financial legal and regulatory w
forces
w physical and w
environmental
w forces.
1 Rationale: The member countries agreed to negotiate to create monetary and trade agreements that might facilitate the exchange of goods, s
ervices, ideas and cultural programs.
1
b h .comThe mission of OPEC includes
Rationale:
b h
m ways and means of ensuring
.coseeking b h .com .com oil markets.
the stabilization of prices in international
b h bh.co
m
-
o1 b Rationale: The North American -
obFree Trade Agreement (NAFTA) - -
b as one objective to promote.uconditions
ohas ob of fair competition in theo b-
free
w w.u trade area including Canada,
w w.uthe U.S. and Mexico. w w.u w w w w.u
w w w w w
1 Rationale: The South American Common Market (called Mercosur) is a common market.
1 Rationale: The truth is that many U.S. companies often fail to think globally.
1
b h comThe U.S. is the world's largest
Rationale:
. b h . om nation because the U.S.
cexporting b h . om the largest volume of goods
cexports b h . m in an absolute sens .com
coglobally h
.uo1 b-e. uob- b- uo
. established the World TradewOrganization,
. b- uo b-b
. assumed the primary task ofwmediatin
. uo
w Rationale: The Uruguay w
Round which on January w1995,
1,
ww w w
g future trade disputes. w w w w w w
1 Rationale: Today in the U.S., small businesses account for only about 29 percent of exports while generating about half of the private-secto
r commerce.
om om om om om
1
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w w w w w
ww 1 ww face aggressive competitionwfrom
Rationale: U.S. companies w exporters in such countries w
as w
Germany, Japan and China. ww
1 Rationale: Unlike joint ventures, strategic alliances do not typically involve sharing costs, risks, management or even profits.

ob -bh ob-
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w.u w.u w.u .uob w.u

h.c om h.c om h.co

h.c om h.com h.c om h.c om h.co

11. Small businesses account for most of U.S. exports.

13. Global trade

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23. The balance

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33. Retail tariffs are designed to raise m

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bh com fee is called abroyalty.

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b h .com alliance is a long-term

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. com . com h. com h.c om .c om

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b .com refers to any activity

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104. The __________ is a nation's ratio of exports to imports.

107. The __________

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.c om .com h.c om .com h.c om

b .comits own brand name

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b .com stock ownership

h om for reaching global

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bh .com the __________ bishconsidered

b .com businesspeople are

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m .com .com .com om

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157. Most absolute

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bh .com Tariff Schedulebh.com

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169. Over __________

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