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Exam 3: Doing Business in Global Markets

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Question 41

Multiple Choice

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

A) They may wish to contract manufacture with each other.
B) They will save time to market if they pool their technological know-how.
C) These arrangements are always less risky than strategic alliances.
D) These arrangements avoid the temptation to tap into marketing and management expertise of the parent companies.

E) C) and D)
F) All of the above

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Question 42

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Absolute advantage is the basis for most global trade today.

A) True
B) False

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Question 43

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Dumping is the practice of selling products in foreign markets at lower prices than what domestic firms are charging for the same product.

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

Casey is typical of many U.S. businesspeople. Casey feels the U.S. culture defines the model for the rest of the world, and that the "American way" of doing things is the best. Casey is guilty of:

Traders in the 18th century were encouraged to focus on selling their nation's goods in the global market to create a favorable balance of trade. Nations attempted to sell more goods to other nations than they bought from other nations. This approach to global trading is called:

If your business has an outstanding product, exporting offers a quick, easy, no hassle way to improve your profitability.

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

Mini-Case Since he was five years old, Rhett Tenna struggled with poor eyesight. He suffered through all the names that went along with wearing eyeglasses for most of his young life. Rhett eventually switched from traditional eyeglasses to contact lens, but he always wondered why glasses were considered to be "ugly" and not fashionable. After graduation from college, Rhett set out on a lifelong goal: to make eye wear synonymous with high fashion. He opened a specialty store called "The Eyes Have It." His marketing plan was to remove the social stigma of wearing glasses, and replace it with a sense of flair and high fashion. From the day he opened his first store, Rhett's plan met with resounding success. Today, "The Eyes Have It" has grown from that single outlet to a medium-sized company with dozens of stores located in six states, and a manufacturing plant that turns out designer frames. A recent internal audit, however, suggested a problem that Rhett had not anticipated. The study indicated that the U.S. market is just about saturated and growth of "The Eyes Have It" stores will be very limited. The audit concerned Rhett until he recognized an untapped market existed overseas. If people all over the world have the same problem, the global market opportunities are fantastic! All in favor of going global say: "The Eyes Have It"! -Rhett spoke with a Korean company that said it might be interested in producing his products in their market. They would pay him a royalty for what they sold and would bear all the start-up expenses of this effort. This Korean company is proposing a:

An unfavorable balance of trade occurs when the value of:

A small Italian grocery store in a large city sells five different kinds of feta cheese: Bulgarian, French, Danish, Greek, and a domestic cheese from Oregon. The domestic cheese sells for less than $2.00 per pound, while all the international cheeses are priced at over $4.00 per pound. Clearly, there is an embargo on international food products.

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

The main goal of the General Agreement on Tariffs and Trade (GATT) was to reduce trade restrictions among world nations.

Nikkei Auto Parts testified before Congress defending the company against an accusation that it was dumping auto parts on the U.S. market. In her testimony, the president claimed . Using traditional guidelines, Congress determined that Nikkei was not dumping.

The Dabble Corporation wants to begin exporting its products. The company needs advice about how to get started, as well as trade-finance support. The federal government has established to help companies like Dabble Corporation.

Opponents of The North American Free Trade Agreement (NAFTA) warned that it would have serious economic consequences such as the loss of U.S. jobs.

Although embargos are enacted upon both imports and exports, this form of trade protectionism is often the result of:

A favorable balance of trade occurs when the value of a nation's exports exceeds its imports.

Carrie, a United States resident says that her home computer was made in Japan. Carrie purchased a(n) :

Today, over 90% of the companies doing business globally believe it is important for their employees to have experience working in other countries.