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Exam 3: Doing Business in Global Markets

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Question 1

Multiple Choice

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Licensing is a popular strategy because:

A) It boosts domestic market revenues.
B) The licensee has incentive to work hard and succeed because he/she has borne the cost.
C) Licensees spend little or no money to produce and market their products.
D) There are seldom any long-term contractual requirements.

E) A) and D)
F) A) and B)

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Question 2

True/False

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According to the Spotlight on Small Business box,"Finding Cracks In the Great Wall",the Internet (alone)made it possible for the owner of MFG.com to penetrate and develop long lasting relationships in the Chinese market. MFG is an online exchange where manufacturers and suppliers can initiate a dialogue to help each other's businesses.Manufacturers needing a part for a computer hard drive can load design specifics onto MFG.com.Other firms can bid on the job.The Internet did not make it easy for Free to develop Chinese business relationships.In order to penetrate the culture,he hired Chinese speaking employees,who could penetrate the market and seal relationships.

A) True
B) False

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Question 3

True/False

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Under a system of floating exchange rates,the value of a country's currency is determined by government regulation.

A nation has a ___________ in the production of a good or service if it can produce that good or service more effectively or efficiently than it can produce other goods.

One advantage of offshore outsourcing is that consumers benefit from lower prices.

The country of New Florentina mines more fluorite each year than it needs for its own manufacturing purposes.Recently,a neighboring country complained that its manufacturing sites could buy fluorite from New Florentina cheaper than they could buy it from its own mines.A government trading expert's claim that New Florentina is dumping fluorite onto its neighbor's market is probably accurate. Dumping is selling products in a foreign country at lower prices than what the foreign country's own industries can sell the same product.Most nations agree that this is an illegal practice.

Norvada is a small nation that has followed protectionist policies for many years.Which of the following would be an example of a nontariff barrier established by Norvada?

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"! -The company was informed by the Japanese Ministry of Trade that they could only export 1.5 million pairs of eyeglasses to the Japanese market during a given year.The Japanese have imposed a(n) :

Ryan learned that he needs extensive Tommy John surgery to repair his blown-out elbow from pitching for several years in the minor leagues.The surgery and subsequent therapy will take upwards of six months.As he ponders his fate and future during the next several months,he happens to come upon the Making Ethical Decisions box about global healthcare,found in his business textbook.Which of the following statements could likely occur?

According to the "Reaching Beyond Our Borders" box,McDonald's global sales continue to increase due to its willingness to serve a variety of foods,depending upon the nation where it is doing business. McDonald's adapts and blends its franchise values into the local culture better than any other company.Its success in foreign markets is evident by the fact that over half of its sales are derived outside of the U.S. ,and this figure continues to increase.

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

With all its perception of opportunity,the expansion of global trade is still plagued by terrorism,nuclear proliferation,rogue states,and other issues.

Competition in exporting is very intense.

Effective human resource management styles are transferable from one culture to another.

In recent years,the government of Saudi Arabia has invested over $900 billion in foreign companies,including several U.S.companies.This move constitutes the creation of a Sovereign Wealth Fund,an emerging type of foreign direct investment. Sovereign wealth funds are investment funds controlled by governments.These funds purchase the bonds and stock of foreign companies.This is a fast-growing form of foreign direct investment.

Using contract manufacturing as a strategy to reach global markets offers firms the advantage of:

U.S.firms that produce sophisticated military hardware are prohibited from exporting that equipment to "unfriendly" governments,such as Iran.This complete ban on exporting sensitive technology to specific countries is an example of a(n) :

The United States enjoys a trade surplus in the global market.

The Foreign Corrupt Practices Act of 1978 created an advantage for American businesspeople to compete in global markets.

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