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Exam 3: Doing Business in Global Markets

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Question 1

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An American firm recently criticized a Chinese steel producer for charging a lower price for its steel in the United States than it charges in China. If proven to be true, the Chinese firm has engaged in .

A) industrial protectionism
B) a low labor cost strategy
C) dumping
D) exchange rate manipulation

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

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Question 2

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An advantage of licensing is that licensors spend little or no money to produce and market their products. These costs are born by the licensees.

A) True
B) False

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Question 3

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Some governments initiate restrictive standards that detail exactly how a product must be sold in a country. Trade experts call these restrictions .

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

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.

Explain and provide examples of the difference between comparative and absolute advantage in global markets.

If global trade experts predict that the value of the dollar will soon fall, it will result in:

Which of the following represents the value of one nation's currency relative to the currencies of another country?

is buying products from another country.

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

Responding to pressure from political lobbyists representing the U.S. steel industry, the U.S. government levies a tax on steel products imported from Europe. This is an example of a(n) :

According to the theory of comparative advantage, a country should buy from other countries those goods it produces most efficiently.

The balance of payments measures the inflows and outflows of money from tourism, foreign aid, military expenditures and foreign investments as well as flows resulting from exports and imports.

Export trading companies assist businesses in reaching buyers, and dealing with customs, documentation, and payment.

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

U.S. recording studios are feeling the pinch in profits due to the fact that artists' music is copied and sold overseas within 24 hours of the music selling in the U.S. market. As a student who is now aware of the challenges businesses face in global trade, which of the following statements is an accurate representation of this situation?

Recently a news article described the pirating of music originally recorded by popular celebrities in the U.S. It seems that a recording made in the U.S. can be copied within a couple of hours and sold abroad. The U.S. government is able to readily prosecute foreign companies involved in these illegal actions.

If a Swiss chocolate firm purchases an American ice cream manufacturer, the American ice cream manufacturer becomes a:

Effective marketing strategies focus on the product and ignore the sociocultural differences in the global environment.

Under the floating exchange rate system, the value of a country's currency is determined by: