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Exam 3: Doing Business in Global Markets

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Question 121

True/False

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When Nestlé, a Swiss company, purchased Ralston Purina, a U.S. company, Ralston Purina became a foreign licensee.

A) True
B) False

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Question 122

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One advantage of licensing as a strategy to enter the global market is the sharing of trade secrets.

A) True
B) False

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Question 123

Multiple Choice

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Reviewing the recent experience of the United States in global markets reveals that the U.S has:

One objective of NAFTA is:

The United States currently enjoys a favorable balance of trade with the rest of the world.

Sovereign wealth funds (a form of foreign direct investment) are investment funds controlled by governments that hold large stakes in foreign companies.

The Nissan automobile assembly plant in Tennessee is an example of foreign direct investment in the United States.

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

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) :

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

Although it has experienced persistent social unrest, multinationals have shown interest in Russia due to:

Strategic alliances almost always result in one company taking over the financial interests of another company.

Recently a news article described the bootlegging 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.

____________ describes an attitude held by some American businesspeople that American culture is superior to all others.

Define offshore outsourcing and explain its pros and cons.

Mini-Case Since he was five years old, Rhett Tenna struggled with poor eyesight. He suffered through all the names that went along with wearing eyeglasses for most of his young life. Rhett eventually switched from traditional eyeglasses to contacts, but he always wondered why glasses were considered to be "ugly" and not fashionable. After graduation from college, Rhett set out on a lifelong goal: to make eyewear synonymous with high fashion. He opened a specialty store called "The Eyes Have It." His marketing plan was to remove the social stigma of wearing glasses, and replace it with a sense of flair and high fashion. From the day he opened his first store, Rhett's plan met with resounding success. Today, "The Eyes Have It" has grown from that single outlet to a medium-sized company with dozens of stores located in six states, and a manufacturing plant that turns out designer frames. A recent internal audit, however, suggested a problem that Rhett had not anticipated. The study indicated that the U.S. market is just about saturated and growth of "The Eyes Have It" stores will be very limited. The audit concerned Rhett until he recognized an untapped market existed overseas. If people all over the world have the same problem, the global market opportunities are fantastic! All in favor of going global say: "The Eyes Have It"! -Next year, in order to cut both time and cost in getting new styles to global markets, Rhett plans to _________________ a few lines. Rhett will send his designs to manufacturers in Saipan, Bangladesh, and Turkey who will produce the eyeglasses in facilities in their respective countries. This will not only reduce the cost of labor, it will help Rhett reach regional markets in a timely manner.

China and Russia present enormous trading opportunities. However, due to political risks in those counties, foreign direct investment is halted.

Just about anything that can be sold in the United States can also be sold to buyers in other countries.

A trade deficit is the same as a favorable balance of trade.

Which of the following nations has joined the U.S., Japan, and the EU as a key driver of the world economy?