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Exam 3: Doing Business in Global Markets

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Question 191

True/False

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As you round out your final year at the university,you are trying to decide on the last two business electives you need to take.You are leaning toward international marketing and international financing because you recall reading that Forrester Research estimates that more than three million jobs could move to global markets in the next ten years. Reputable business research such as Forrester Research predicts that many current graduates will be working abroad in the near future due to the blue collar and white collar jobs that are moving off shore.

A) True
B) False

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Question 192

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

A) True
B) False

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Question 193

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Why does it make sense to trade with other nations?

The objectives of the North American Free Trade Agreement (NAFTA)include allowing free immigration between Canada,Mexico and the U.S. The objectives of NAFTA were to (1)eliminate trade barriers and facilitate cross-border movement of goods and services among the three countries; (2)promote conditions of fair competition in this free-trade area; (3)increase investment opportunities in the three nations; (4)provide effective protection and enforcement of intellectual property rights; (5)establish a framework for further regional trade cooperation;and (6)improve working conditions in North America.

To understand legal and regulatory conditions and be successful in global markets it's often useful to contact:

The World Trade Organization (WTO)was established to mediate trade disputes among nations.

The impetus behind trade protectionism is:

A ________ tariff is designed to raise the price of imported products so that domestic goods are more competitively priced.

An example of foreign direct investment would be Pepsi granting a Japanese firm the use of its formula and trademark,for a fee. Licensing allows one firm to manufacture another firm's product and use their trademark for a fee.Foreign Direct Investment involves the purchase of property in a foreign country.

The outlook for growth in global trade appears to be:

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 domestic cheese is priced less than the other cheeses because importers paid a protective tariff on the international cheeses,and the cost is passed on to the consumer.If there were a government embargo against the international cheese,the grocery store would be unable to legally sell any of the imported products.

Rosa's aunt was taking a cruise to Brazil.She suggested to Rosa that she would be glad to buy her some jewelry while in port in Rio de Janeiro because the exchange rate would be to her benefit.This means:

Efficient currency exchange markets have eliminated countertrade in global business transactions.

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"! -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.

For a firm to be considered a multinational corporation,which of the following conditions must be true?

The growth of the Internet and e-commerce enables companies to enter global markets without using the traditional distribution channels.

When it comes to ethics,successful American businesspeople are encouraged to follow the policy of "when in Rome,do as the Romans." American businesspeople are required to follow U.S.laws when competing in global markets (specifically the Foreign Corrupt Practices Act of 1978).

Bartering is the exchange of goods or services for other goods or services with no exchange of money traded.

Differences in electrical systems throughout the world can impair a U.S.firm's ability to sell its products to other countries. Technological differences affect the nature of exportable products.