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Exam 3: Doing Business in Global Markets

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Question 61

True/False

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Foreign firms find it difficult to sell goods in the United States because most goods produced by foreign firms are already produced more efficiently by American firms. The United States is the largest importer in the global marketplace.This indicates that foreign firms have found great success in selling their products in the U.S.

A) True
B) False

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Question 62

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France,Italy,Denmark,and Luxembourg are all members of the EU.Which of the following statements is an accurate description of trade between these nations?

A) France and Italy are permitted to engage in free trade due to their proximity to each other,however,Luxembourg only has free trade with Belgium,and Denmark only has free trade with Switzerland,Sweden,and Germany.
B) The EU has abolished customs duties at internal borders for these and other member nations and put in place a uniform system for taxing imports.Internal border controls subsequently disappeared.
C) Customs officers that collect tariffs are now found at the internal borders of all EU member nations.
D) France,Italy,Denmark,and Luxembourg are four nations strongly considering abandoning the EU common market.The global trading bloc has proved inefficient in these nations attracting global business.

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

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Question 63

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Besides cost constraints,Exporters often face additional challenges.An example of a nontariff barrier was the former Japanese keiretsu:

__________ is lowering the value of a nation's currency relative to other currencies.

Global financial markets operate under a system of __________,where the supply and demand for various currencies dictate their value at any moment in time.

After finishing college,Nathan joined his uncle's company in Miami,FL,a company that buys bauxite,copper,and other minerals from the country of Chile,and brings them into the U.S.Everyday,he brokers trades with mines in Chile.His uncle's company is in the export business. The company is in the business of importing.They buy minerals from another nation and bring the product into the U.S.Exporting is selling product to another country.

A favorable balance of trade occurs when the value of:

A "second wave" of offshore outsourcing involves sizable numbers of skilled,well-educated,middle-income workers in service-sector jobs.

When studying abroad last year,Blake found that his U.S.dollars did not stretch as far as he had hoped.Each time he exchanged U.S.dollars for euros,he gave up more U.S.dollars in exchange for less euros.The exchange rate indicates:

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.

Kodak contracts with a firm in Taiwan to manufacture Kodak digital cameras.This is an example of a joint venture. The relationship described in this question refers to contract manufacturing,not a joint venture.

The North American Free Trade Agreement (NAFTA)requires member nations to negotiate uniform trade agreements with nonmember nations. The nations participating in NAFTA have formed a free trade area rather than a common market.Unlike common markets,free trade areas allow member nations to maintain independent trade agreements with nonmember nations.

When trading in global markets,most countries prefer to import more than they export.

With the achievements of the General Agreement on Tariffs and Trade (GATT)and the World Trade Organization (WTO),nearly all barriers to trade expansion are finally removed. Although GATT and the WTO have certainly helped eliminate many international trade problems and disputes,others still remain.For example,WTO did not resolve many of the legal and regulatory problems that impede trade expansion.

Since patent and copyright laws are the same in all nations,they are not of much impact to firms that compete globally. Unfortunately there is no universal set of laws that govern the global market.Companies often must adapt legally market-by-market.

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?

Currently boasting a $1.6 billion Ketchup brand,the H.J.Heinz Company is flying high with a 44% increase in its sales of Indonesian based ABC,a soy sauce company that it owns.ABC is a _____________ of Heinz.

As a form of franchising,Sovereign Wealth Funds are getting very little attention as a strategy for doing business in foreign markets.

Foreign direct investment refers to the buying of goods produced in another country.

In global markets,no central system of law exists.