Upgrade to remove ads
Only $35.99/year

Management Unit 7, International Business Chapter 5 Quiz, chapter 6 international business, MGT 301

Terms in this set (100)

A cologne or perfume producer might want to bottle its fragrance in France and give it a French name. This type of image appeal can be strong enough to encourage foreign direct investment. What is this an example​ of?
Customer knowledge
Firms from​ ________ markets are accounting for an ever greater share of global merger and acquisition activity.
emerging
When Mercedes opened its first international car plant in Tuscaloosa​ County, Alabama,​ automobile-parts suppliers also moved to the area from Germanylong dashbringing with them additional investment in the millions of dollars. This is an example of​ _____________.
following clients
According to your​ textbook, which of the following is one of the reasons that a large number of Korean manufacturers invested in production facilities in​ Tijuana, Mexico, just south of​ Mexico's border with​ California?
To avoid import tariffs
An oil company is seeking a market opportunity in the Middle East. Which one of the following options is a compelling reason for the company to favor foreign direct investment over other​ options?
Location advantage
Which one of the following is the purchase of physical assets or a significant amount of the ownership​ (stock) of a company in another country in order to gain a measure of management​ control?
Foreign direct investment
Consider the typical stuffed animal made in​ China, whose components are almost all imported to China. The stuffed​ animal's eyes are molded in Japan. Its outfit is imported from France. The​ polyester-fiber stuffing comes from either Germany or the United States. And the​ pile-fabric fur is produced in Korea. Only final assembly of these components occurs in China. This is an example of which management issue as it relates to foreign direct​ investment?
Production costs
Which one of the following BEST describes building a new subsidiary abroad from the ground​ up?
Greenfield investment
When a​ company's specialized knowledge is embodied in its​ employees, which one of the following options would you recommend the company to take to exploit a market​ opportunity?
Foreign direct investment
Which one of the following is an advantage of merger and​ acquisitions?
An acquisition generally provides the investor with an existing​ plant, equipment, and personnel.
According to the​ textbook, the number of​ cross-border investment activities and their rising values over time underlie​ long-term growth in foreign direct investment. Which form of investments is the majority of these​ activities?
Mergers and acquisitions
A greenfield investment is the best choice when​ ________.
adequate facilities in the local market​ aren't available
Poland is a source of skilled and inexpensive​ labor; it is an appealing location for automobile manufacturers. But the country had little in the way of advanced​ automobile-production facilities when General Motors considered investing there. What type of investment options did GM decide to take to exploit this market​ opportunity?
Greenfield investment
​Acer, headquartered in Singapore but founded in​ Taiwan, manufactures personal computers and computer components. Just 20 years after it opened for​ business, Acer had spawned 10 subsidiaries worldwide and had become the dominant industry player in many emerging markets. This is an example of​ ____________.
foreign direct investment
Which one of the following theories stipulates tight control when the​ firm's concern is controlling the​ company's activities?
Market imperfections​ (internalization)
When a U.S.​ company's subsidiary abroad remits profits back to the parent in the United​ States, it is recorded as​ ________.
income receipts
According to the U.S.​ ________, foreign direct investment​ (FDI) occurs when the physical assets or at least 10 percent of the stock in a company abroad is purchased to gain a measure of management control.
Commerce Department
Which one of the following is a home country foreign direct investment​ (FDI) promotion?
Grant loans to firms wishing to increase their investments abroad.
Which one of the following is considered host country performance​ demand?
Require that certain technologies be transferred to local business
Many​ cross-border M&A deals are driven by the desire of companies to​ _______________.
get a foothold in a new geographic market
Import of goods and​ services, income receipts on assets​ abroad, and income payments on foreign assets inside the country are tallied under the​ ________.
current account
Host governments sometimes intervene in foreign direct investment to​ ____________.
shore up balance of payments
Which one of the following is a national accounting system that records all receipts coming into the nation and all payments to entities in other​ countries?
Balance of payments
Which one of the following is limited in its power to explain why companies choose foreign direct investment over other forms of market​ entry?
International product life cycle theory
The decision of whether to build facilities in a market abroad or to purchase existing operations in the local market can be difficult. Which one of the following local issues do managers have to​ consider?
Mandated benefits
Trade in services accounts for around 22 percent of total world trade. Although the importance of trade in service is growing for many nations, it tends to be relatively more important for the world's _____ countries
Richest
Which agencies/departments/organizations in most countries record the destination of exports, the source of imports, and the physical quantities and values of goods crossing their borders?
Customes
Which one of the following statements BEST explains the benefits of international trade to nations?
a. International trade protects countries increase the demand of its own domestic products
b. International trade helps countries to limit its import in order to protect its infant industries
c. International trade is an important engine for job creation
d. International trade increases tariff charges on imported goods to generate more revenue for the country
e. International trade helps countries limit access to products it cannot produce
e. International trade helps countries limit access to products it cannot produce
There has been a persistent pattern of merchandise trade among nations. Trade between which economies of the world represents the highest level of total world merchandise?
a. Trade between the​ world's middle-income economies
b. Trade between​ high-income economies nations and​ low-income economies nations
c. Trade between the​ world's low-income economies
d. Trade between the​ world's high-income economies
e. Trade between​ low-and middle-income nations
d. Trade between the​ world's high-income economies
As the world becomes even more like a global village, countries become dependent on trade with each other to sustain their own economies. However, the dangers of trade dependency become apparent when____
a nation experiences economic recession or political turmoil
__________ advocates that nations should accumulate financial​ wealth, usually in the form of​ gold, by encouraging exports and discouraging imports.
Mercantilism
The main problem with mercantilism is that it views trade as a
Zero-sum game
Which one of the following statements BEST expresses a pillar of ​ mercantilism?
a. International trade is a​ positive-sum game.
b. Governments acquire wealth through unrestrictive trade policies.
c. Nations should trade with other nations to obtain the goods they​ need, but​ don't produce.
d. Trade should be allowed to flow as dictated by market​ forces, not by government intervention.
e. Nations should increase their wealth by increasing their exports and minimizing their imports
e. Nations should increase their wealth by increasing their exports and minimizing their imports
The practice of mercantilism rested on three essential pillars. Which of the following sets identify these three​ pillars?
a. Colonialism, maximize​ production, and product standardization
b. Trade​ surpluses, government​ intervention, and colonialism
c. Free​ trade, subsidizing​ export, and banning imports
d. Free​ trade, government​ intervention, and colonialism
e. Free​ trade, colonialism, and strict government intervention
b. Trade surpluses, government intervention, and colonialism
Mercantilism advocates that governments should actively intervene in international trade to maintain a trade surplus. Which of the following tools have mercantilist nations used to support this​ policy?
a. Adopt the factor proportion theory.
b. Subsidize​ export, ban​ import, and impose tariff charges and quotas.
c. Liberalize import policies to ensure access to products that mercantilist nations do not produce.
d. Allow trade to flow as dictated by market forces to ensure trade surplus.
e. Concentrate on producing the goods in which it holds an​ advantage, then trade with other nations.
b. subsidize export, ban import, and impose tariff charges and quotas
According to Adam Smith, a nation should concentrate on producing the goods in which it
has an absolute advantage in producing the product
Which one of the following trade conditions occurs when a country is unable to produce a good more efficiently than other nations, but produces the good more efficiently than it does any other good?
Comparative advantage
Which one of the following describes the theory of absolute advantage?
a. International trade should be banned or restricted by tariffs and quotas.
b. A nation with an absolute advantage is less efficient than other nations in the production of a particular product.
c. It allows for government intervention in international trade.
d. It allows the flow of trade as dictated by the central planning committee.
e. It's the ability of a nation to produce a good more efficiently than any other nation.
e. its the ability of a nation to produce a good more efficiently than any other nation
Country X specializes in the production of corn more efficiently than any other nation and buys rice which it produces less efficiently than corn from Country​ Z, despite the fact that Country Z produces rice less efficiently than Country X. Which of the following international trade theories agree with Country​ X's decision to buy rice from Country​ Z?
a. International Product Life Cycle
b. Comparative advantage
c. Factor Proportions theory
d. Mercantilism
e. Absolute advantage
b. Comparative advantage
Which one of the following is TRUE with regard to the factor proportions theory?
a. Trade is still beneficial even if one country is less efficient in the production of two goods, as long as it is less inefficient in the production of one of the goods.
b. A nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.
c. A nation has the ability to produce a good more efficiently than any other nation.
d. Nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports.
e. Countries produce and export goods which require resources that are abundant and import goods that require resources in short supply.
e. Countries produce and export goods which require resources that are abundant and import goods that require resources in short supply.
The difference between the comparative advantage theory and the factor proportions theory is that the factor proportions theory
states that a country specializes in producing and exporting goods using the factors of production that are most abundant and thus cheapest - not the goods in which it is most productive.
International product life cycle theory says that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle. Which of the following BEST defines the maturing product stage?
a. Competition pressures companies to lower prices in order to maintain sales levels.
b. Exports begin to account for an increasingly greater share of total product sales.
c. Keep production where initial research and development occurred.
d. The exact level of demand in the domestic market is highly uncertain.
e. Most production now takes place outside the innovating country.
b. Exports begin to account for an increasingly greater share of total product sales.
_______ Says that a company will begin by exporting its product and later undertake foreign direct investment. The theory also says that, for a number of reasons, a country's export eventually becomes its import.
The product life cycle theory
The international product life cycle theory follows the path of a good through its life cycle in order to determine where it will be produced. Which one of the following BEST defines the standardized product stage?
a. competition pressures companies to lower prices in order to maintain sales levels.
b. Exports begin to account for an increasingly greater share of total product sales.
c. Both domestic and international markets become fully aware of the product and its benefits.
d. The product begins generating sales in developing nations.
e. The exact level of demand in the domestic market is highly uncertain.
a. Competition pressures companies to lower prices in order to maintain sales levels.
The ability of the theory of the product life cycle to accurately depict the trade flow of nations is being challenged. This is due to the fact that _____
more companies are operating in international markets from their inception
Which one of the following statements BEST describes the new trade theory?
a. The theory emphasizes productivity rather than a​ nation's resources.
b. The theory does not assume any role of government intervention.
c. The theory states​ that, as specialization and output​ increase, companies can increase the unit costs of production.
d. There are gains to be made from specialization and increasing economies of scale.
E. Gains made as a result of increasing economies of scale will increase the cost of production and thus the price to​ buyers, which will force the competition to increase their prices as well.
d. There are gains to be made from specialization and increasing economies of scale
Which one of the following trade theories indicates that government may play a role in assisting its home companies and that government involvement has always been widely accepted in undertakings such as space exploration for national security​ reasons?
a. Comparative advantage
b. New trade
c. Leontief paradox
d. Absolute advantage
e. Product life cycle
b. New trade
Which one of the following is a component of Porter's diamond?
a. International product life cycle
b. First-mover advantages
c. comparative advantages
d. Firm strategy, structure, and rivalry
e. Geography
d. Firm strategy, structure, and rivalry
Which one of the following represents the core of the national competitive advantage​ theory?
a. Trade is still beneficial even if one country is less efficient in the production of two​ goods, as long as it is less inefficient in the production of one of the goods.
b. International trade is a​ positive-sum game.
c. Countries produce and export goods that require resources that are abundant and import goods that require resources in short supply.
d. A​ nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.
e. A country may dominate in the export of a certain product because it has a​ home-based firm that has acquired a​ first-mover advantage.
d. A nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.
Which one of the following of​ Porter's diamond components supports the concept that companies that belong to a​ nation's internationally competitive industries do not exist in​ isolation, rather, supporting industries spring up to provide the inputs required by the​ industry?
a. Demand conditions
b. Factor conditions (basic factor
c. Factors conditions (advanced factors)
d. Related and supporting industries
e. Firm strategy, structure, and rivalry
d. Related and supporting industries
Which of the following is the pattern of imports and exports that occurs in the absence of trade​ barriers?
Free Trade
For which of the following political motives do governments intervene in trade in order to ban certain​ defense-related goods from export to other​ nations?
Preserve national security
According to the infant industry​ argument, a​ country's emerging industries need protection from international competition during their development phase until they become sufficiently competitive internationally. Which of the following represents a major consequence to this​ argument?
.Complacency toward innovation
Consumers often end up paying more for products because of a lack of competition. Which of the following is a type of government intervention that leads to this​ problem?
Protection of infant industries
All of the following are political motives behind government intervention in trade EXCEPT​ ________.
Pursuing strategic trade policy
You are a manager of a U.S. firm that plans on exporting a product that is designated as a dual use product and you need to have a U.S. government approval before export can take place. What is the political motive behind this​ intervention?
To preserve national security
The United States has banned all trade and investment with Cuba since 1962. This is an example of which type of government political​ intervention?
Gaining influence
Which of the following is considered government​ subsidy?
Providing tax breaks and product price support
Governments often promote exports by helping companies finance their export activities. Which U.S. financing entity finances the export activities of companies in the United States and offers insurance on foreign accounts​ receivable?
Ex-Im Bank
Which of the following is a restriction on the amount​ (measured in units or​ weight) of a good that can enter or leave a country during a certain period of​ time?
Quota
One of the most common instruments that government uses to promote trade with other nations is the establishment of a foreign trade zone. Which of the following is not an advantage of a free trade​ zone?
Increase government revenue by applying additional import tariff.
Governments of most nations have special agencies responsible for promoting exports. Which of the following is NOT a type of export​ promotion?
Paying import duties
Export tariff is levied mostly by the government of a country that is​ ________.
exporting products that consist mostly of​ low-priced natural resources
​A(n) ________ is levied as a percentage of the stated price of an imported product.
ad valorem tariff
A government may impose an import quota to protect its domestic producers by placing a limit on the amount of goods allowed to enter the country. Who are the winners of imposing such​ quotas?
Domestic producers
In​ 1980, the closing of U.S.​ carmakers' production facilities in the United States was creating a volatile​ anti-Japan sentiment among the population and the U.S. Congress. Fearing punitive​ legislation, the Japanese government and its carmakers decide to limit its automobile exports to the United States. Which of the following is this an example​ of?
Voluntary export restraint​ (VER)
What method of trade restriction is the U.S. using with​ Cuba?
Embargo
When a certain portion of the end product must consist of domestically produced goods or that a certain portion of the final cost of a product must come from domestic​ sources, this is the result of​ _________.
local content requirements
Which of the following describes administrative​ delays?
Regulatory controls or bureaucratic rules designed to impair the flow of imports into a country
Which of the following has eliminated all tariffs and nontariff trade barriers on goods originating within North​ America?
NAFTA
Tariffs that are called specific tariffs are levied based on​ ________.
a specific fee for each unit​ (measured by​ number, weight,​ etc.) of an imported product
Western European plastic producers considered retaliating against Asian competitors whose prices were substantially lower in European markets than at home. Which of the following is this an example​ of?
Dumping
The General Agreement on Trade in Services​ (GATS) created during the Uruguay Round identifies four different forms that international trade in services can take. Which of the following is NOT one of those​ forms?
Agriculture subsidy
The creation of the​ ________ was perhaps the greatest achievement of the 1986 Uruguay Round.
World Trade Organization
Which of the following is an additional tariff placed on an imported product that a nation believes is receiving an unfair​ subsidy?
Countervailing duty
The importance of trade for a nation can be measured by...
examining the volume of its trade relative to its total output.
The danger of trade dependency is that...
political turmoil in a country might affect all dependent countries
The purpose of ___ is to force companies from other nations to use local resources in their production...
administrative delays
Free trade
implies that the national government exerts minimal influence on trade
proposes that national governments should directly help domestic firms
Managers should understand the effect of trade protectionism because it...
may make it difficult for a company to buy what it needs from foreign supply
_____ can occur when a firm sells its goods in a foreign market below what it charges in its home market....
Dumping
Tariffs are taxes placed on goods imported into a country create a barrier to trade by increasing the cost of import
True
A foreign trade zone in primarily used by governments to....
spur economic development
Exports and imports of tangible goods are included in the ________ account of a country's balance of payments.
merchandise
The balance of payments is useful to international business people for which of the following reasons?
warning of new policies that could affect a country's business climate
Foreign direct investment is acquisition of foreign assets for the purpose of controlling them.
True
Which stage of the international product life cycle does the innovating firm's country become a net importer of the product?
standardized product stage
The requirement a sufficient portion of a product's content originate within a certain market to escape tariff charges
market imperfection
According to the market theory, competition is a common market imperfection.
False
Regional economic integration is also referred to as
regionalism
Industries considered essential to national security often receive government-sponsored protection.
True
Higher levels of trade between nations result in
greater purchasing power
ALADI refers to the
Latin American Integration Association
The main purposed of the ______ is to debate and amend legislation proposed by the European Commission of the EU.
European Parliament
In this members eliminate internal barriers, adopt an external policy toward nonmembers, and eliminate barriers.
common market
Economic integration whereby countries remove all barriers to trade among themselves and restrictions for nonmembers
free trade area
... encourages free trade among Canada, Mexico, and the US.
NAFTA
Mercantilist countries used to amass wealth by acquiring less-developed territories around the world.
True
The theory of absolute advantage measures a nation's wealth by the standard of living of its people.
True
The theories of comparative advantage and absolute advantage assume that countries are driven only by the max production
True
Other sets by this creator