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Exam 3: Doing Business in Global Markets

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Question 101

Multiple Choice

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Which of the following statements describes laws and regulations in global markets?

A) No central system of law exists.
B) The World Trade Organization reigns supreme and dictates law for all global markets.
C) Most trading partners will default to the laws that govern the seller's home country.
D) With the exception of labor relations, most laws are pretty standard across global markets.

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

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Question 102

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Nontariff barriers such as the Japanese keiretsu can be just as detrimental to free trade as tariffs.

A) True
B) False

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Question 103

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Firms such as McDonald's, Pizza Hut, and KFC, have entered the global market by offering investors the opportunity to buy:

is the practice of selling a product in foreign countries for a lower price than the good is sold in the producing country.

In 2008, Emerson, Inc. reported that it owns and operates 265 companies worldwide with 23% of its sales coming from Europe, 18% from Asia, 46% from the U.S., and 13% from other parts of the world. Clearly, Emerson exemplifies .

Technological differences can prevent some companies from doing business abroad.

Idle Time Gaming, Inc. needed silicon wafers that it knew could be mass produced efficiently by Silicon City, Inc., a start-up firm in India. The Indian company needed MSG (metallurgical grade silicon) in order to make the wafers which it knew it could get from a Chinese firm. The Chinese firm (mostly owned by the Chinese government) agreed to supply the silicon to the Indian company if it could get a certain quantity of gaming hardware from Idle Time. This beneficial exchange is described as countertrading.

Japanese automobile producers sold more of their Japanese production overseas than they sold in Japan. Their business strategy emphasizes:

Free trade is the movement of goods and services between nations without political or economic barriers.

The country of Nelly exports $250 of goods and services and imports $170 of goods and services. Nelly has an unfavorable balance of trade of $80.

The purpose of enacting some type of protectionist policy toward foreign goods is to limit competition from abroad, particularly when the country has domestic companies that produce and sell the same products and services.

Contract manufacturing is when a firm pays foreign manufacturers to produce its product. The Foreign manufacturer places the domestic company's label on the products.

Household Appliances, Inc. has a manufacturing plant near Chicago. The company specializes in compact washers and dryers for countries where consumers have less living space. Household Appliances participates in the global market through:

Foreign travel can help in identifying global business opportunities.

Mini-Case Harry, Sirly, and Bo are in the midst of a heated discussion. As the chief operating officers of the U-Scream Ice Cream Corporation, they are reviewing the latest financial reports. Intense competition has resulted in deceased profits. Each of the three officers has their own view of how to reverse the current trend. Harry suggests cutting costs by firing union employees and hiring replacement workers at lower wages. He has directed the firm's attorney to find a loophole in the contract that will allow for this action. Sirly protests, stating that Harry's proposal is unethical and unfair. Sirly feels that every stakeholder should be treated equally, and that profiting at the expense of others is foolhardy. Bo, agreeing in part with Sirly, states, "We must be sensitive to all affected parties, but clearly our primary goal is to make a profit for our owners." In an attempt to resolve the conflict between Harry and Sirly, Bo offers an alternative suggestion: reduce the firm's charitable contributions until acceptable profit levels are realized. Sirly is outraged and reminds Bo of the social responsibilities that U-Scream Ice Cream has to the community, environment, suppliers, employees, and stockholders. -A major force that often impeded global trade occurs when government regulations limit the import of goods and services. We call this:

ExxonMobil Corporation refines and markets its petroleum products in many different nations. In addition, Exxon's stockholders and managers come from many different nations. If some of the nations where it operates decided to take over the assets of the company, this act would constitute:

Effective human resource management styles are transferable from one culture to another.

The U.S. Department of Commerce predicts that by the year 2018, at least half of all small businesses will be exporters.

The is the total value of a nation's exports compared to its imports measured over a specific period of time.

Labor unions and businesses in the heavy equipment industry have asked the U.S. Congress to place a tax on imported equipment in order to make it more expensive. They hope that this will allow U.S. producers to be more competitive. The U.S. heavy equipment industry appears to be seeking a(n) :