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Exam 3: Doing Business in Global Markets

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Question 151

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In recent years, the government of Saudi Arabia has invested over $900 billion in foreign companies, including several U.S. companies. This move constitutes the creation of a Sovereign Wealth Fund, an emerging type of foreign direct investment.

A) True
B) False

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Question 152

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Through licensing, domestic firms give foreign manufacturers/producers the right to produce their product and use their trademark in exchange for royalties.

A) True
B) False

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Question 153

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Imported wines such as Pinot Noirs from France or Italy often sell at a higher price than wine from Napa Valley, California. This is due to the protective tariff importers pay for the foreign wine.

In order to enjoy the highest standard of living possible, comparative advantage theory states that all nations should strive to become self-sufficient.

People from other nations sometimes comment on the ethnocentric attitudes of U.S. business people. This indicates that American business people:

Profitable opportunities in global markets are diminishing for small and medium sized businesses.

Monique's Unique Tile Boutique offers decorative tile from around the world. The owner regularly travels overseas to locate the best and most unusual tile that foreign producers have to offer. Monique participates in .

As a market for U.S. exports, China represents the only major business opportunity on the continent of Asia.

The impetus behind trade protectionism is:

Due to a nation's weak currency, people may have to fall back on .

A is a regional group of countries that have no internal tariffs among participants, a common external tariff, and the coordination of laws to facilitate exchange among the member countries.

The value of Chinese exports coming to the United States is greater than the value of goods China buys from the United States. This results in a U.S. trade deficit with China.

A firm may export everything it produces overseas and yet not be considered a multinational.

A favorable balance of trade occurs when the value of a country's imports exceeds the value of its exports.

Compared to many other industrialized countries, the United States has historically exported a much higher percentage of its products than other countries do.

A more recent free trade agreement between Cost Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the U.S., is known as the Central American Free Trade Agreement. Its strategy is to open new markets for all member countries and to lower tariffs between participating nations.

India and Russia are emerging markets that present enormous business opportunities.

According to the Spotlight on Small Business box, "Finding Cracks In the Great Wall", the Internet (alone) made it possible for the owner of MFG.com to penetrate and develop long lasting relationships in the Chinese market.

When Anheuser-Busch/In Bev sells Budweiser beer made in St. Louis, MO., to Germany, the sales of its product would be classified as a U.S. .

Only large firms have the resources needed to successfully compete in the global environment.