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Exam 3: Doing Business in Global Markets

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Question 51

Multiple Choice

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Jake's family business sells and installs tile in bathrooms and kitchens.He is convinced that heater coils under bathroom floor tiles is the best thing since sliced bread.In his effort to avoid domestic competition,he sets his sights on the vast Chinese market.Much to his surprise,most Chinese people do not yet have indoor plumbing and are accustomed to government-run communal baths.Jake realized that his global marketing effort is hampered by:

A) Legal and regulatory constraints.
B) Cultural constraints.
C) Physical and environmental constraints.
D) The floating exchange rate.

E) None of the above
F) A) and C)

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Question 52

True/False

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General Electric's (GE)website recently noted,"Russia has been one European country in which GE has made significant investments.GE is one of the largest foreign companies in Russia,operating multiple businesses including an equipment fleet with more than 1,500 large units." With physical presence in Russia,Argentina,Australia,Belgium,Greece,Kenya,Canada and other countries,GE is an example of a multinational company.

A) True
B) False

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Question 53

Multiple Choice

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The U.S.and China (no.1 and no.2 global powers) continue to spar over sociocultural issues,such as human rights,and economic and financial issues,such as the value of the Chinese Yuan against the U.S.dollar.U.S.diplomats complain that these differences continue to bolster China's favorable balance of trade and increase the U.S.trade deficit.The trade protectionist policy exhibited by the Chinese is similar to an economic policy known as ____________ that was followed during the 17^th and 18^th centuries.This policy resulted in a flow of money to the country that sold the most globally.

Countertrading is a form of exchange where firms will put certain products "on the counter" offering them to foreign customers at a cheaper price than what they would offer them to domestic customers.

Dumping is the practice of selling products in foreign markets at lower prices than what domestic firms are charging for the same product.

Sociocultural,economic,and legal/regulatory hurdles cause significant challenges in global trade.

In the past,foreign companies have adapted to U.S.culture more easily than U.S firms have adapted to foreign cultures.

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?

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.

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.

Casey is typical of many U.S.businesspeople.Casey feels the U.S.culture defines the model for the rest of the world,and that the "American way" of doing things is the best.Casey is guilty of:

Last year,the nation of Kwansai reported that it had a favorable balance of trade even though it imported $11 billion worth of goods.This indicates that Kwansai:

Japanese auto manufacturers,such as Toyota and Nissan,have invested billions of dollars in the United States by building new factories,warehouses,and offices.These investments increase "favorably" the balance of payments for the United States.

A fast-growing form of foreign direct investment is sovereign wealth funds (SWFs) .Why do these investments by governments with surplus cash flows worry trade experts?

When it comes to ethics,successful American businesspeople are encouraged to follow the policy of "when in Rome,do as the Romans."

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

Today,over 90% of the companies doing business globally believe it is important for their employees to have experience working in other countries.

Governments directly participate in global markets through sovereign wealth funds.

A firm desiring to enter a foreign market with a limited investment should consider licensing.

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