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Exam 3: Doing Business in Global Markets

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Question 41

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Country A is extremely efficient in the mining of tin.However,its climate and terrain makes it difficult to produce corn.According to the theory of comparative advantage,Country A should:

A) produce both tin and corn in order to remain self-sufficient.
B) watch the global market to see which product is bringing the highest price.
C) import the resources needed to produce corn.
D) concentrate its production on tin and buy corn from an efficient producer.

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Question 42

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The president of Auto Parts of America Corporation recently testified before Congress,urging them to limit the flow of imported automobile parts into the United States.He contended that these imports were priced lower than foreign producers were charging for them in their own countries.He believes foreign producers are:

A) dumping.
B) exercising trade deficits.
C) promoting free trade.
D) exhibiting ethnocentricity.

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Question 43

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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.

From a sociocultural perspective,foreign companies have experienced a good amount of success in adapting their products and services to the U.S.market. In the past,foreign companies have had great success in reaching U.S.customers.U.S.companies,on the other hand,have often failed to understand cultural differences when marketing abroad.

One goal of the World Trade Organization (WTO)is to increase national subsidies on agricultural products.

Which of the following nations has joined the U.S. ,Japan,and the EU as a key driver of the world economy?

A few years ago,a well-known celebrity who promoted a line of clothing was accused of supporting child labor in a Honduras manufacturing site where the clothes were made.Although the celebrity's image was tarnished,he immediately was able to close down the operation due to a violation of international law. Antitrust,labor relations,patents,copyrights,trade practices,taxes,product liability,child labor,prison labor,and other issues are governed differently country by country.There is no guarantee that foreign firms will operate under the same laws that U.S.firms operate under.

The world market is approximately _____________.

Telewhiz,Inc.just contracted with a firm in the Philippines to provide customer service for its cell phone customers.Although there were cheaper labor markets that Telewhiz could have tapped,customers have reported that they understand English speaking Filipino people better than English speaking people in other countries.As an outsourcing option,it is a good compromise. Firms should consider how offshore outsourcing benefits the customer.If customers can receive the same comparable service that they would receive from a domestic call center,the move offshore is probably a good decision.

According to Reaching Beyond our Borders box,the king of global franchising is:

Mini-Case Since he was five years old,Rhett Tenna struggled with poor eyesight.He suffered through all the names that went along with wearing eyeglasses for most of his young life.Rhett eventually switched from traditional eyeglasses to contact lens,but he always wondered why glasses were considered to be "ugly" and not fashionable.After graduation from college,Rhett set out on a lifelong goal: to make eye wear synonymous with high fashion.He opened a specialty store called "The Eyes Have It." His marketing plan was to remove the social stigma of wearing glasses,and replace it with a sense of flair and high fashion.From the day he opened his first store,Rhett's plan met with resounding success.Today,"The Eyes Have It" has grown from that single outlet to a medium-sized company with dozens of stores located in six states,and a manufacturing plant that turns out designer frames. A recent internal audit,however,suggested a problem that Rhett had not anticipated.The study indicated that the U.S.market is just about saturated and growth of "The Eyes Have It" stores will be very limited.The audit concerned Rhett until he recognized an untapped market existed overseas.If people all over the world have the same problem,the global market opportunities are fantastic! All in favor of going global say: "The Eyes Have It"! -Rhett spoke with a Korean company that said it might be interested in producing his products in their market.They would pay him a royalty for what they sold and would bear all the start-up expenses of this effort.This Korean company is proposing a(n) :

While Asia represents an important source of U.S.imports,few export opportunities exist for U.S.firms to sell goods and services to Asian consumers.

China's one-party political system,its past human rights abuses,and issues related to counterfeiting of products continue to concern some U.S.firms about doing business there. While global investment and entrepreneurship in China are leading it to wealth and economic interdependence with the rest of the world,China also has a one-party political system,human rights issues,and problems with product piracy and counterfeiting that prevent it from being a "free trader's dream."

As students think about a career in the business world today,which of the following is a good strategic suggestion?

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.

Even though the U.S.exports a vast amount of goods globally,it exports a much lower percentage of its products than other countries do.

Yesterday,Frank was trying to use his new laptop features,with only a negligible amount of success.His warranty said that he had three months of free technical support,so he promptly called the tech support number.After several minutes,he finally got through to someone who spoke English (the same language he speaks),but the dialect was still difficult to understand.He shook his head as he tried to listen carefully to every word the guy at the help desk provided,and thought to himself,"There are some pros and cons to outsourcing.I'm not certain the service is adding value for the customer." Although the producers of products and services find offshore outsourcing to be a more cost efficient way to provide service to customers,the customers' perceptions of this service does not always meet with their expectations.

When the U.S.provides foreign aid to Israel and Egypt,a balance of payments outflow occurs. United States dollars spent elsewhere in the form of tourism,foreign aid,military expenditures,and foreign investment are all examples of balance of payments outflows.

The __________ represents the first attempt to establish a truly global mediation center to resolve international trade disputes.

A benefit of contracting with export trading companies is: