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Exam 3: Doing Business in Global Markets

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Question 81

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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.___________.

A) countertrade arrangement
B) export
C) import
D) foreign aid shipment

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Question 82

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

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Question 83

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The Nissan automobile assembly plant in Tennessee is an example of foreign direct investment in the United States. Foreign direct investment in the United States is the buying of permanent property and businesses in the United States like the Nissan automobile plant.

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:

Sovereign Wealth Funds (a form of foreign direct investment)are investment funds controlled by governments that hold large stakes in foreign companies.

A trade deficit is the same as a favorable balance of trade.

The appeal of global marketing strategies is that they all involve the same amount of risk. Licensing one's product,franchising,and contract manufacturing involve less risk than foreign direct investment.Acquiring subsidiaries by directly purchasing assets and property in another nation involves more risk.If political unrest should emerge in a nation where your business owns substantial assets,the result could be loss of business,employees,and even the loss of your property and assets.The challenge of global marketing strategies is that they all do not involve the same amount of risk.

Responding to pressure from political lobbyists representing the U.S.steel industry,the U.S.government levies a tax on steel products imported from Europe.This is an example of a(n) :

__________ is an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell the parent company's product or service to others in a given territory in a specified manner.

Define offshore outsourcing and explain its pros and cons.

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"! -Although he is confident of success,Rhett is concerned that social,cultural and economic differences in other nations may create some problems.He believes he should adapt his approach to these differences rather than trying to force the "American way" on foreign consumers.Rhett's attitude suggests that he wants to avoid a(n) ___________ approach to business.

First Engineering,a large U.S.based mechanical engineering firm,is considering entering the global market.Upon careful analysis of the global market,they will find that global trade:

Free trade between nations generally results in:

Free trade results in a mutually beneficial exchange between and among nations. Trading countries generally benefit from a free trade environment because global trade enables a nation to produce what it is most capable of producing and to buy what it needs from others in a mutually beneficial exchange relationship.

An import quota is a complete ban on the import or export of certain products.

Export trading companies:

The second wave of offshore outsourcing is having a more negative effect on the U.S.job market.

Sociocultural differences that affect global businesses include customs,language,and religion.

_______________ are specialists that match buyers and sellers from different countries and provide services to ease the process of entering global markets.

A free trade agreement is likely to result in: