Chapter 3: Competing in Global Markets: Learning Goals
Chapter 3: Competing in Global Markets: Learning Goals
Chapter 3: Competing in Global Markets: Learning Goals
Learning goals
After you have read and studied this chapter, you should be able to:
Listed below are important terms found in the chapter. Choose the correct term for each
definition and write it in the space provided.
2. The practice of selling products in foreign countries at lower prices than the charge for the
same products in producing country is known as________________
3. A country has a(n) ______________ when it has a monopoly on the production of a specific
product or is able to produce it more efficiently than all other countries.
4. The difference between money coming into a country and money leaving the country plus
money-flows from other factors such as tourism, foreign aid, military expenditures and
foreign investment is the ______________
5. A(n) _____________ is a complete ban on the import or export of a certain product or when
all trade with a particular country has been stopped.
6. When there is a limit on the number of products in certain categories that can be imported,
a(n) _______________ has been established.
1
7. An unfavorable balance of trade, or _______________ occurs when the value of a country’s
imports exceeds that of its exports.
9. The ________________ is the value of one currency relative to the currencies of other
countries.
10. A country is involved in _______________ when it is buying products from another country.
11. In a _________________ a partnership has been formed in which two or more companies,
often from different countries, have joined to undertake a major project.
12. A global strategy known as ________________,is one in which one allows a foreign
company to produce its product in exchange for a fee.
15. An organization that manufactures and markets products in many different countries and has
multinational stock ownership and multinational management is a(n) _______________
16. The theory of ________________ asserts that a country should sell to other countries those
products that it produces most effectively and efficiently, and buy from those other countries
those products that it cannot produce as effectively and efficiently.
17. Also known as outsourcing, _____________ occurs when a foreign country produces private-
label goods to which a domestic company then attaches its brand name or trademark.
18. Lowering the value of a nation’s currency relative to other currencies is known as
________________.
19. There is __________________ when the movement of goods and services among nations
occurs without political or economic obstruction.
20. The use of government regulations to limit the import of goods and services is considered to
be _________________, which advocates believe will allow domestic producers to survive
and grow, producing more jobs.
21. A complex form of bartering known as_____________ occurs when several countries
trade goods for goods or services for services.
22. Many countries today are involved in __________________ , which is the buying of
permanent property and businesses in foreign nations.
2
24. This organization, known as the __________________ , replaced the GATT agreement
and was assigned the duty to mediate trade disputes among nations.
25. The agreement known as the __________________ created a free trade agreement
between the United States, Canada, and Mexico
2. All of the following are reasons for countries to participate in foreign trade except
a. It is just as easy to start a business overseas as it is in the home country
b. No nation can produce all of the products its people want and need.
c. Even if a country were self-sufficient, other nations would seek to trade with
that country in order to meet the needs of its own people.
d. Some nations have resources, but not technological know-how; while others
have know-how, but lack resources.
3. The idea that countries should produce and sell goods that they produce most
effectively and efficiently, and buy goods that other countries produce most
effectively and efficiently is known as
a. Absolute advantage
b. Free trade
c. International marketing
d. Comparative advantage theory.
4. When the value of exports from a country exceeds the value of imports into that
country there is a:
a. Trade deficit
b. Balance of payments
c. Favorable balance of trade
d. Unfavorable balance of trade
5. The difference between money coming into a country from exports and money
leaving a country due to imports, plus money flows from other factors, is known as
the:
a. Balance of trade
b. Free trade
c. Balance of payments
d. Trade deficit
3
b. The buying of permanent property and businesses in foreign nations
c. The practice of selling products in a foreign country at lower prices than those
charged in the producing country.
d. A foreign company’s production of private label goods to which a domestic
company attaches its own brand name
7. In recent years the Nestle company (a Swiss company) has acquired several U.S.
firms, such as Carnation which now operates in the U.S. as a(n):
a. Exporter.
b. Subsidiary
c. Licensing agent
d. franchise
8. Coke and Pepsi often enter foreign markets by allowing a foreign manufacturer to use
their trademark and pay them a royalty for that right. This is an example of
a. A joint venture
b. Exporting
c. Licensing
d. A strategic alliance
9. In franchising to foreign markets, companies such as McDonald’s and KFC have had
to:
a. Be careful to adapt to the countries they are attempting to enter.
b. Find franchisees with money they can afford to lose if the franchise fails
c. Be sure not to alter their products for the foreign countries so that consumers
know exactly what they are getting.
d. Find opportunities for joint ventures, as franchising doesn’t seem to work in
foreign markets.
11. Guillermo Martinez was concerned that his new boss, Donald Darr didn’t know his
job very well. Donald is continually asking Guillermo and the other workers in the
company’s plan in Mexico City to give him their opinions before he makes a final
decision. Guillermo’s concern stems from ______________ differences between
Donald and him.
a. Economic
b. Cultural
c. Language
d. Regulatory
12. The makers of Whirlpool washers and other electrical appliance manufacturers need
to be concerned about the kind and availability of electricity in the global
marketplace. If there were a compatibility problem, it would be the result of a
_______________ difference.
4
a. Cultural
b. Technological
c. Economic
d. Societal
14. When Egypt devalued the Egyptian Pound, the EGP became ____________ valuable
relative to other currencies.
a. More
b. Less
c. Equally
d. Significantly more
15. Using government regulations to limit the import of goods and services is called:
a. Mercantilism
b. Regulating the balance of trade
c. Global marketing
d. Trade protectionism
16. When the Vietnamese government imposes a tax on imported electronics products to
help their relatively young electronics industry compete in the global marketplace,
a(n) ____________________ is being levied.
a. Protective tariff
b. Import quota
c. Embargo
d. Revenue tariff
True or False
1. ____ When Egypt is buying less from the United States than it is selling to the United
States, a favorable balance of trade exists for Egypt.
5
2. ____ In general, it is better to have a favorable balance of trade.
4. ____ One disadvantage of licensing is the cost to the company of licensing its product
or trademark (the licensor) to the foreign firm (the licensee)
5. ____ Export Assistance Centers serve the role of matching buyers and sellers from
different countries and of providing other services to ease the process of
exporting.
7. ____ A sound global philosophy is “always assume that what works in one country
will work in another”
8. ____ Trade protectionism is based upon the idea that barriers will help domestic
producers grow and create more jobs.