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A company is considering establishing a subsidiary in a new host country and wishes to
prepare its expatriates to adapt to the local environment.
How should this company prepare its expatriates?
Negotiation
Operational training
Repatriation
Cultural Training -ANSWERS-Cultural training
How are free trade agreements handled differently than treaties in the United States? -
ANSWERS-Treaties must be approved by the Senate, whereas a free trade agreement
must pass both houses of Congress.
Treaties must be approved by the Senate, whereas a free trade agreement must pass
both houses of Congress. -ANSWERS-Tariffs
What happens to consumer surplus when tariffs and quotas are discontinued? -
ANSWERS-They increase
Which type of tariff is put in place to specifically ensure that domestic industries are
given an advantage? -ANSWERS-Protective
What is a benefit of implementing a system of free trade? -ANSWERS-Reduced tariffs
would result in lower costs of imported raw materials.
,An airplane manufacturer outsources the manufacture of some its parts and sub-
assemblies. They are then returned to the manufacturer's main plant for final assembly.
-ANSWERS-Value chain
Country A exports more goods to Country B than it imports from Country B. Country A
receives more monetary gain by using this practice.
Which relationship does Country A have with Country B? -ANSWERS-Trade surplus
Country A has been criticized by other countries for giving generous tax credits to its
corn farmers, which in turn, enables the country's farmers to sell corn on the
international markets cheaper than all other countries.
Which term is used by other countries to describe this practice? -ANSWERS-
Government subsidies
A farmer knows that it takes 100 hours of labor to produce 100 bushels of corn. It only
takes 50 hours of labor to produce 100 bushels of soy. Currently, a bushel of corn is
selling at three times a bushel of soy.
Which type of cost should the farmer use to determine what to plant? -ANSWERS-
Opportunity
A country produces goods more efficiently than all other countries in the same industry.
Which type of advantage does this country have? -ANSWERS-Absolute
Country A exports farming equipment to Country B, while Country B exports car
manufacturing equipment to Country A. Both countries are highly developed and could
develop these industries separately but instead made the decision to export and import
these products from each other.
Which unique condition caused this practice between the two countries? -ANSWERS-
Skill specialization
A company produces the same product over and over, and it has caused the
manufacturing cost of the product to become cheaper and more competitive in
international markets than similar products in the industry.
,Which approach is this company using to achieve this ability? -ANSWERS-Economies
of scale
A country with a new economy implemented trade protectionism in relation to countries
with more developed economies.
Why did the country take this action? -ANSWERS-To restrict international economic
trade
How do anti dumping laws protect a domestic market? -ANSWERS-They prevent
foreign companies from selling goods and services at or below cost.
How do Congress and the Department of Agriculture use quotas to their advantage? -
ANSWERS-To increase domestic prices to specific levels to make products profitable
Which strategy should a government use to offset the cost of manufacturing
domestically? -ANSWERS-Subsidies
Which type of globalization refers to the international movement of goods, capital, and
services? -ANSWERS-Economic
The CEO of an international company reminds the executive vice presidents that while
the company may do good while performing corporate social responsibilities, the
business has one ultimate goal since it is engaged in commercial activities with
corporate shareholders.
Which ultimate goal is the CEO emphasizing to the executive vice presidents? -
ANSWERS-Profitability
A CEO decides to expand the company's business internationally by purchasing
production capability in another country, including the foreign country's buildings and
equipment.
Which type of market entry is the CEO using? -ANSWERS-Direct investment
, A CEO seeks to better use the economies of scale and scope of production to increase
the international company's profits.
Which type of globalization driver is the CEO seeking to use? -ANSWERS-Cost
A CEO is discussing an expansion of production of a company's highly perishable dairy
line in a country that can offer low labor costs and good internet connections. The
country has no highways, and roads are poorly maintained.
Which challenge to international business expansion do the road conditions present? -
ANSWERS-Infrastructure
Which argument is used by critics who wish to discourage movement towards
globalization? -ANSWERS-It increases the wealth of the rich rather than the poor
Anarchism -ANSWERS-Individuals control political activities, and the government has
no control over these activities
Totalitarianism -ANSWERS-A centralized government creates oppressive policies
based on ideas from powerful leadership.
Direct democracy -ANSWERS-The government provides a method of voting for the
people of a country, not for elected officials.
What is a free trade zone? -ANSWERS-A geographic region in which a county will
reduce restrictions that might prevent or reduce trade
Which term describes a government giving a tax break to a producer to increase their
global competitiveness? -ANSWERS-Subsidies
Industrialized -ANSWERS-Prevalent formation of new markets with possibility of
saturation