Test Bank For Business Strategy, Development Application 2Nd Canadian Edition By Gary Bissonette

Chapter 03 - The Global Marketplace True / False Questions 1. Global GDP surpassed 80,000 USD (billions) in 2015. TRUE 2. Global GDP surpassed 100,000 USD (billions) in 2015. FALSE Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape 3. According to the IMF, Canada's estimated GDP for 2014 was greater than Mexico's. TRUE Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape 4. According to the IMF, Canada's estimated GDP for 2014 was greater than Russia's. Chapter 03 The Global Marketplace FALSE 1 Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape Chapter 03 - The Global Marketplace 5. According to the IMF, Canada's estimated GDP for 2014 was roughly equal to China's. FALSE Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape 6. Small businesses are less involved in global trade today than in the past. FALSE Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-03 Global Marketplace 7. Several international companies have sales greater than 25% of Canada's total GDP. TRUE Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-02 Our Changing World 8. While China presents an important source of Canadian imports, few export opportunities exist for Canadian firms to sell goods and services to Asian consumers. FALSE Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-02 Our Changing World 9. Profitable opportunities in the global markets are diminishing for small and medium sized businesses. FALSE Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-02 Our Changing World 2 Chapter 03 - The Global Marketplace 10. Only large firms have the resources needed to successfully compete in the global environment. FALSE Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-02 Our Changing World 11. Exporting is the purchase of products from another nation. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-06 Cost Reduction Opportunity 12. One reason companies look to expand their operations across the globe is to be close to markets. TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-08 Closeness to Markets 13. According to the Brookings Institution, 300 of the largest metropolitan areas globally account for nearly 100% of global GDP. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-08 Closeness to Markets 14. Engaging an organization into new markets very seldom returns the added benefits of identifying new ideas. FALSE Difficulty: Easy 3 Chapter 03 - The Global Marketplace Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-08 Closeness to Markets 15. Economies of scope are reductions in the cost base of an organization as a result of greater size, process standardization, or enhanced operational efficiencies. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-09 Economies of Scale 16. In creating competitive advantage, organizations seek to develop, manage, and leverage global production and distribution networks. TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-09 Economies of Scale 17. In industries like automobiles, it is unusual to find products purposely designed for global consumption. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-09 Economies of Scale 18. Reductions in the cost base of an organization as result of greater size are referred to as economies of scale. TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-09 Economies of Scale 4 Chapter 03 - The Global Marketplace 19. Reductions in the cost base of an organization as a result of process standardization are referred to as economies of scale. TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-09 Economies of Scale 20. Reductions in the cost base of an organization because of product/market diversification are referred to as economies of scale. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-09 Economies of Scale 21. Few of the recent acquisitions of Canadian firms by foreign firms have been for the purpose of controlling mineral rights. FALSE Difficulty: Moderate Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-07 Resource Base Control 22. In some business sectors, organizations look globally to add the required resource base. TRUE Difficulty: Moderate Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-07 Resource Base Control 23. Since 2000, over $960 billion (CDN) has been invested in the Alberta oil sands project. FALSE 5 Chapter 03 - The Global Marketplace Difficulty: Moderate Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-07 Resource Base Control 24. Canadian companies have been some of the biggest players in the development of the African mining sector. TRUE Difficulty: Moderate Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-07 Resource Base Control 25. Outsourcing is contracting out a portion of a firm's business system. TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-06 Cost Reduction Opportunity 26. Offshoring is contracting out a portion of a firm's business system. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-06 Cost Reduction Opportunity 27. Outsourcing is transferring a component of a firm's business system to another country. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-06 Cost Reduction Opportunity 6 Chapter 03 - The Global Marketplace 28. Educational institutions are developing new markets for knowledge-based services in many parts of the world. TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-05 New Market Opportunities 29. Companies can gain access to new markets via acquisitions. TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-05 New Market Opportunities 30. Companies cannot gain access to new markets via organic growth. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-05 New Market Opportunities 31. China's extraordinary growth has been largely driven by an export strategy. TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-05 New Market Opportunities 32. China's extraordinary growth has been largely driven by an import strategy. FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets 7 Chapter 03 - The Global Marketplace 33. New market opportunities is one of the reasons to "go global." TRUE Topic: 03-05 New Market Opportunities Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-04 Why Go Global? 34. Resource base control is one of the reasons to "go global." TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-04 Why Go Global? 35. Closeness to markets is one of the reasons to "go global." TRUE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-04 Why Go Global? 36. Economies of scope is one of the reasons to "go global." FALSE Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-04 Why Go Global? 37. Price acceleration is one of the reasons to "go global." FALSE 8 Difficulty: Easy Chapter 03 - The Global Marketplace Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-04 Why Go Global? 38. Free trade results in a mutually beneficial exchange for the countries involved. TRUE 39. Free trade is the movement of goods and services among nations without political or economic obstruction. TRUE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-11 Ongoing Commitment to International Trade System 40. Trade protectionism is the use of government regulations to encourage the import of goods and services. FALSE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-11 Ongoing Commitment to International Trade System 41. Countries often use trade protectionism measures to protect their domestic industries from foreign competition. TRUE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 42. Protective tariffs are designed primarily to raise money for the government. FALSE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-11 Ongoing Commitment to International Trade System 9 Chapter 03 - The Global Marketplace Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 43. An import quota is a complete ban on the import or export of certain products. FALSE 44. Protectionism includes economic policies that protect or improve the competitiveness of domestic industries by restricting the openness of a market or markets to foreign competitors. TRUE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 45. The World Trade Organization (WTO) was established to mediate trade disputes and oversee global business practices. TRUE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-10 Global Market Stability: The Role of Government 46. One goal of the World Trade Organization (WTO) is to increase national subsidies on agricultural products. FALSE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-10 Global Market Stability: The Role of Government Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 10 Chapter 03 - The Global Marketplace 47. Responsible sovereign debt management means that governments should manage their economies in a fiscally prudent manner. TRUE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-16 Responsible Sovereign Debt Management 48. Responsible sovereign debt management means that governments should avoid taking on debt. FALSE 49. Governments must look to ensure that the total focus of an economy is not export-driven. TRUE 50. Governments must ensure that the total focus of an economy is exports. FALSE 51. Governments must ensure that the total focus of an economy is imports. FALSE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-16 Responsible Sovereign Debt Management Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-15 Balanced Economic Development Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-15 Balanced Economic Development Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace 11 Chapter 03 - The Global Marketplace Topic: 03-15 Balanced Economic Development 52. Black market activities violate the intellectual and property rights of developers and manufacturers of products or services. TRUE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-14 Adherence to the Fundamentals of Fair Trade 53. Global fair trade fundamentals do not include adherence to anti-dumping legislation. FALSE 54. The global marketplace is expected to grow, but at a lower rate than the one achieved over the past few years. TRUE Difficulty: Easy Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Topic: 03-17 Global Market Trends 55. Deflation occurs when prices rise. FALSE Difficulty: Easy Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Topic: 03-17 Global Market Trends 56. Aging populations in North America, Europe, and some parts of Asia will require broader immigration policies in order to meet employment, productivity, and social needs. TRUE Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-14 Adherence to the Fundamentals of Fair Trade 12 Chapter 03 - The Global Marketplace Difficulty: Easy Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Topic: 03-17 Global Market Trends 57. If your business has an outstanding product, exporting offers an easy way to improve your profitability. FALSE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 58. Franchising is popular both domestically and internationally. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 59. When competing in global markets, business organizations can choose among a variety of ways to reach foreign buyers. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 60. Exporting is available only to large corporations. FALSE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 13 Chapter 03 - The Global Marketplace 61. As Canadian companies seek to gain a worldwide presence, so too do other companies worldwide. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 62. An exchange rate is the value of one nation's currency relative to the currencies of other nations. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 63. An increase in the exchange rate value of the dollar causes the dollar price of foreign made goods to decrease. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 64. Efficient currency exchange markets have eliminated countertrade in global business transactions. FALSE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 65. Currency fluctuations can be an advantage to firms trading in the global market. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade 14 Chapter 03 - The Global Marketplace Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 66. A devaluation of the Canadian dollar would make Canadian goods cheaper to foreign buyers. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 67. A strategic alliance is a partnership formed to create competitive advantage on an international basis. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 68. Companies doing business internationally have several different strategies to choose from when entering foreign markets. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 69. What has allowed trade to flourish is a willingness on the part of the marketplace to engage in specialization. TRUE Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-18 The Concept of International Trade 70. Specialization is the amalgamation of tasks within a system. FALSE 15 Chapter 03 - The Global Marketplace Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-18 The Concept of International Trade 71. In expanding internationally, managers will find compliance management issues taking up an increasing amount of time. TRUE Difficulty: Easy Learning Objective: 03-06 An understanding of the challenges managers face in considering expansion into the global arena Topic: 03-21 Management Reflection - Challenges of Managing in Todays Global Environment Multiple Choice Questions 72. Approximately how many people live in the "emerging markets"? A. 5+ billion B. 2+ billion C. 3+ billion D. 1+ billion E. 4+ billion Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-02 Our Changing World 73. The projected GDP growth rate for Canada and the US is ______. A. 10% or more B. 6-10% C. 3-6% D. 0-3% E. less than 0% 16 Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape Chapter 03 - The Global Marketplace 74. The projected GDP growth rates for China are _____. A. 10% or more B. 6-10% C. 3-6% D. 0-3% E. less than 0% 75. Global GDP (USD, Billions) in 2015 was approximately: A. 80,000 B. 70,000 C. 60,000 D. 50,000 E. 40,000 Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape 76. The search for new markets is not __________, with developing economy companies also looking to export to fully-developed economies, such as the U.S. and Canada. A. A closed system B. a one-way focus C. a two-way street D. an exclusive endeavour E. a limited effort Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-05 New Market Opportunities 77. For firms interested in global markets, investments in China are considered to be: A. too risky and not worth the effort. B. illegal based on World Trade Organization (WTO) rulings. C. an emerging business opportunity. 17 Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape Chapter 03 - The Global Marketplace D. dependent on Yao Ming's success in the National Basketball Association. E. unsecured, according to the World Bank Difficulty: Easy Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Topic: 03-17 Global Market Trends 78. Where do Canadian companies naturally look first for potential growth opportunities? A. Asia B. SouthAmerica C. Britain D. U.S. E. Mexico Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-05 New Market Opportunities Topic: 03-19 Evolution of a Global Presence 79. According to the Brookings Institution, metropolitan areas in which two countries delivered the fastest rate of growth in 2014: A. Canada and the US B. China and Japan C. China and Turkey D. Japan and Turkey E. Canada and Japan Difficulty: Moderate Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-08 Closeness to Markets 80. Why are a variety of Canadian organizations realizing new market potential in emerging developing economies of the world? A. Cost reduction B. Resource base control C. Closeness to Market D. Rapid growth E. Economies of scale 18 Chapter 03 - The Global Marketplace Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-04 Why Go Global? 81. ___________ is the use of government regulations to limit the import of goods and services. A. Trade protectionism B. Fiscal policy C. Countertrade policy D. Monetary policy E. Dumping Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 82. Which of the following is NOT a core component behind the rise of the developing economies of the world? A. countries adhering to the principles of international trade B. firms making capital investments C. countries increasing the level of sovereign debt D. firms seeking the most productive and cost-effective systems for the manufacturing of goods E. firms seeking the most productive and cost-effective systems for the delivery of services Difficulty: Easy Topic: 03-18 The Concept of International Trade 83. Which of the following is NOT part of the whole new set of employment and organizational structure requirements and challenges? A. Cultural and social issues relating to staffing B. Cultural and social issues relating to customer attitudes C. Cultural and social issues relating to foreign market needs D. Protectionist attitudes within some governments E. Issues related to foreign market needs Difficulty: Easy Learning Objective: 03-06 An understanding of the challenges managers face in considering expansion into the global arena 19 Chapter 03 - The Global Marketplace Topic: 03-21 Management Reflection - Challenges of Managing in Todays Global Environment 84. Which of the following is NOT one of the forces shaping the global economy? A. Managing the Planet. B. The State of Nations. C. Deceleration of Connectivity. D. The Rise of Political Economies. E. Global Re-Balancing. Difficulty: Easy Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Topic: 03-17 Global Market Trends 85. What is happening to the standard of living for the billions of people in the "emerging markets?" A. stagnating B. improving C. decreasing D. uplifting E. none of the choices are correct Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-02 Our Changing World 86. Transferring a component of a firm's business system to another country is known as: A. Outsourcing B. Vertical integration C. Diversification D. Penetration E. Offshoring Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-06 Cost Reduction Opportunity 87. Which of the following is NOT a requirement for competing in today's global economy? A. efficient and effective production and manufacturing systems. B. well-organized and expertly-supported trade facilitation processes. 20 Chapter 03 - The Global Marketplace C. efficient and effective resource allocation. D. well-organized and expertly-supported distribution logistics. E. solid network of financial intermediation and support. Difficulty: Easy Learning Objective: 03-06 An understanding of the challenges managers face in considering expansion into the global arena Topic: 03-21 Management Reflection - Challenges of Managing in Todays Global Environment 88. Adherence to generally accepted labour practices is typically part of the ______ approach to doing business. A. free trade B. fair trade C. equality-based administration D. monopolistically competitive E. restricted trade Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-14 Adherence to the Fundamentals of Fair Trade 89. Which of the following represents the value of one nation's currency relative to the currencies of another country? A. Euro rate B. Currency rate C. Exchange rate D. Standard of living E. Convertibility index Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 90. The development of internal markets for goods and services results in all but which of the following? A. Attractive export markets B. Stronger economic base C. Expanded economic activity D. Economic stability E. Growth in the standard of living 21 Chapter 03 - The Global Marketplace Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-15 Balanced Economic Development 91. Which of the following is NOT an example of protectionism? A. Tariffs B. trade restrictions C. free trade agreements D. quotas E. subsidies Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 92. _______ refers to the need for developing economies to maintain a focus on the core elements of an open economy - the law of supply and demand, encouragement of entrepreneurship and wealth creation, and the willingness to encourage and support private ownership. A. Commitment to an international trade system B. Absence of protectionism C. Fundamentals of fair trade D. Market openness E. Balanced economic development Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-12 Market Openness 93. The __________ represents the first attempt to establish a truly global mediation centre to resolve international trade disputes. A. International Trade Court B. World Trade Organization C. Global Trade Commission D. United Nations Arbitration Centre E. General Agreement on Tariffs and Trade 22 Chapter 03 - The Global Marketplace Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-11 Ongoing Commitment to International Trade System 94. A _____ market arises within economies where goods are scarce, taxation on such goods is high, or the prices of legitimate goods are beyond the capacity of significant segments of the population to buy. A. monopolistic B. black C. grey D. white E. competitive Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-14 Adherence to the Fundamentals of Fair Trade 95. With respect to the global marketplace, what did the meltdown of the financial services sector in the fall of 2008, and the accompanying recession of 2009 bring to the forefront? A. liquidity and solvency issues B. interdependency and connectivity C. growth and development issues D. regulatory policies E. spending issues Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-10 Global Market Stability: The Role of Government 96. ____________ is the selling of goods and services to other countries. A. In-trading B. Exporting C. Importing D. Dumping Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 23 Chapter 03 - The Global Marketplace 97. According to the IMF, Canada's GDP in 2014 was less than the GDP of all of the following except: A. Germany B. France C. India D. Brazil E. Australia 98. Trade occurs between _________. A. countries B. organizations C. individuals D. countries and organizations E. organizations and individuals Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-18 The Concept of International Trade 99. What type of investment is currently under way within the emerging market countries? A. Sovereign B. capital C. infrastructure D. foreign direct E. foreign development Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-02 Our Changing World 100. When a country devalues its currency, this encourages the sale of its A. imports. B. domestic goods to foreign countries. C. international goods. 24 Chapter 03 - The Global Marketplace D. international services. E. debts. Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 101. In terms of global competitiveness, companies are attracted to countries where _______ costs are relatively low and __________ are relatively high. A. occupational skills; labour B. workforce; occupational skills C. labour; professional skills D. occupational skills; workforce E. labour; occupational skills Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-06 Cost Reduction Opportunity 102. Which of the following is NOT a contributor to economic market stability? A. Established factors of production B. Regular changes to the nature of the political system C. National monetary policy and banking system D. Manageable levels of national debt E. Low inflation Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-15 Balanced Economic Development 103. Country X has stopped some goods from entering the country because it said that the information on the labels was too small. This is an example of a(n): A. tariff B. import quota C. non-tariff barrier D. embargo E. ad valorem tax 25 Chapter 03 - The Global Marketplace Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 104. If Canada wanted to reduce the cost of its goods in foreign markets, it could A. revalue its currency. B. devalue its currency. C. pay off its trade deficit. D. borrow from the Exim Bank. E. sell more goods abroad. Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 105. Which of the following is NOT one of the risk areas mentioned by the text as one of the areas for review when shifting to an international focus? A. geographic B. financial C. political D. legal E. reputational Difficulty: Moderate Learning Objective: 03-06 An understanding of the challenges managers face in considering expansion into the global arena Topic: 03-21 Management Reflection - Challenges of Managing in Todays Global Environment 106. Australia's BHP Billiton attempted a takeover of which Canadian company: A. Penn West Energy B. Sinopec C. Potash Corporation D. Xstrata E. Falconbridge Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets 26 Chapter 03 - The Global Marketplace Topic: 03-07 Resource Base Control 107. China's meteoric economic rise was largely driven by a(n) ___________ strategy. A. import B. export C. price-focused D. competitive E. trade Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-05 New Market Opportunities 108. Paula, a Canadian businessperson who closely follows international business conditions, recently read a newspaper article predicting that the value of the dollar will soon fall. If this article is correct, Paula should expect: A. prices of imported goods to rise, and prices of Canadian goods sold overseas to rise as well. B. prices of imported goods to rise, but prices of Canadian goods sold overseas to fall. C. prices of imported goods to fall, and prices of Canadian goods sold overseas to fall as well. D. prices of imported goods to fall, but prices of Canadian goods sold overseas to rise. E. no change. Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 109. Which of the following would not typically trigger a reduction in the organization's cost base? A. Product diversification B. Increased size C. Process standardization D. Enhanced operational efficiencies E. Enhanced administrative efficiencies Difficulty: Moderate Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-09 Economies of Scale 27 Chapter 03 - The Global Marketplace 110. A ________ tariff is designed to raise the price of imported products so that domestic goods are more competitively priced. A. protective B. restrictive C. progressive D. revenue E. regressive Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 111. Which of the following is NOT one of the six fundamentals which governments globally need to commit to? A. Commitment to an International Trade System B. Market Openness C. Protectionism D. Fundamentals of Fair Trade E. Balanced Economic Development Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-10 Global Market Stability: The Role of Government 112. What sectors prices are expected to continue to have a strong influence on the cost base of many businesses? A. labour B. energy C. raw materials D. goods E. services Difficulty: Easy Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Topic: 03-17 Global Market Trends 113. Hennessy Hardware, a Canadian retailer, buys much of its inventory from Asian countries. Hennessy Hardware would benefit if the value of the dollar ________ relative to the currencies of the countries 28 Chapter 03 - The Global Marketplace from which Hennessy imports. A. rose B. fell C. remained constant D. floated unpredictably E. was not convertible Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 114. ____________ is an example of a successful Canadian business which started out as a small local player, and has evolved into an international organization with retail store locations including the U.S. and Australia. A. LululemonAthletica B. Magna International C. Research In Motion D. Sinopec E. Hudson's Bay Company Difficulty: Easy Topic: 03-01 Quick Facts The Global Landscape 115. Which of the following is not a reason that encourages companies look beyond their domestic markets to expand? A. Cost reduction opportunity B. New market opportunities C. Resource base control D. Closeness to market E. Market openness Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-04 Why Go Global? Topic: 03-08 Closeness to Markets 116. According to the IMF, Canada's GDP in 2014 was less than the GDP of all of the following except: A. United States 29 Chapter 03 - The Global Marketplace B. United Kingdom C. Russia D. Mexico E. Brazil 117. Canadian natural resources include which of the following? A. Mining B. technology C. services D. manufacturing E. government Difficulty: Moderate Topic: 03-01 Quick Facts The Global Landscape Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-02 Our Changing World 118. Many economists and business experts contend that ________ will likely be the growth market of the future. A. Asia B. Africa C. SouthAmerica D. the Middle East E. Australia Difficulty: Easy Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Topic: 03-17 Global Market Trends 119. What has allowed trade to flourish? A. individualization B. departmentalization C. specialization D. division of labour E. manufacturing 30 Chapter 03 - The Global Marketplace Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-18 The Concept of International Trade 120. Contracting out a portion of a firm's business system is known as: A. Vertical integration B. Horizontal diversification C. Tapered integration D. Offshoring E. Outsourcing Difficulty: Easy Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-06 Cost Reduction Opportunity 121. Which of the following factors does not influence the value of a nation's currency? A. The movement in the GDP of the country in question B. The movement in the domestic level of income C. The competitiveness of the country in question D. The ability of the country to maintain its rate of inflation within acceptable target ranges E. The ability of the country to operate within an acceptable balance of trade range Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 122. Which of the following is NOT a reason that the United States dollar has been positioned as the benchmark currency for so long? A. The size of the U.S. economy B. The position of the U.S. as the predominant purchaser of goods and services globally C. The historical strong U.S. economic growth D. The political flexibility of the U.S. E. The U.S. sovereign debt Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade 31 Chapter 03 - The Global Marketplace Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 123. Which of the following is NOT a valid definition of protectionism? A. the intent of economic policies put in place to protect and/or improve the competitiveness of domestic industries B. impeding or restricting the openness of a market or markets to foreign competitors C. the use of tariffs, trade restrictions, or other related activities D. the use of quotas, artificial control of currency values, or other related activities E. the use of training and development policies to ensure citizens have skills and knowledge in international trade Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 124. Many countries use ________________ policies as a way to protect their domestic industries from unfair foreign competition. A. Export limitation B. global marketing C. trade protectionism D. import enhancement E. sovereign debt management Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-13 Absence of Protectionism 125. What organization typically plays a key role in the development of a solution to sovereign debt issues (e.g., those that challenged) the governments of a number of European Union members in 2010 and 2011)? A. WTO B. IMF C. U.S. government D. ECB E. World Bank Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace 32 Chapter 03 - The Global Marketplace Short Answer Questions 126. Why do Canadian companies naturally look first to the U.S. for potential growth opportunities? They look first to the U.S. because of its close proximity or "closeness to market" reasons for potential growth opportunities. Also, the U.S. can provide new markets and organizational growth. Difficulty: Easy Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-02 Our Changing World Topic: 03-03 Global Marketplace 127. Why do some organizations look globally to ensure their portfolios add resources? Provide an example. In some business sectors, organizations seek to look globally in an effort to ensure that their business portfolios continually add the required resource base necessary to ensure that an adequate future supply exists to support the products and services which they offer in the marketplace. This is particularly true of the energy and commodity-based resource industries. Specific to Canada, we have seen a significant interest, by foreign firms, in acquiring ownership of our natural and energy resource bases. Oil-producing companies, mining companies, and other natural resource-intensive companies have all been active in making direct investments into Canada or obtaining ownership stake in our resource base via business acquisitions. As an example, since 2000, over $52 billion has been invested in the Alberta Oil Sands project, with a significant percentage of the investment coming from foreign companies. Xstrata's purchase of Falconbridge, and CVRD's (now known as VALE) purchase of Inco are examples of a few of the energy and mining-related acquisitions which have taken place. Difficulty: Difficult Learning Objective: 03-01 An overview of the rapidity and extent of change occurring in the global marketplace Topic: 03-02 Our Changing World Topic: 03-03 Global Marketplace 128. In terms of global competitiveness explain and provide an example of why organizations locate in and purchase inputs from other countries. 33 Chapter 03 - The Global Marketplace In terms of global competitiveness, organizations will locate in, and purchase inputs from, countries where the costs of productive resources enable them to generate a competitive advantage. In terms of global competitiveness, companies are attracted to countries where labour costs are relatively low and occupational skills are relatively high. This enables the organization to lower its overall cost base, thereby allowing the organization to maintain a competitive price in today's ever-demanding competitive markets. As an example, technology-based companies are attracted to India, given its well-educated and technology-focused labour pool. Numerous manufacturing processes have been globally shifted to China, given its lower labour costs and productive yields, while the garment industry has seen significant growth in Asia (Thailand, Vietnam, Bangladesh, Mongolia) and in Central America (Costa Rica, Guatemala, Honduras). Difficulty: Difficult Learning Objective: 03-02 An understanding of the reasons why businesses expand their operations into international markets Topic: 03-04 Why Go Global? 129. What role does the IMF (International Monetary Fund) serve in managing and supporting the international trading system? Focused on strengthening the global financial system, the IMF contributes to the international trade framework by 1) monitoring global economic and financial development with an emphasis on crisis prevention (and global responses to crises which may occur), exchange rate stability, and balanced economic growth, 2) the issuance of temporary or short-term loans to countries which have balance of trade imbalances, thereby eliminating liquidity issues within these countries, and 3) the lending of credit facilities to low-income countries for the purpose of poverty reduction and economic development and providing technical support in the development of such poverty-reduction strategies. Difficulty: Moderate Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-10 Global Market Stability: The Role of Government 130. What is the purpose of the World Bank? Recognizing the relationship between economic growth and the elimination of poverty in the world's poorest countries, the World Bank provides low-interest loans, interest-free credits, and grants to developing countries for the purpose of funding development projects in areas, such as education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management. Providing both financial and technical assistance, the World Bank's mission is to work with developing 34 Chapter 03 - The Global Marketplace countries to eliminate poverty, enhance growth via sustainable practices, and create individual opportunity and hope. In undertaking initiatives within countries in need, the World Bank seeks 1) to build capacity through the strengthening of governments via education of government officials, 2) to assist in the creation of legal and judicial frameworks within these countries, 3) to assist in the development of financial systems to support the development of an economic platform, and 4) to combat corruption. Difficulty: Difficult Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-10 Global Market Stability: The Role of Government 131. Briefly explain the expectations for free trade in the near future. Free-trade agreements will continue to evolve from country-to-country agreements towards broader free- trade zones. NAFTA could be further expanded into the Agreement of the Americas, encompassing both Central and South America. ASEAN (Association of Southeast Asian Nations) will continue to broaden the number of countries included within this Asian free-trade zone. Difficulty: Easy Learning Objective: 03-03 Exposure to the interconnectivity of the political and economic influences impacting the global marketplace Topic: 03-14 Adherence to the Fundamentals of Fair Trade 132. With respect to developing economies, why has there been an overall reduction in the prices of many goods and services? Combining the concept of trade, with capital investment, and the desire to seek the most productive and cost-effective systems for the manufacturing and delivery of goods and services is the core component behind the rise of the developing economies of the world and the rapidity of technological advances globally, to the benefit of all. It has also resulted in an overall reduction in the prices of many goods and services, resulting in enhanced purchasing power for consumers. Difficulty: Difficult Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-17 Global Market Trends 133. What should a strategic assessment for an organization consider for shifting to a global presence? Shifting to a global presence for an organization is a strategic decision which requires a considerable thought process as to where and how to compete. 35 Chapter 03 - The Global Marketplace This strategic assessment would include decisions relating to not only the identification of potential foreign buyers, thereby opening up new markets, but also an assessment of the organization's business system in order to determine if there are parts of the business system which could be made more efficient and cost competitive if they were initiated elsewhere. Also critical to this assessment process is the magnitude of investment which would be required in order to gain access to such new markets or replicate portions of the supply, manufacturing, or distribution logistics processes off shore. Depending on market dynamics, competitive pressures, production efficiencies, and overall cost considerations, a final evolution could be that as shown in Figure 3.11. In this situation, manufacturing has been fully shifted to an offshore location, with support services, head office, and critical intellectual proprietary-based staff positions and responsibilities remaining in Canada. Difficulty: Difficult Learning Objective: 03-04 An understanding of the macro-level trends that will impact the global marketplace going forward Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-19 Evolution of a Global Presence 134. What have the Internet and ecommerce models done for the operating structure in many industries? The Internet and ecommerce models have, in many industries, eliminated the need to replicate full operating structures in foreign countries. They have also provided access to global markets with significantly smaller capital investment requirements - a particularly attractive feature for small businesses. Organizations with significant capital at their disposal may choose to acquire other foreign- based firms as a mechanism to develop an international presence. What is important to understand is that actions relating to developing a foreign presence and in creating a global trading business platform require significant strategic thought, planning, and learning. It also significantly changes the risk for the company, as trade considerations (tariffs, duties, etc.) come into play, as do currency exchange rates, political and legal considerations, and social and cultural differences, to name a few. Difficulty: Difficult Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-17 Global Market Trends 135. What are the primary influences on currency exchange rates? The rise or fall in value of one country's currency relative to another's has a direct impact on their ability to accomplish international trade. Positive influences include (per Figure 3.16): controlled inflation (as measured by movements in consumer prices in purchasing power parity (PPP) terms); adequate supply and mobility of capital, including the ability of the country and firms to access credit; improving domestic income levels; a country's ability to operate within an acceptable balance of trade range; reasonable fiscal 36 Chapter 03 - The Global Marketplace discipline (as expressed in terms of government surpluses/deficits); and reasonable change in gross domestic product (GDP). Difficulty: Easy Learning Objective: 03-05 An understanding of the fundamental process associated with the development of international trade Topic: 03-20 A Note on Currency Exchange Rates: How Are They Influenced? 136. What is the major challenge for Canadian companies in the foreseeable future? For Canadian companies, the major challenge will be to reduce our dependency on the U.S. market as the primary "go to" initial focus of market expansion. The significant recession and financial turmoil of 2008 and 2009 has demonstrated, to many Canadian manufacturers and businesses, the reality of an over-dependency on the United States as the cornerstone of our export strategy. With U.S. demand expected to remain soft for the foreseeable future, as U.S. consumers wrestle with record-high debt loads, coupled with a higher propensity for savings versus spending, the market is communicating to our business community that a greater emphasis needs to be placed on emerging markets. Difficulty: Easy Learning Objective: 03-06 An understanding of the challenges managers face in considering expansion into the global arena Topic: 03-21 Management Reflection - Challenges of Managing in Todays Global Environment 137. What can managers expect to take up more of their time in expanding internationally? Managers, in expanding internationally, will find that compliance management (trade, customs, security, etc.), and risk management (market, financial, intellectual property), along with global technology-based connectivity issues, will demand more and more of their time. Cultural and social issues, relating to staffing, customer attitudes, and foreign market needs, will present a whole new set of employment and organizational structure requirements and challenges. Difficulty: Easy Learning Objective: 03-06 An understanding of the challenges managers face in considering expansion into the global arena Topic: 03-21 Management Reflection - Challenges of Managing in Todays Global Environment 37