Exam 3: Doing Business in Global Markets

Comparative advantage theory states that a country should sell to other countries those products that it produces most efficiently and buy from other countries those products it cannot produce as efficiently.

The president of Car Parts Kings, Inc. just testified before Congress. He urged them to limit the flow of imported automobile parts into the country. He stated that these imports were priced lower than foreign producers were charging for them in their own countries. He believes foreign producers are

Global trade with China is

When a company's strategy is ________, the firm makes arrangements for a foreign manufacturer to produce the product. The domestic company's label and/or trademark are attached to the completed product.

James's family business, J&J Interiors, sells and installs tile in bathrooms and kitchens. More and more of J&J's customers are asking for heater coils under bathroom floors, and James thinks there is a greater opportunity in heated tiles. In his effort to avoid domestic competition, he sets his sights on the vast Hasalot market. Much to his surprise, most of Hasalot's citizens do not yet have indoor plumbing and are accustomed to government-run communal baths. James realizes that his global marketing effort is hampered by

You sell paint products and accessories for painters. Recently, you were in contact with merchants from India who have taken an interest in your products and are willing to talk more about entering into a contractual deal to purchase your goods. This opportunity may be just the thing to get your business out of its slump, because you learned from your Introduction to Business class that very few barriers exist between U.S. and Indian markets.

Last year, the island nation of Winstone imported goods totaling $300 million and exported products totaling $86 million. Tigerland experienced a(n)

Nicky Larson, a well-known American celebrity, promoted a line of clothing that was accused of supporting child labor in a Bangladesh factory. Although her image was immediately tarnished, she quickly was able to close down the unethical operation due to a violation of international law.

A(n) ________ refers to a complete ban on importing or exporting of products from a specific country.

The tiny nation of Tinian is extremely efficient in the mining of tin. However, its climate and terrain make it difficult to produce corn. According to the theory of comparative advantage, Tinian should

Halpert Hardware Pros, an American retail store, buys most of its inventory from Asian countries. Halpert Hardware Pros would benefit if the value of the dollar ________ relative to the currencies of the countries from which Halpert imports.

An example of a U.S. import would be the purchase of oil by U.S. companies from Saudi Arabia.

What is a benefit of contracting with export trading companies?

If a protective tariff is placed on an imported product, the added cost will go to the government.

Shortly after graduating college, Roberto took his place in his family's company in Miami. Roberto's father and uncle started a company that buys bauxite, copper, and other minerals from Chile, and brings them into the U.S. Every day, Roberto brokers trades with mines in Chile. The company is in the export business.

Export trading companies

A ________ is a partnership in which two or more companies (often from different countries) join together and share the risk and costs in order to undertake a major project.

PepsiCo entered into a long-term contract with a South African beverage company. The contract calls for the South African firm to produce and market Pepsi products in the country. PepsiCo will receive royalties on each case of sodas sold. This is an example of

A major advantage of licensing is

Next year, in order to cut both time and cost in getting new styles to global markets, Rhett plans to ________ a few of his designer lines. Rhett will send his designs to manufacturers in India, Bangladesh, and Turkey who will produce the eyeglasses in facilities in their respective countries. This will not only reduce the cost of labor, it will help Rhett reach regional markets in a timely manner.