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

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Sample Test

Chapter 03
The Global Marketplace

True / False Questions

1. Global GDP surpassed 80,000 USD (billions) in 2015.
TRUE

Difficulty: Moderate
Topic: 03-01 Quick Facts The Global Landscape

2. Global GDP surpassed 100,000 USD (billions) in 2015.
FALSE

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.
FALSE

Difficulty: Moderate
Topic: 03-01 Quick Facts The Global Landscape

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

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
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

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

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

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
Topic: 03-05 New Market Opportunities

33. New market opportunities 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?

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

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?

38. Free trade results in a mutually beneficial exchange for the countries involved.
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

39. Free trade is the movement of goods and services among nations without political or economic obstruction.
TRUE

40. Trade protectionism is the use of government regulations to encourage the import of goods and services.
FALSE

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: 03-13 Absence of Protectionism

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

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

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

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

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

50. Governments must ensure that the total focus of an economy is exports.
FALSE

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

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: 03-15 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: 03-04 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

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

64. Efficient currency exchange markets have eliminated countertrade in global business transactions.
FALSE

65. Currency fluctuations can be an advantage to firms trading in the global market.
TRUE

66. A devaluation of the Canadian dollar would make Canadian goods cheaper to foreign buyers.
TRUE

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

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%

Difficulty: Moderate
Topic: 03-01 Quick Facts The Global Landscape

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%

Difficulty: Moderate
Topic: 03-01 Quick Facts The Global Landscape

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.
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. South America
C. Britain
D. U.S.
E. Mexico

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

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

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.
C. efficient and effective resource allocation.
D. well-organized and expertly-supported distribution logistics.
E. solid network of financial intermediation and support.

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

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

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

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

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

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

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

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

Difficulty: Moderate
Topic: 03-01 Quick Facts The Global Landscape

98. Trade occurs between _________.
A. countries
B. organizations
C. individuals
D. countries and organizations
E. organizations and individuals

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.
D. international services.
E. debts.

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

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

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.

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
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

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.

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

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

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 from which Hennessy imports.
A. rose
B. fell
C. remained constant
D. floated unpredictably
E. was not convertible

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. Lululemon Athletica
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
B. United Kingdom
C. Russia
D. Mexico
E. Brazil

Difficulty: Moderate
Topic: 03-01 Quick Facts The Global Landscape

117. Canadian natural resources include which of the following?
A. Mining
B. technology
C. services
D. manufacturing
E. government

118. Many economists and business experts contend that ________ will likely be the growth market of the future.
A. Asia
B. Africa
C. South America
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

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

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

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

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.

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 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.

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

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