QUESTION Describe the concept of absolute advantage within the framework of global business. What will be an ideal response? ANSWER Answer: A country is said to have an absolute advantage when it has a monopoly on producing a product more cheaply or efficiently than any other country can. Explanation: Natural and technological resources are […]
QUESTION What is electronic commerce? What will be an ideal response? ANSWER Answer: Electronic commerce, also known as e-commerce, is the buying and selling of products and services through computer networks. Explanation: The development of Web technology supported the rise of electronic commerce—the buying and selling of products and services through computer networks.
QUESTION As new technology has served to “shrink” time and distance over the past 150 years, what three major developments have occurred in terms of the world economy? What will be an ideal response? ANSWER Answer: 1. development of the global marketplace and e-commerce 2. consolidation of many national markets into one big world […]
QUESTION What type of method for entering foreign markets is considered to present the highest risk? What will be an ideal response? ANSWER Answer: A foreign subsidiary presents the highest level of risk for a U.S. company looking to do business in a foreign country. Explanation: As sole owner, a parent company has complete […]
QUESTION Give three reasons why countries trade. What will be an ideal response? ANSWER Answer: Not all countries are self-sufficient, some countries have natural resources that other countries want, and some countries have technology that other countries want. Explanation: Nations trade with each other primarily to meet needs that cannot be met by commerce […]
QUESTION Understanding and respecting cultural differences is important for good business practice in all situations. Name three cultural issues that require special consideration when doing business globally. What will be an ideal response? ANSWER Answer: differences in communication, time orientation, and religion Explanation: Differences in spoken language as well as the meanings of nonverbal […]
QUESTION What is the difference between a direct exporter and an indirect exporter? What will be an ideal response? ANSWER Answer: A direct exporter sells its products to markets outside of its home country. An indirect exporter sells products to domestic customers, who then use that product as a component of a larger product […]
QUESTION How does devaluation affect a country’s exports and imports? What will be an ideal response? ANSWER Answer: When a country devalues its currency, the price of its exports decreases and the price of imports increase. Explanation: Devaluation lowers the value of a currency relative to the currency of other countries. This makes the […]
QUESTION What economic condition affecting international trade would present a daily challenge for all import and export companies? What will be an ideal response? ANSWER Answer: Currency exchange rates are an economic condition that affects that value of currencies for companies that trade with other countries. Explanation: Currency exchange rates are in constant flux, […]
QUESTION Prior to World War II, countries had installed tariff barriers to save domestic jobs. Why was this strategy unsuccessful? What will be an ideal response? ANSWER Answer: Higher tariffs depressed the demand for goods and services, which resulted in the loss of jobs. Explanation: Higher tariffs on products depressed demand, which resulted in […]
