Global Business and International Trade — True/False Conversion

While franchising is popular in the United States, it is not an accepted strategy for firms in the global market.

• True

• False

One advantage of franchising is that the parent corporation does not need to concern itself with adapting to the culture of another country.

• True

• False

Contract manufacturing is when a firm pays foreign manufacturers to produce its product. The foreign manufacturer places the domestic company's label on the products.

• True

• False

Contract manufacturing requires heavy start-up costs by the domestic company.

• True

• False

Contract manufacturing is a form of outsourcing.

• True

• False

A joint venture is a partnership in which two or more companies join to undertake a major project. All parties commit financing and risk to the project.

• True

• False

According to current U.S. laws, American firms are prohibited from participating in joint ventures with foreign firms.

• True

• False

The purpose of forming strategic alliances is to share the costs of marketing new products and services to several countries.

• True

• False

A disadvantage of creating a foreign subsidiary is the loss of control over technology and expertise used in the production of the product.

• True

• False

Foreign direct investment refers to the buying of goods produced in another country.

• True

• False