1. You work for U.S.-based Caterpillar, which makes earth-moving equipment, locomotives, turbines, and other industrial products. Your assignment is to analyze the challenges and opportunities facing Caterpillar as it does business in more than 180 nations. Thinking about what Caterpillar’s business activities mean for the domestic and global economies, use the drop down menu to match each of the following concepts with its definition.
What Caterpillar is doing when it sells U.S.-made equipment to buyers in France.
What French buyers are doing when they purchase U.S.-made equipment from Caterpillar.
What happens to the U.S. economy when the value of imports exceeds the value of exports.
All buying and selling transactions that take place across national boundaries, such as between U.S.-based Caterpillar and its French customers.
How the U.S. economy handles money flows in and out of the country related to imports, exports, tourism, and aid to other nations.
2. You created the following list of possible actions that Caterpillar might take in doing business with other countries. Now you need to determine the corresponding effects on U.S. trade, including the balance of trade, the balance of payments, and the trade deficit. Using the drop down menu, determine if the following statements are true or false.
If Caterpillar imports a large quantity of raw materials from Asia for use in U.S. factories, it will improve the trade deficit.
If Caterpillar exports a large quantity of finished products from U.S. factories to European countries, it will add to an unfavorable U.S. balance of trade.
If Caterpillar sells U.S.-made turbines to China, it will help improve the U.S. balance of payments.
If Caterpillar buys Chinese-made parts for its U.S.-made turbines, it will help improve the U.S. balance of payments.
3. Now that Alpha Train is well-known and successfully selling to stores in Canada and Mexico, you are looking for sales beyond North America. The following are four possible ways to enter your next market. Use the drop down menu to arrange them in order, from the least involvement and control to the most involvement and control.
Build a factory in the other country to manufacture Alpha Train wooden toys.
License the Alpha Train name and designs to a local manufacturer in the other country.
Export Alpha Train’s U.S.-made toys to the other country.
Form a joint venture with a local partner to manufacture and sell Alpha Train’s toys in the other country.
4. Alpha Train just received an unusually large toy order from a retail chain with stores all over Asia. Something else about the order is unusual: This is a countertrade transaction. Use the drop down menu to indicate which of the following statements about countertrade are true and which are false.
Countertrade is sometimes used when one of the countries involved in the transaction has currency limits.
Countertrade only involves tangible goods, not services.
Countertrade allows trading companies to connect multinational enterprise buyers with small business sellers.