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1) Differences in culture, geography, and financial methods make it complicated for MNEs to identify cause-and-effect performance measures. 2) Export intensity, the percentage of total revenues coming from exports, is not always correlated with company size. Answer: TRUE 3) According […]

1) The term protectionism, when applied to international trade, refers to governmental restrictions and incentives to affect trade flows. 2) In a matrix structure, product, functional, or geographic groups compete for resources. Answer: TRUE 3) Companies that have integrated their […]

1) What role has the IMF played in the Greek financial crisis of 2010-2011? A) setting the value of the drachma B) releasing funds for debt payments C) demanding the sale of state-owned assets D) lowering interest rates for international […]

1) Global integration occurs as countries from all over the world decide to cooperate through the ________. A) EU B) NAFTA agreement C) WTO D) CARICOM 2) Which of the following statements about small and medium-sized enterprises (SMEs) is true? […]

1) A criticism of globalization is that as economic growth increases, too many nonrenewable resources are used 2) In a licensing arrangement, it is rare for companies to agree to a front-end payment to cover technology transfer costs. Answer: FALSE […]

1) An effective code of conduct reports results to external stakeholders. 2) Vertical integration occurs when the company owns the entire supplier network or at least a significant part of it. Answer: TRUE 3) Countries typically establish export restrictions to […]

1) Dispersed value chains make sense when costs vary across countries. 2) When a company sells technologically advanced products to global customers, it is more likely to handle distribution itself. Answer: TRUE 3) The fact that a company is the […]

1) Which of the following best explains why international business has grown rapidly in the past few decades? A) the end of the political division between the Communist and non-Communist blocs B) greater income equality in most countries C) growing […]

1) Risk is an important factor for companies engaged in international business. One way a collaborative arrangement helps minimize risk when operating abroad is by ________. A) reducing the possibility of technological appropriation B) freeing up resources so a company […]

1) Which of the following is most likely a true statement about organization culture? A) Many organizations use a robust organization culture to create consistently high performance B) Fewer and fewer companies allow an organization’s culture to emerge naturally C) […]

1) If a brand name becomes generic in one country, it becomes generic in other countries as well. 2) A company would most likely outsource abroad in order to gain access to more domestic products. Answer: FALSE 3) Good scanning […]

1) Import substitution is a program promoting local production of products that would otherwise be imported. 2) Trading activity has increased in recent years due to the growing importance of foreign exchange as an alternative asset and the expanded emphasis […]

1) As a Japanese MNE, Sony is more likely to use ________ to evaluate performance of its foreign operations. A) quality targets B) market share C) ROI D) sales 2) Forecasters must predict the magnitude, direction, and ________ of an […]

1) At Fidelity Enterprises, raw materials, parts, and components are acquired from suppliers as they are needed in the manufacturing process so that Fidelity does not have to store large inventories. Which of the following does Fidelity most likely use? […]

1) Which of the following is NOT a major reason that companies adopt IT systems? A) maintaining effective arms’ length relationships with customers B) producing high-quality products quickly and efficiently C) communicating effectively with suppliers D) managing inventory levels proficiently […]

1) A company can best benefit from a first-mover advantage by moving into a small country, before entering a much larger country. 2) The balance of trade is a record of a country’s international transactions that take place among companies, […]

1) The ________ the level of the company at which managers make decisions, the more that organization is ________. A) higher; decentralized B) lower; centralized C) higher; centralized D) higher; unstructured 2) According to the research described in your text, […]

1) Electronic data interchange (EDI) is an online collaboration model that brings manufacturers, distributors, value-added retailers, and customers together to execute trading transactions. 2) Many products’ location of production will shift internationally as the products go through their life cycle. […]

1) Tax law variations around the world affect an MNE’s capital budgeting, financing, and method of setting transfer prices. 2) By operating internationally, a company may take advantage of business-cycle differences among countries and thereby reduce its financial risks Answer: […]

1) Collaborative agreements allow companies to specialize more in those activities that best fit their competencies. 2) The more partners in a joint venture, the more complex the management of the arrangement will be. Answer: TRUE 3) The most common […]

1) One advantage of importing is that an importer can diversify its operating risks by developing alternative suppliers. 2) A Eurocurrency is any currency that is banked outside its country of origin. Answer: TRUE 3) Governments sometimes prohibit foreign acquisitions […]

1) When using a budget for foreign operations, it is important for the parent company to select an exchange rate to set the budget and use that same rate to evaluate performance. 2) An important business objective for pursuing ethical […]

1) Companies often face problems repatriating executives from foreign assignments to the home nation due to which of the following? A) The vacant position cannot be filled overseas B) The firm must increase compensation substantially C) Different departments compete excessively […]

1) Anderson Enterprises is a U.S. firm that manufactures light fixtures for commercial and residential consumers. Anderson is looking to expand internationally, so the firm should most likely ________. A) focus on developing new recruitment strategies and selection tests B) […]

1) ________ focus on offering banking and other financial services to nonresident customers. A) Subsidiary banks B) Branch banks C) Affiliated banks D) Offshore financial centers 2) Which of the following is a primary business objective for pursuing ethical behavior? […]

1) The opportunity to increase profitability is the primary reason that firms decide to export. 2) The protection of intellectual property rights is very similar from country to country. Answer: FALSE 3) Although the broadening of product lines increases distribution […]

1) The requirement by the U.S. government that its subsidiaries abroad comply with trade restrictions with Cuba is an example of externalities. 2) A company with limited resources is more likely to achieve national distribution within a small country than […]

1) Under the ________ form of totalitarianism, the regime confines itself to political control of the state. It does not regulate the economic and social structure of society. A) fascist B) communist C) theocratic D) authoritarian 2) A bond that […]

1) A geocentric staffing policy is one in which all key management positions throughout the company’s global operations are filled by host-country nationals. 2) A company that prices its products at a desired margin over cost is using a cost-plus […]

1) When income inequality is high in a specific country, the per capita GDP figures are more meaningful. 2) Most cultural variables are universal. Answer: TRUE 3) The infant-industry argument for trade protection holds that an industry needs government protection […]

1) Each country in NAFTA sets its own tariffs to the rest of the world. 2) Stockholders are typically more interested in corporate social responsibility than in earning profits. Answer: FALSE 3) A multidomestic strategy makes the most sense for […]

1) There is a strong relationship between skewed income distributions and the split between those who live in urban settings versus those who live in rural areas. 2) A differentiation strategy works well in situations where there are many ways […]

1) The ethnocentric and polycentric staffing policies, unlike the geocentric staffing policy, rely on extensive use of expatriate managers. 2) A polycentric staffing policy is well matched with a transnational strategy. Answer: FALSE 3) The IMF’s primary role is to […]

1) JIT is the process of sourcing raw materials and parts just as they are needed in the manufacturing process. 2) An advantage of collaborative agreements is the ability to spread faster geographically. Answer: TRUE 3) Mobile Technology is a […]

1) Which of the following is a statement that summarizes all economic transactions between a country and the rest of the world during a given period of time? A) trade deficit B) Gini coefficient C) balance of payments D) purchasing […]

1) Uneven income distribution ________. A) exists in almost every country B) is largely a problem for poorer nations C) primarily affects people in urban settings D) is limited to a small share of the world population 2) Tom, a […]

1) Although countries are similar in terms of having a mandatory retirement age, they differ in what that age is. 2) The Eurocurrency market is a retail, rather than wholesale, market. Answer: FALSE 3) Under mercantilism, colonial powers sought to […]

1) An advantage of locating operations where there are many competitors is that the cluster of competing firms attracts multiple suppliers and specialized personnel. 2) Some companies that opt for the cost leadership strategy plan to sell products below the […]

1) Uneven income distribution is largely a problem confined to poorer nations. 2) A condition that is conducive to low transfer prices from the parent company to the subsidiary and high transfer prices from the subsidiary to the parent company […]

1) The argument for using protectionism to bring about industrialization in developing countries presumes that gains will occur because the industry will become internationally competitive. 2) Many professional basketball teams recruit tall youngsters in foreign countries into basketball camps where […]

1) The law is often based on imprecisely defined moral concepts that cannot be separated from legal concepts. 2) In the long run, MNEs must adequately meet the needs of all stakeholders in order to prosper and survive. Answer: TRUE […]

1) According to experts, stakeholder participation in decision making is effective only in countries with an educated population. 2) In an FX swap, one currency is swapped for another on one date and then swapped back on a future date. […]

1) Ownership advantages refer to a firm’s specific assets, international experience, and the ability to develop either low-cost or highly differentiated products within the context of its particular value chain. 2) Headquarters management often feels that people within an established […]

1) A company that adapts its marketing to foreign differences without deviating very much from its experience is following a customer orientation. 2) U.S.-based MNEs are not permitted to set budgets and monitor results using the same exchange rate. Answer: […]

1) The U.N. Global Compact is best described as a(n) ________. A) corruption mandate B) environmental initiative C) external code of conduct D) international trade guideline 2) Why do turnkey operators often require a feasibility study as part of the […]

1) Vertical and horizontal constraints that segment employees and their tasks within an organization are generally referred to as ________. A) structures B) networks C) boundaries D) classifications 2) An argument against limiting exports to unfriendly countries is that ________. […]

1) U.S. and U.K. companies tend to be more transparent than Japanese companies. 2) The essential-industry argument holds that industries with potential export capabilities should be protected. Answer: FALSE 3) Demand for a country’s independently floating currency is a function […]

1) The Single European Act set steps to accomplish monetary union in the European Union, including the creation of the euro. 2) The use of JIT does not depend on the quality of incoming parts or the time of their […]

1) In a multiple exchange-rate system, the government determines which kinds of transactions are to be conducted at which exchange rate. 2) Major types of indirect intermediaries include export trading companies, distributors, and freight forwarding companies. Answer: FALSE 3) The […]

1) Horizontal differentiation is concerned with how the managers of a firm decide to divide the company into discrete subunits. 2) Executives from the home office typically demand richer compensation packages and impose higher relocation costs than third-country nationals do. […]

1) A firm’s vertical differentiation determines where in its organization structure managers have decided to concentrate decision-making authority. 2) A company that exports products at a price lower than its domestic market price is using a skimming policy abroad. Answer: […]

1) An exception to the PLC theory in terms of production location is often a product with very rapid change in innovation. 2) Most U.S. companies have moved from a total quality management (TQM) approach to an acceptable quality level […]

1) Gross domestic product is the value of production that takes place within a nation’s border, without regard to whether the production is done by domestic or foreign factors of production. 2) The Netherlands is an example of a country […]

1) Geographical barriers typically affect distribution channels within countries, but they rarely affect distribution channels between countries 2) Companies find it challenging to judge a potential expatriate’s adaptability to foreign places, people, and processes. Answer: TRUE 3) Expatriates are locals […]

1) If inflation in the United States is relatively higher than inflation in Japan, and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar, it should most likely ________. A) allow its currency […]

1) When comparing economic and demographic variables among countries, one should consider that consumers in developing countries do not necessarily follow the same historical patterns as those in more developed countries. 2) English-speaking peoples account for a larger portion of […]

1) Endaka, the “high yen,” caused financial problems for ________. A) Japanese foreign-exchange reserves B) American foreign-exchange reserves C) Japanese importers D) Japanese exporters 2) All of the following are ways that Coca-Cola has been attempting to increase its global […]

1) A tariff is the price of a currency. 2) Rationalization is the process of specializing in manufacturing according to product or process. Answer: TRUE 3) The Washington Consensus promotes democracy, freedom, the rule of man, and human rights. Answer: […]

1) Limitation of logging in the Amazon region is generally viewed as environmentally beneficial for the planet as a whole; however, unemployed Brazilian workers have felt that job creation inside Brazil is more important than climate protection outside Brazil This […]

1) GATT’s contribution to trade liberalization made possible the expansion of world trade in the second half of the twentieth century. 2) A currency sells at a forward premium when the forward rate is greater than the spot rate. Answer: […]

1) Although a company may have a good track record with collaborative arrangements, this is of little help when negotiating new collaborative arrangements with different companies. 2) A currency that is pegged to another currency is usually changed on a […]

1) Identify and briefly compare the major regional trading groups in Latin America, Asia, and Africa. 2) If a foreign subsidiary is located in a low tax country, the parent company would probably use a ________. A) high transfer price […]

1) The term collectivism refers to a system that stresses the primacy of societal goals over individual goals. 2) Decentralization has the key advantage of letting decisions be made by those who directly deal with customers, competitors, and markets. Answer: […]

1) Home country consumers are typically active in preventing their domestic companies from dumping products into foreign markets. 2) The three levels of quality standards are general, international, and industry-specific. Answer: FALSE 3) Agricultural subsidies by developed countries impede the […]

1) New configurations of value activities create coordination and control challenges that cannot be addressed by the functionality outlined in a formal structure. 2) The term brain drain describes the export of high-technology products in exchange for low-technology products. Answer: […]

1) As exemplified in China, the government in a collectivist society is highly connected to and interdependent with business. 2) An effective tariff is the sum of the ad valorem tariff plus the specific duty. Answer: FALSE 3) If the […]

1) Indirect exporters sell goods to a foreign intermediary, who then sells the product in the domestic market to the final consumer. 2) An MNE would most likely benefit from converting local currency into its home-country currency when exchange rates […]

1) The Big Mac Index suggests that exchange rates should leave Big Mac hamburgers costing the same in the U.S. as abroad. 2) A problem of advertising through media that reach multiple countries is that the product may not be […]

1) The Malcolm Baldrige National Quality Award is an example of a general standard that is presented annually to companies that demonstrate quality strategies and achievements. 2) A civil law system anchors itself in the wisdom of daily experience or, […]

1) The range of economic systems in the world today, when represented on a spectrum, has one end anchored by the idea of capitalism, the other with that of socialism. 2) According to EIU research, 37% of the world’s populations […]

1) The growth of small-scale production technology will most likely enable small countries to produce products efficiently for their own consumption. 2) The bid is the price at which the trader is willing to sell foreign currency. Answer: FALSE 3) […]

1) Using a concentrated configuration, an MNE performs value activities in different countries. 2) Most countries’ imports account for more than half of their citizens’ consumption Answer: FALSE 3) The balanced scorecard is an approach to performance measurement that closely […]

1) A licensing agreement is a contract for the granting of rights on tangible property. 2) A current account deficit suggests that a country is importing more than it is exporting and building up foreign debt. Answer: TRUE 3) An […]

1) The foreign-born population as a percentage of total population is substantial for some countries and insignificant for others. 2) GE’s Ecomagination program has enabled the firm to develop a competitive advantage over its competitors. Answer: TRUE 3) The U.S. […]

1) Currency is a major issue in financial reporting because companies must decide in which currency to present their financial information to the general public. 2) Translation of foreign currency financial statements is the process of restating foreign currency financial […]

1) It is difficult to compare globalization of business over time because shifting national borders have changed the nature of transactions from domestic to international and vice versa 2) The primary duty of the customs agency of a government is […]

1) NGOs must be recognized by the United Nations in order to do humanitarian work in developing countries. 2) The argument for using import controls to promote exports is partially premised on the assumption that other countries will remove their […]

1) LIBOR is best defined as the ________. A) interest rate of the National Bank of London B) short-term interest rate for dollars held in the Eurodollar market C) interest rate of the European Union D) deposit rate that applies […]

1) A culture in which people prefer to handle tasks sequentially is a polychronic culture. 2) Germanic and Japanese companies tend to be more optimistic than U.S. and U.K. companies. Answer: FALSE 3) The most important rationales for NAFTA are […]

1) None of the new members of the EU has yet been allowed to adopt the euro as its currency. 2) Upon selection of an executive for an expatriate posting, the most common predeparture training involves a range of instructive […]