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Businesspeople measure material culture to determine whether a market can support production activities. Critics of globalization argue that it eliminates jobs in developing nations. Answer: FALSE The most important disadvantage of a strategic alliance is that it can create a […]

The exchange rate at which two parties agree to exchange currencies on a specified future date is called a ________ rate. A) forward B) prime C) spot D) cross A country’s ________ is a national accounting system that records all […]

During which stage of the market or site screening process do managers normally want to visit locations? A) identification of basic appeal of a product B) measurement of market or site potential C) assessment of the national business environment D) […]

Companies that belong to a nation’s internationally competitive industries exist in isolation from supporting industries. Scenario: Better Mousetrap Inc. Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a […]

Availability of energy is an important aspect of the business environment necessary for facilities location planning. Matching market needs to the company’s abilities is the first step in developing a successful export strategy. Answer: FALSE Direct exporters always sell directly […]

Which of the following is an example of a dual use product? A) a blowdryer B) a GPS navigation device C) a food processor D) a vacuum cleaner ________ is a payment method commonly used when there is an ongoing […]

Factor proportions theory differs from the theory of comparative advantage in that the focus of factor proportions theory is on the ________. A) usage of the most abundant factors of production, while the focus of the comparative advantage theory is […]

A multinational strategy is best suited to industries in which price competitiveness is a key success factor. Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government’s priority […]

Company debt normally takes the form of ________. A) bonds B) equity C) stocks D) bank loans An organizational structure that splits the chain of command between product and area divisions is referred to as a(n) ________ structure. A) international […]

The theory of absolute advantage destroys the mercantilist idea that international trade is a ________. A) positive-sum game B) zero-sum game C) negative-sum game D) win-win game A team of top managers from both headquarters and international subsidiaries who meet […]

Just-in-time manufacturing drastically reduces the costs associated with large inventories in the production process. Lobbying is the policy of hiring people to represent a company’s views on political matters. Answer: TRUE The particular process to be used to create products […]

Industry data cannot indicate how individuals feel about a company or its products. Switch trading is the export of industrial equipment in return for products produced by that equipment. Answer: FALSE The major purpose of foreign trade zones is to […]

Receiving financing from government agencies is often crucial to the success of small businesses just beginning to export. Franchising is primarily used in the manufacturing industries. Answer: FALSE A company can improve its profits by selling in a country with […]

________ is a political system in which political leaders rely on military and bureaucratic power to support their rule. A) Secular totalitarianism B) Secular anarchism C) Theocratic totalitarianism D) Theocratic pluralism The ________ was established in 2006 between the United […]

The process by which a company extends its control over additional stages of production is called vertical integration. The international bond market consists of all bonds sold by issuing companies outside their own countries. Answer: FALSE When one World Trade […]

A typical industry analysis includes the ________. A) experience and qualifications of the researcher B) structure of the wholesale and retail distribution networks C) accurate forecast of unforeseen political changes in the country D) history of currency fluctuations Scenario: ABC […]

Scenario: Moonland Union Twenty-six nations of Moonland region, have decided to cooperate with one another to eliminate trade barriers among them and create the Moonland Union. They are not sure, however, to what extent they want to cooperate. Economic integration […]

Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government’s priority is to protect local jobs and provide opportunities to Freeland’s emerging industries to flourish without the threat […]

The population of a(n) ________ market is mostly rural and is characterized by poor infrastructure with little credit or collateral. A) emerging B) traditional C) developed D) virtual According to the international product life cycle theory, in which stage of […]

An offset agreement differs from a counterpurchase agreement in that an offset agreement ________. A) fails to specify the type of product that must be purchased B) fails to specify the amount that will be spent on the purchase C) […]

The lowering of taxes in the U.S. by its government is an example of the ________. A) fiscal policy B) monetary policy C) social policy D) foreign affairs policy A ________ is a separate company created and owned by two […]

Availability and cost of labor in the local market is crucial to process planning. Scenario: Excelsior’s Limited Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence in several countries around the world. Excelsior’s president is surprised […]

IMF members formalized the existing system of floating exchange rates as the new international monetary system by drafting the so-called ________. A) Bretton Woods Agreement B) Smithsonian Agreement C) Plaza Accord D) Jamaica Agreement A(n) ________ is the most restrictive […]

A(n) ________ structure separates domestic from international business activities by creating a separate global branch with its own manager. A) international area B) international division C) global matrix D) global product The intentional raising of the value of a currency […]

Scenario: You’re Hired! Erica Els has just been promoted as vice president of human resources for Hudson Foods, a U.S.-based international frozen food corporation. Erica’s first task is to staff the company’s European subsidiary. One challenge facing Hudson Foods as […]

Scenario: Better Mousetrap Inc. Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a unique design that has been selling well in the U.S. market. Senior Vice President Marc […]

Donna Bader, Globalization opponent Donna Bader spent her final year at college studying the effect of various economic factors on the economy of developing nations. Based on the results of her study, she concluded that globalization does these countries more […]

An ethnocentric staffing strategy can facilitate the transfer of special know-how to branch operations. In a backward integration joint venture, the parties choose to invest together in downstream business activities. Answer: FALSE Companies use polycentric staffing to re-create local operations […]

When a market is experiencing rapid growth, a company will ________. A) emphasize on decruitment B) divest its operations C) reinvest in its operations D) implement retrenchment strategies The international product life cycle theory was put forth for ________. A) […]

Scenario: Sam Dearing, Budding International Financier Sam Dearing is a summer intern in the arbitrage department at a prestigious Wall Street firm. Sam is hoping to be offered a full-time position at the firm after he graduates from college, and […]

Scenario: ABC Software ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China. The company’s […]

Which of the following is an investment entry mode? A) licensing B) franchising C) joint venture D) turnkey project The psychological process of readapting to one’s home culture after working in a host-country culture is called ________. A) social loafing […]

Donna Bader, Globalization opponent Donna Bader spent her final year at college studying the effect of various economic factors on the economy of developing nations. Based on the results of her study, she concluded that globalization does these countries more […]

Reverse brain drain is the process by which ________. A) manual laborers migrate from low-income countries to high-income countries B) former communist nations lure professionals back to their homeland C) students from Europe choose to enroll themselves in American universities […]

Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government’s priority is to protect local jobs and provide opportunities to Freeland’s emerging industries to flourish without the threat […]

Scenario: Excelsior’s Limited Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence in several countries around the world. Excelsior’s president is surprised at some of the responses the company is receiving from other countries. Restrictions on […]

________ tend to occupy the highest social layer in industrialized countries. A) Teachers B) Scientists C) Medical doctors D) Business leaders The Council of the European Union is the ________ body of the European Union. A) legislative B) executive C) […]

Which of the following represents the Fisher effect? A) Cross Rate = Real Interest Rate + Nominal Interest Rate B) Real Interest Rate = Nominal Interest Rate + Spot Rate C) Nominal Interest Rate = Real Interest Rate + Inflation […]

________ allows labor representatives in Germany to participate in high-level company meetings by actually voting on proposed actions. A) Centralization B) Codetermination C) Individualism D) Authoritarianism Which of the following steps of the market screening process involves examining the cost […]

An offshore financial center is a territory whose financial sector features very few regulations and few, if any, taxes. If the law of one price is applied and upheld, an arbitrage opportunity arises. Answer: FALSE[/cpmembership] Scenario: Moonland Union Twenty-six nations […]

An exchange rate calculated using two other exchange rates is called a(n) ________. A) interest arbitrage B) forward contract C) forward rate D) cross rate Eurobonds are popular because ________. A) they are less risky than traditional bonds B) they […]

Venture capital is a source of equity financing for successful multinational companies. Scenario: Moonland Union Twenty-six nations of Moonland region, have decided to cooperate with one another to eliminate trade barriers among them and create the Moonland Union. They are […]

The international product life cycle theory was developed by ________. A) Milton Friedman B) Karl Marx C) Michael Porter D) Raymond Vernon An offshore financial center is usually characterized by ________. A) extensive regulations B) economic and political instability C) […]

Currency devaluation increases consumers’ buying power. Product differentiation is more likely when nations share the same level of economic development. Answer: FALSE[/cpmembership] The brand name or trademark of a company is normally the single most important item desired by a […]

A ________ strategy can create cost savings due to product and marketing standardization. A) retrenchment B) multidomestic C) blue ocean D) global Adapting products and their marketing strategies in each of the national markets of a company to suit local […]

The open account method of export/import financing is used when the two parties are unfamiliar with each other. One of the key obstacles faced by countries in economic transition is the lack of managerial expertise. Answer: TRUE Scenario: Moonland Union […]

The main benefit of a global strategy is that it allows companies to monitor buyer preferences closely in each local market. An excess money supply creates a borrower’s market, forcing down interest rates and the cost of borrowing. Answer: TRUE […]

Islamic law is the most widely practiced theocratic legal system today. Critics of globalization believe the overall gains that accrue to national economies are worth the lost livelihoods of some workers. Answer: FALSE The Bretton Woods Agreement was an accord […]

Had the government taken over the assets of Global Trading without compensation, and not taken over the assets of any other company, the government’s actions would be an example of ________. A) expropriation B) nationalization C) confiscation D) communism The […]

Which step of the market-screening process involves determining the income elasticity of the Zulu doll? A) selection of the market B) assessment of the national business environment C) identification of the basic appeal for markets D) measurement of market potential […]

Companies usually decide to reinvest when a market is experiencing rapid growth. A characteristic of the world’s least-global nations is low levels of corruption. Answer: FALSE Scenario: Moonland Union Twenty-six nations of Moonland region, have decided to cooperate with one […]

The objectives at the ________ of an organization are typically more precise and contain numerical targets of performance. A) department-level B) business-level C) global-level D) corporate-level The ease with which bondholders and shareholders may convert their investments into cash is […]

In any exchange rate, the quoted currency is always the numerator. Translating subsidiary earnings from a strong host currency into a weak home currency increases stated earnings in the home currency. Answer: TRUE Scenario: Moonland Union Twenty-six nations of Moonland […]

The common currency of the European Union is known as the ________. A) European currency unit B) eurodollar C) euro D) European unit of account A(n) ________ advantage is the one that a company gains from incorporating a business activity […]

Scenario: Frankfurter Friday Betty Cleveland is the vice president of Frankfurter Friday, a highly successful hot dog joint in Oceania. Her company decides to expand to Asia and identifies China as the ideal market. Before she leaves for China, she […]

Regulations for the purpose of environmental protection generally increase short-term production costs. Objectives of individual business units in an organization exclusively contain numerical targets of performance. Answer: TRUE A product’s income-elasticity refers to the sensitivity of the price of a […]

Which of the following statements is true about cultural influences? A) Culture and trade are independent of each other. B) Unwanted cultural influence in a nation can cause governments to block imports that it believes are harmful. C) The cultures […]

According to the opponents of globalization, which of the following occurs as a result of worker dislocation brought about by globalization? A) increased labor costs for companies B) lower workers’ wages in developed nations C) surfeit of jobs in developed […]

Worker productivity tends to be lower in most developing nations than in developed nations. Scenario: Learning the Americas’ Way The newly-formed countries that emerged after the break up of the United Frontier States (UFS) are interested in learning more about […]

Like the European Union commissioners, EU justices are required to act in the interest of their native countries. Objectives at the highest level in a company are always stated in the most specific terms. Answer: FALSE A focus strategy works […]

Which of the following is least likely a reason for companies to seek cross-border mergers and acquisitions? A) to get a foothold in new geographic markets B) to raise company budgets for increased research and development activities C) to increase […]

Religion is confined to national political boundaries. Scenario: Excelsior’s Limited Excelsior’s Limited, a manufacturer of health and beauty aids, is expanding its presence in several countries around the world. Excelsior’s president is surprised at some of the responses the company […]

Which of the following disagrees with the concept of centrally planned economies? A) At the time of their collapse, standards of living in most centrally planned economies were at or above those of market economies. B) Basic necessities were often […]

An important advantage of the staffing policy recommended by Valerie is that it ________. A) re-creates local operations in the image of home-country operations B) eliminates the high cost of relocating expatriate managers and families C) helps the company develop […]

Currency speculation is the purchase or sale of a currency with the expectation that its value will remain constant. The Council of the European Union is the executive body of the EU. Answer: FALSE The first step in the identification […]

Scenario: Happyland Happyland is a country characterized by beautiful beaches, vast natural resources, and a highly skilled labor force. Happyland is now encouraging foreign direct investment flows. The country has been exporting textiles, computer hardware, and software programs. The net […]

In countries with high illiteracy rates, a(n) ________ should not be used to collect information. A) personal interview B) written survey C) focus group D) field research According to Hofstede’s framework, a culture that scores low on ________ can change […]

________ are usually located on small island nations or territories with favorable tax and/or secrecy laws. A) Cybermarkets B) Over-the-counter markets C) Booking centers D) Operational centers Which of the following financing methods entails the greatest risk for importers? A) […]

Liquidity refers to the ease with which bondholders and shareholders may convert their investments to cash. A differentiation strategy is often implemented when a company wants to exploit economies of scale to have the lowest cost structure. Answer: FALSE Securitization […]

A major drawback of geocentric staffing is that it is expensive. Polycentric staffing places managerial responsibility in the hands of people intimately familiar with the local business environment. Answer: TRUE An international area structure separates domestic from international business activities […]

A global strategy does not allow a company to modify its products except for the most superficial features. Scenario: Better Mousetrap Inc. Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative […]

According to the market imperfections theory, competition is a common market imperfection. All parties ranging from suppliers and employers to consumers who are affected by a company’s activities are called its stockholders. Answer: FALSE Scenario: Susan Goes Global with Grape […]

The compensation of nonmanagerial workers is strongly influenced by increased cross-border business investment. Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government’s priority is to protect local […]

Which of the following terms refers to the forced transfer of assets from a company to the government without compensation? A) expropriation B) nationalism C) nationalization D) confiscation The value of a product relative to its weight and volume is […]