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PART 1 FOUNDATION CONCEPTS CHAPTER 1 INTRODUCTION: WHAT IS INTERNATIONAL BUSINESS? Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ Consider having everyone in class introduce themselves. One way to initiate introductions is distribute random pages torn from […]

● SUGGESTED SOLUTIONS TO CASE QUESTIONS 1-4. What is the nature of the international business environments Harley faces? What types of risk does the firm face? ■ Domestic and international environment: complex and risky ■ All FOUR types of risks […]

QUESTIONS 1-1. What advantages does Facebook obtain from doing business in international markets? ■ Capitalizing upon the global interdependency and interconnectedness among economic, 1-2. Why have some foreign governments banned their citizens from accessing Facebook? ■ Some governments fear the […]

PART 2 THE ENVIRONMENT OF INTERNATIONAL BUSINESS CHAPTER 10 FINANCIAL MANAGEMENT AND ACCOUNTING IN THE GLOBAL FIRM Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ This chapter explores international financial management, which refers to obtaining and using […]

■ THE GOAL IS TO MINIMIZE INTERNATIONAL CURRENCY RISKS. QUESTIONS 10-1. HOW DOES MARKEL CORPORATION GAIN AND LOSE FROM FLUCTUATING EXCHANGE RATES? (LO 10.5; AACSB: Application of knowledge) ■ Markel quotes prices in its customers’ currencies. Foreign customers prefer this, […]

10-18. Ethical Dilemma: Suppose you are president of West Turner Bank (WTB). WTB made loans for major construction projects in countries in Eastern Europe and North Africa. However, WTB’s fortunes declined in recent years and the bank now faces financial […]

PART 3 STRATEGY AND OPPORTUNITY ASSESSMENT CHAPTER 11 STRATEGY AND ORGANIZATION IN THE INTERNATIONAL FIRM Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ This chapter marks a transition in the textbook and in the course that moves […]

QUESTIONS 11-1. What strategies and other approaches does IKEA follow that have allowed the firm to become the world’s leading furniture retailer? (LO 11.1; AACSB: Application of knowledge) ■ Strategy- Targeting a global customer segment allows IKEA to offer standardized […]

11-19. Ethical Dilemma: You were recently hired as a manager for international operations of Despoyle Chemical Corporation, a major manufacturer of dyes, fertilizers, and other industrial chemicals. Despoyle has chemical production plants in 28 countries, including many developing economies. It […]

PART 3 STRATEGY AND OPPORTUNITY ASSESSMENT CHAPTER 12 GLOBAL MARKET OPPORTUNITY ASSESSMENT Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ With this chapter, the class begins to explore how managers decide how and in what countries they […]

QuESTIONS 12-1. Why is it challenging to estimate demand in emerging markets? (LO 12.4; AACSB: Application of knowledge) ■ Estimating the demand for products/services in emerging markets is challenging because of the unique commercial environments. ■ They are limited in […]

PART 4 ENTERING AND WORKING IN INTERNATIONAL MARKETS CHAPTER 13 EXPORTING AND GLOBAL SOURCING Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ Market entry strategies consist of exporting, sourcing, foreign direct investment, licensing, franchising, and non-equity alliances. […]

QUESTIONS 13-1. As described in the case, what are the benefits of exporting? (LO 13.1; AACSB: Application of knowledge) ■ As an entry strategy, exporting is low cost, low risk, and uncomplicated. 13-2. How do exporters go about finding foreign […]

13-22. Moose & Walrus (M&W) is a manufacturer of a popular line of clothing for young people. M&W is firmly established in its home market, which is relatively saturated and has little prospects for future sales growth. Top management has […]

PART 4 ENTERING AND WORKING IN INTERNATIONAL MARKETS CHAPTER 14 FOREIGN DIRECT INVESTMENT AND COLLABORATIVE VENTURES Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ This chapter discusses foreign direct investment (FDI) and joint ventures. Compared to exporting, […]

QUESTIONS 14-1. What are the main characteristics of Africa as a market for mobile telephones? (LO 14.1; AACSB: Application of knowledge) ■ With a population just over one billion, Africa is the world’s second most populous ■ Recently Africa has […]

14-13. What are the major motives for undertaking FDI for a small firm whose sales are dwindling in its home market? For a firm that wants to enter a country with high trade barriers? For a firm with high manufacturing […]

PART 4 ENTERING AND WORKING IN INTERNATIONAL MARKETS CHAPTER 15 LICENSING, FRANCHISING, AND OTHER CONTRACTUAL STRATEGIES Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ This chapter discusses types of contractual relationships and their role in international business. […]

QUESTIONS 15-1. How does Warner generate royalties by using contractual entry strategies? (LO 15.1; AACSB: Application of knowledge) ■ Warner licenses with many types of companies worldwide to use Potter-related images on manufactured products like game software, children’s furniture, school […]

PART 5 FUNCTIONAL AREA EXCELLENCE CHAPTER 16 MARKETING IN THE GLOBAL FIRM Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ This chapter discusses how marketing program elements are affected by international business. It focuses on how companies […]

QUESTIONS 16-1. What international marketing strategies have been key to Kors’ success? (LO 16.1; AACSB: Application of knowledge) 16-2. Describe the role of branding in the global luxury products market. (LO 16.3; AACSB: Application of knowledge) ■ Power of branding […]

PART 5 FUNCTIONAL AREA EXCELLENCE CHAPTER 17 HUMAN RESOURCE MANAGEMENT IN THE GLOBAL FIRM Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ This chapter discusses the strategic role of human resources in international business. As firms become […]

QUESTIONS 17-1. How does J&J’s Credo help guide employee behavior around the world? ■ The cornerstone of Johnson & Johnson’s (J&J) six-decade old Credo is their high regard for human resources. 17-2. How does J&J develop managers for international operations? […]

PART 1 FOUNDATION CONCEPTS CHAPTER 2 GLOBALIZATION OF MARKETS AND THE INTERNATIONALIZATION OF THE FIRM Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER The Value Chain concept is central to this chapter. To ensure that students understand this […]

● SUGGESTED SOLUTIONS TO CASE QUESTIONS QUESTIONS: 2-1. What are the main characteristics of born global firms? ■ Born globals target a dozen or more countries within the first few years of their 2-2. What drivers/causes of globalization have allowed […]

2-18. Globalization provides numerous advantages to businesses and consumers around the world. At the same time, some critics believe that globalization is harming various aspects of life and commerce. In what ways is globalization good for firms and consumers? In […]

PART 2 THE ENVIRONMENT OF INTERNATIONAL BUSINESS CHAPTER 3 THE CULTURAL ENVIRONMENT OF INTERNATIONAL BUSINESS Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ Many will be familiar with Richard D. Lewis’ When Cultures Collide and more recently, […]

QUESTIONS: 3-1. Why are the Chinese such heavy users of the Internet? (LO 3.2; LO 3.5; AACSB: Reflective thinking) ■ Government bans Western social media sites that may be critical of the Chinese government, 3-2. What are the characteristics of […]

● APPLY YOUR UNDERSTANDING 3-18. Suppose you get a job at Kismet Indemnity, a life insurance company. In its 45-year history, Kismet has never done any international business. Now its president, Randall Fraser, wants to expand abroad. You have noted […]

PART 2 THE ENVIRONMENT OF INTERNATIONAL BUSINESS CHAPTER 4 ETHICS, CORPORATE SOCIAL RESPONSIBILITY, SUSTAINABILITY AND GOVERNANCE IN INTERNATIONAL BUSINESS Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER The concepts of ethics and legal frameworks are central to this […]

QUESTIONS: 4-1. Give examples of unethical or unsustainable behavior that firms in the food and beverage industry might undertake. ● Endangering water supplies 4-2. What types of sustainable practices has Coca-Cola adopted over time? ■ Water Neutral Strategies ● Invested […]

● APPLY YOUR UNDERSTANDING 4-21. Ethical Dilemma: You were recently hired by ThunderCat Corporation, a major aircraft producer with a manufacturing presence in numerous countries. ThunderCat’s sales personnel constantly travel the world, selling fighter jets and commercial aircraft to airlines […]

PART 2 THE ENVIRONMENT OF INTERNATIONAL BUSINESS CHAPTER 5 THEORIES OF INTERNATIONAL TRADE AND INVESTMENT Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ Question: What do a Scottish Political Economist (Adam Smith), a British Political Economist (David […]

QUESTIONS: 5-1. Explain why most Apple products are made outside the firm’s home country, the United States. (LO 5.4; AACSB: Reflective thinking) ■ Global sourcing: The advantages provided by suppliers and nations in Asia, Europe, and ■ Factor Proportions Theory […]

V. END OF CHAPTER QUESTIONS ● TEST YOUR COMPREHENSION 5.9. Describe the classical theories of international trade. Which theories do you believe are relevant today? (LO 5.1; AACSB: Application of knowledge) There are five classical perspectives explaining the underlying rationale […]

5-19. Ethical Dilemma: To reduce poverty in Africa, government officials want to increase African exports to Europe. Africa’s top exports include agricultural products, such as meat, coffee, peanuts, and fruit, and many Africans depend on food exports for their livelihood. […]

PART 2 THE ENVIRONMENT OF INTERNATIONAL BUSINESS CHAPTER 6 POLITICAL AND LEGAL SYSTEMS IN NATIONAL ENVIRONMENTS Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER Who knows the difference between common law and civil law? ■ There are four […]

QUESTIONS 6-1. What is the nature of country and political risk in Russia? (LO 6.5; AACSB: Application of knowledge) ■ Country risk is defined as exposure to potential loss or adverse effects on company operations and profitability caused by developments […]

Market economy ■ Market economies– decisions regarding production levels, consumption, investment, and savings resulting from the interaction of supply and demand (market forces). ■ Economic decisions are left to individuals and firms. Mixed economy ■ Mixed economy– exhibits market and […]

PART 2 THE ENVIRONMENT OF INTERNATIONAL BUSINESS CHAPTER 7 GOVERNMENT INTERVENTION AND REGIONAL ECONOMIC INTEGRATION Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ Governments have long intervened in international business, hindering the free flow of trade and […]

7-1. Describe the nature of government intervention in India? What is the likely effect on business activities? (LO 7.1; LO 7.3; AACSB: Application of knowledge) ■ Government intervention creates a bureaucratic nightmare for businesses- trade barriers, business regulations, import taxes, […]

North American Free Trade Agreement (NAFTA) ■ 1994– NAFTA (http://www.nafta-sec-alena.org)– Canada, the U.S. and Mexico ■ Most significant economic bloc in the Americas ■ Maquiladora program facilitated NAFTA passage – since the 1960s U.S. firms have located ■ NAFTA: ◘ […]

● GlobalEDGE™ INTERNET EXERCISES http://globaledge.msu.edu 7-22. Your firm is considering exporting to two countries: Kenya and Vietnam. However, management’s knowledge about the trade policies of these countries is limited. Conduct a search at globalEDGE™ to identify the current import policies, […]

PART 2 THE ENVIRONMENT OF INTERNATIONAL BUSINESS CHAPTER 8 UNDERSTANDING EMERGING MARKETS Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER ■ Did you know that the world’s number three and four top-selling beer brands are produced by new […]

QUESTIONS 8-1. What are the emerging markets? Give examples of emerging markets. (LO 8.1; AACSB: Application of knowledge) ■ Emerging market countries are a subset of developing countries, which are enjoying rapidly improving living standards and a growing middle class […]

8-15. What social and sustainability characteristics are typical of emerging markets? What can businesses do to support the development of poor countries in emerging markets? (LO 8.6; AACSB: Reflective thinking) ■ Leading firms display good corporate social responsibility by engaging […]

PART 2 THE ENVIRONMENT OF INTERNATIONAL BUSINESS CHAPTER 9 THE INTERNATIONAL MONETARY AND FINANCIAL ENVIRONMENT Instructor’s Manual by Marta Szabo White, Ph.D. I. LECTURE STARTER/LAUNCHER 1. Which currency is the second largest reserve currency in the world as well as […]

QUESTIONS 9-1. What benefits does using a single currency, the euro, provide to European countries? (LO 9.1; AACSB: Application of knowledge) ■ A common currency, such as the euro: ◘ Integrates the EU economies into a unified whole 9-2. What […]

 9-12. Distinguish the two systems that make up the exchange rate system today. Visit MyManagementLab for suggested answers. (LO 9.3; AACSB: Application of knowledge) 9-13. What is the difference between the international monetary system and the global financial system? […]

Governments have facilitated economic integration by lowering barriers to international trade and investment, harmonizing their monetary and fiscal policies within regional economic integration blocs. Many emerging market economies are dominated by family-owned rather than publicly owned businesses. TRUE Value chain […]

Which of the following best characterizes the concept of global integration? A) Effective global competition requires that products be specialized based on the market. B) Making adjustments for unique markets is an essential element of international business. C) Creating variations […]

Firms use foreign trade zones to ________. A) consolidate market monopolies B) assemble foreign dutiable materials and components into finished products, which are then re-exported C) create employment opportunities for the local people D) meet quota demands established by the […]

Developing new product designs and new ways of organizing or training are some of the ways in which companies innovate. Grease payments intended to expedite transactions are both accepted and legal in many countries. TRUE Expatriates usually do not receive […]

Cross-cultural proficiency is characterized by all of the following EXCEPT ________. A) perceptiveness B) flexibility and adaptability C) valuing personal relationships D) tolerance for ambiguity ________ tends to worsen culture shock. A) The ability to speak more than one language […]

The problem of noncomparable outcomes arises because of differences in economic, political, legal, and cultural variables. International Management Qualifications (Scenario) Core Computer Corporation (CCC) recently opened a customer service facility in New Delhi, India. Managers of the Texas-based firm have […]

Which of the following best explains why India was once characterized by high country risk? A) taxes and financial incentives benefited Indian businesses over foreign firms B) Indian business leaders distrusted most European corporations C) political leaders enacted laws that […]

Which of the following is NOT true about Islam? A) Islam prohibits gambling. B) Islam condemns charging interest for money loaned. C) Islam discourages free trade. D) Islam prohibits drinking alcoholic drinks . Through ________, a subsidiary can defer payment […]

Typically, administrative and bureaucratic procedures ________. A) speed up the investment activities of firms B) hinder the activities of importers C) boost investment activities D) harm late importers Which of the following is characteristic of cross-border contractual relationships? A) When […]

All else being equal, the greater the demand for a currency, the lower its price; the lower the demand for a currency, the higher its price. Converging tastes of consumers worldwide promote traditional lifestyles. FALSE Strategic global teams identify or […]

Which of the following is subject to importing and exporting? A) both finished products and intermediate goods B) finished products but not intermediate goods C) intermediate goods but not raw materials D) raw materials and components, but not finished products […]

Technological advances have helped make internationalization affordable for all sizes of firms. Commodities, industrial equipment, and technology products are difficult to standardize. FALSE Regional integration greatly increases the scale of the marketplace for firms inside the economic bloc. TRUE Ethics […]

According to Porter, the competitive advantage of a nation depends on the collective competitive advantages of the nation’s firms. Firms prefer HCNs when the host-country environment is complex and their specialized knowledge or local connections are required in the local […]

The relocation of a business process or entire manufacturing facility to a foreign country is known as ________. A) offshoring B) captive sourcing C) outsourcing D) subsidizing Which of the following would most likely be considered an appropriate action for […]

Nations with economies based on agriculture and textile manufacturing generate more economic revenue than do nations with many high-tech industries. Global sourcing eliminates the possibility of new rivals being created in a country. FALSE Given the complexities of international business, […]

The failure rate of collaborative ventures is higher in developing economies than in advanced economies. With a global strategy, headquarters seeks substantial control over its country operations in order to minimize redundancy and achieve maximum efficiency, learning, and integration worldwide. […]

Which of the following reflects the major contribution of GATT to globalization? A) It instituted strict controls on international currencies. B) It simplified patent and copyright laws. C) It reduced barriers to international trade and investment. D) It eliminated the […]

Adaptation is often necessitated due to ________. A) differences across countries in language, culture, economic conditions, and other factors B) unstable demand C) high import tariffs D) similarities in customer preferences across various demographic groups worldwide and the increased emphasis […]

Global sourcing hinders firms from freeing expensive analysts, engineers, and managers from routine tasks. The global capital market has grown rapidly due to government deregulation, which has made international movement of capital easier. TRUE Infringement of intellectual property is the […]

Over the last few decades, export activity by nations has grown more quickly than has domestic production. According to the indexing and ranking method for choosing the most promising target market, the researcher assigns scores to countries based on their […]

Tariffs rarely vary with the form of an imported product. Corporate codes of conduct emphasize standards related to ethics and social responsibilities. TRUE Local tradition, culture, and cost of living do not influence compensation packages. FALSE In cultures with a […]

When assessing the firm’s readiness to internationalize, managers peer into their organization to determine the degree to which it has the resources necessary to successfully engage in international business. Estimating project cash flows is complex and requires forecasting a range […]

When sourcing relies on foreign suppliers or production bases, it is known as global sourcing or offshoring. Treaties that support international protection of intellectual property harm developing economies due to high capital investment. FALSE Born global firms are young companies […]

Which of the following best characterizes the functions of the World Bank? A) monitor interest rates in emerging economies B) provide loans and technical assistance to developing countries C) offer financial assistance to small businesses D) initiate trading for impoverished […]

Convergence of consumer preferences has led to an enhanced emphasis on standardization which implies that ________. A) the consistently rising prices of consumer goods have led to a demand vacuum in the market B) the distance between consumers worldwide has […]

Which of the following is true with regard to firm-level theories? A) Firm-level theories are classical theories, widely accepted since the sixteenth century. B) Firm-level explanations address the question: “How can internationalizing firms gain and sustain competitive advantage?” C) Firm-level […]

Which of the following types of assumptions is the cause of most problems between business managers and foreign employees? A) geocentric assumptions B) ethnocentric assumptions C) polycentric assumptions D) religious assumptions Which of the following countries hosts the greatest number […]

If last year one dollar equaled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely NOT occur? A) European firms would pay more for raw materials […]

Currency Arbitragers are currency traders who seek to minimize their risk of exchange-rate fluctuations, often by entering into forward contracts or similar financial instruments. Relative efficiency of production refers to the total value of assets that MNEs own abroad via […]

MNEs with a global mindset encourage an ethnocentric orientation among managers and employees working abroad. Confiscation is the seizure of assets with compensation. FALSE A patent exclusively refers to a distinctive design, symbol, logo, word, or series of words placed […]