Global Business Today 9th Edition

79. Globalization critics argue that the decline in unskilled wage rates in advanced economies is due to the: A. migration of low-wage manufacturing jobs offshore. B. technology-induced shift toward jobs that require significant education and skills. C. increased supply of highly skilled workers. D. decreasing demand for unskilled workers in

c1 Key 1. As a result of globalization, we have been moving toward a world in which national economies are relatively self-contained entities. FALSE Over the past four decades a fundamental shift has been occurring in the world economy. We have been moving away from a world in which

50. Which of the following reasons contributed to the Great Depression of the 1930s? A. Inability to meet the increasing world demand for products B. Several countries accepting General Agreement on Tariffs and Trade C. Increasing attack from foreign competitors on domestic industries D. Privatization of state-owned organizations E. Countries

c10 Key 1. What happens in the foreign exchange market does not directly impact the sales, profits, and strategy of a multinational enterprise. FALSE What happens in the foreign exchange market can have a fundamental impact on the sales, profits, and strategy of an enterprise. Accordingly, it is very

89. Which of the following premises is technical analysis, an approach to exchange rate forecasting, based on? A. Price and volume data cannot be used to determine past trends. B. Econometric models drawn from economic theory are best suited to predict exchange rate movements. C. The foreign exchange market is

49. Which of the following is a reason for London's dominance in the foreign exchange market? A. Great Britain's decision to retain the British pound instead of using the euro B. The preeminence of Financial Times Stock Exchange (FTSE) index as an economic health indicator C. London's location making it

50. All countries were to fix the value of their currency in terms of gold but were not required to exchange their currencies for gold, according to the 1944: A. Bretton Woods agreement. B. Washington Consensus. C. World Bank treaty. D. Group of Five treaty. E. United Nations agreement. The

90. Which of the following is a drawback of the currency board system? A. The ease with which governments can set and manipulate interest rates acts as a limitation. B. Higher domestic inflation rates compared to the inflation rate in the country to which the currency is pegged can make

c11 Key 1. The international monetary system refers to a system to regulate fixed exchange rates before the introduction of the euro. FALSE The international monetary system refers to the institutional arrangements that govern exchange rates. FALSE The international monetary system refers to the institutional arrangements that govern exchange

89. For an international business, which of the following is most likely to be an outcome of protectionism and nationalism in a host-country? A. Increase in the attractiveness of location economies B. Pressure for localization of production C. Requirement of standardization of products or services D. Pressure for cost reduction

c12 Key 1. The actions that managers take to attain the goals of the firm are referred to as a firm's strategy. TRUE A firm's strategy can be defined as the actions that managers take to attain the goals of the firm. TRUE A firm's strategy can be defined

51. Which of the following is a support activity in the operations of a firm? A. Research and development B. Customer service C. Marketing and sales D. Creation and maintenance of information systems E. Production The support activities of the value chain provide inputs that allow the primary activities to

84. What gives a firm tight control for coordinating a globally dispersed value chain? A. Signing joint-venture agreements B. Installing manufacturing units in locations with optimal factor conditions C. Setting up wholly owned marketing subsidiaries D. Establishing a greenfield venture E. Using foreign marketing agents Setting up wholly owned marketing

52. Which of the following is a disadvantage of small-scale entry for an international firm considering foreign expansion? A. The possibility of escalating commitment leading to major financial losses B. The limited availability of resources for use in other markets C. The lack of flexibility associated with strategic commitments D.

c13 Key 1. A firm contemplating expansion should choose a foreign market based on an assessment of the nation's long-run profit potential. TRUE The 196 nation-states in the world do not all hold the same profit potential for a firm contemplating foreign expansion. Ultimately, the choice of a location

90. In the modern era, countertrade arose in the 1960s as a way to purchase imports for: A. the United States. B. the Soviet Union. C. Germany. D. Japan. E. Africa. In the modern era, countertrade arose in the 1960s as a way for the Soviet Union and the communist

c14 Key 1. Only large companies have benefited significantly from the moneymaking opportunities of exporting. FALSE Exporting is not just for large enterprises; many small firms have benefited significantly from the moneymaking opportunities of exporting. FALSE Exporting is not just for large enterprises; many small firms have benefited significantly

50. Which of the following refers to an export specialist that acts as an export marketing department for client firms? A. Export management company B. Export-import firm C. Foreign direct investment management firm D. Strategy management company E. Association of export companies One way for first-time exporters to identify the

46. Uniway Technologies Inc. has based its manufacturing units in the country of Lanthania. The country's stable economic and political environment has helped the firm gain competitive advantage by lowering its production costs and improving product quality. Other things being equal, the benefits realized from such a strategy can be

c15 Key 1. In recent years, the trend among U.S. firms is to outsource the "production" of certain service activities to developing nations where labor costs are lower. TRUE In recent years, the trend among U.S. firms is to outsource the "production" of certain service activities to developing nations

84. Which of the following is the initial reason for the establishment of a foreign production facility? A. Employee turnover is high. B. Products are not labor-intensive. C. Inventory turnover is low. D. Exchange rate fluctuations are high. E. Labor costs are low. Whatever the rationale behind establishing a foreign

50. In which kind of retail system do a few retailers supply most of the market? A. Fragmented B. Dispersed C. Isolated D. Concentrated E. Exclusive In some countries, the retail system is very concentrated, but it is fragmented in others. In a concentrated retail system, a few retailers supply

c16 Key 1. A global marketing strategy that views the world's consumers as similar in their preferences is consistent with the mass production of a standardized output. TRUE A global marketing strategy that views the world's consumers as similar in their tastes and preferences is consistent with the mass

90. Which of the following is necessary for a firm to ensure profitable price discrimination? A. The firm must sell a standardized product. B. The firm must be able to keep its national markets separate. C. The firm must encourage other firms and competitors to engage in arbitration. D. Products

c17 Key 1. The human resource management function can help a firm achieve its primary strategic goals of reducing the costs of value creation and adding value by better serving customer needs. TRUE Human resource management (HRM) refers to the activities an organization carries out to use its human

91. In terms of expatriate pay, which of the following is a characteristic of a foreign service premium? A. It allows a firm to pay expatriates' income tax in the host country. B. It ensures that expatriates' children receive adequate schooling. C. It helps to evaluate expatriates' performance without any

51. What is the advantage of a geocentric staffing policy? A. It requires firms to provide little or no documentation to hire a foreign national. B. It enables firms to build a cadre of international executives who feel at home working in a number of cultures. C. It is inexpensive

51. Which of the following is a form of totalitarianism which advocates that socialism can be achieved only through a totalitarian dictatorship? A. Tribal totalitarianism B. Democratic totalitarianism C. Communist totalitarianism D. Theocratic totalitarianism E. Right-wing totalitarianism Communist totalitarianism is a form of totalitarianism that advocates achieving socialism through totalitarian

90. Which of the following best exemplifies facilitating or expediting payments in business? A. Making payments to government officials not to cancel the business license after violating local laws B. Paying a lump sum amount in order to win a government tender for road construction in a foreign country C.

c2 Key 1. The term political economy is used to stress the fact that the political, economic, and legal systems of a country are independent of each other. FALSE We use the term political economy to stress that the political, economic, and legal systems of a country are interdependent;

90. In economic terms, the long-run monetary benefits of doing business in a country are most likely to be a function of the: A. gender ratio of the country. B. latitudinal and the longitudinal location of the country. C. natural resources available in the country. D. present wealth (purchasing power)

52. Only a totalitarian regime that is committed to which of the following is capable of promoting economic growth? A. A command economy B. A dictatorship C. Limiting human freedom D. A market system and strong protection of property rights E. Limiting individualism and privatization Only a totalitarian regime that

c3 Key 1. The purchasing power parity for different countries is adjusted (up or down) depending upon whether a country's cost of living is lower or higher than the cost of living in the United States. TRUE To account for differences in the cost of living, one can adjust

90. A person seeking and receiving help through a guanxi network is: A. liable to a social sanction if he or she does not reciprocate when called upon. B. considered to be disloyal to his or her superiors. C. free from reciprocal obligations. D. not a follower of Confucian ethics.

50. When compared to American society, Japanese society lacks: A. commitment to lifetime employment. B. emphasis on group memberships. C. self-managing work teams. D. close cooperation between individuals. E. dynamism and entrepreneurship. Just as U.S. society is characterized by a great deal of dynamism and entrepreneurship, reflecting the primacy of

c4 Key 1. Values provide the context within which a society's norms are established and justified. TRUE Values are abstract ideas about what a society believes to be good, right, and desirable. They form the bedrock of a culture. They provide the context within which a society's norms are

50. Davis is the manager of a pharmaceutical manufacturing facility in a developing country. The manufacturing unit does not meet the acceptable standards of the manufacturing facility in the home nation. He knows that demanding a better manufacturing unit will raise the cost of the drugs mainly exported to other

90. Justice theories primarily focus on: A. minimizing the amount of political liberty permitted to each person. B. the attainment of fair and equitable distribution of economic goods and services. C. the attainment of maximum business profits. D. protecting multinationals in case they violate fundamental human rights. E. minimizing the

c5 Key 1. The term ethics refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization. TRUE The term ethics refers to accepted principles of right or wrong that govern the conduct of

91. According to the new trade theory: A. the ability to capture first-mover advantages is restricted in a world that disallows trade. B. differences in labor productivity between nations underlie the notion of comparative advantage. C. a country may predominate in the export of a good because it has firms

54. Australia is a major producer of agricultural and dairy products and exports coffee, tea, spices, and milk products to the United States. United States is the world's third largest supplier of machinery and exports heavy machinery to Australia. What explains the trade equation between Australia and the United States?

c6 Key 1. Mercantilism, propagated in the sixteenth and seventeenth centuries, advocated that countries should simultaneously encourage both imports and exports. FALSE Propagated in the sixteenth and seventeenth centuries, mercantilism advocated that countries should simultaneously encourage exports and discourage imports. FALSE Propagated in the sixteenth and seventeenth centuries, mercantilism

79. The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something the GATT had never done. Two of the first industries targeted for this reform were: A. global telecommunication and financial services industries. B. scientific research and defense sector. C. pharmaceuticals and heavy metal

51. Which of the following best indicates the motive for foreign firms to engage in dumping? A. Unloading excess production in foreign markets B. Cutting labor costs to reduce the costs of production C. Providing a wider range of products for consumers in foreign markets D. Meeting the voluntary export

c7 Key 1. Subsidies are a trade policy instrument. TRUE Trade policy uses seven main instruments: tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative policies, and antidumping duties. TRUE Trade policy uses seven main instruments: tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative

c8 Key 1. When a firm exports its products to a foreign country, foreign direct investment occurs. FALSE Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or market a product in a foreign country. According to the U.S. Department of Commerce, FDI occurs

91. Which of the following statements is most likely to be true regarding the effects of FDI on employment? A. FDI does not result in job creation. B. FDI has only indirect effects on employment in the host country. C. The indirect employment effects of FDI are always smaller than

51. FDI is risky because of the problems associated with: A. sharing a valuable technological know-how with a potential competitor. B. an increase in transportation costs, especially for those products that have a low value-to-weight ratio. C. doing business in a different culture where the rules of the game may

89. Which of the following is an expected consequence of the implementation of the North American Free Trade Agreement? A. Low-skilled jobs will be moved out to Mexico resulting in lowering of average wage rates in the United States and Canada. B. Increased imports from Mexico will help reduce the

c9 Key 1. As with free trade in general, regional economic integration creates gain for consumers, but it can be challenging for some producers. TRUE By regional economic integration we mean agreements among countries in a geographic region to reduce, and ultimately remove, tariff and nontariff barriers to the

49. Which of the following are the two impediments to regional economic integration? A. Labor activism and political ideologies B. Immigration and political ideologies C. Costs and national sovereignty D. Political will and popular support E. Political ideologies and international policies Despite the strong economic and political arguments in support,