Global Business Today, 11e (Hill)
Chapter 1 Globalization
1) As a result of globalization, we have been moving toward a world in which national economies
are relatively self-contained entities.
2) To truly benefit from globalization, a firm needs to be a multinational conglomerate rather than
a small or mid-size company.
3) In today’s marketplace, outsourcing efforts are confined to manufacturing activities.
4) The World Trade Organization, the International Monetary Fund and its sister institution the
World Bank, and the United Nations were all created by voluntary agreement between individual
nation-states.
5) The WTO polices the world trading system, and without this organization, the globalization of
markets might not be where it is today.
6) Foreign direct investment (FDI) occurs when a firm invests resources in business activities
outside its home country.
3
7) The retaliatory trade policies of the 1920s and 1930s contributed to the Great Depression.
8) The Uruguay Round extended GATT to cover services as well as manufactured goods.
9) Enhanced protection for patents and trademarks was one focus of the Uruguay Round.
10) The lowering of trade and investment barriers creates more opportunities for companies to
have the world as their market.
11) In recent years, the economies of the world’s nation-states have become less intertwined as a
result of international trade.
12) The United Nations created the Millennium Development Goals to increase the number of
entrepreneurial activities around the world.
13) Containerization has revolutionized the transportation business, significantly lowering the
costs of shipping goods over long distances.
14) Moore’s law helps determine the most appropriate transportation method for a produced good.
15) During the 1960s, centrally planned economies associated with the communist world became
open to Western international businesses.
16) The stock of foreign direct investment refers to the total cumulative value of foreign
investments.
17) Throughout the 1990s, the amount of investment directed at both developed and developing
nations increased dramatically.
18) A domestic enterprise is any business that has productive activities in at least two countries.
19) Today, many of the former communist nations of Europe and Asia seem to share a
commitment to democratic policies and free market economies.
20) The amount of foreign direct investment in China has been decreasing since the 1980s.
21) According to many influential economists, the increase in international trade and cross-border
investment will result in an increase in the prices of goods and services.
22) One criticism of globalization is that falling trade barriers encourage companies to locate
manufacturing activities in another country to take advantage of lower wage rates.
23) A firm has to become a multinational enterprise to engage in international business.
24) The range of problems that a manager in an international business faces is typically more
complex than those faced by a manager in a domestic business.
25) As a result of globalization, international businesses can avoid the haggle of currency
exchanges during cross-border transactions.
26) Many believe that globalization has created a convergence in
A) the volume of goods and services produced.
B) foreign exchange transaction law.
C) environmental and labor laws.
D) consumer taste preferences.
E) the regulation of markets.
27) What is the shift toward a more integrated and interdependent world economy called?
A) international trade
B) foreign direct investment
C) globalization
D) Moore’s Law
E) containerization
28) Fast food chain restaurants promote different menu choices in different countries depending on
a range of factors such as demographics, local taste, income levels, and cultural values. This
demonstrates that
A) significant differences still exist among national markets.
B) cultural diversity has been replaced by global uniformity.
C) the global market is less complex than national markets.
D) only multinational giants can benefit from the globalization of markets.
E) the social norms in a country do not affect purchase decisions of consumers.
29) What statement best supports the claim that greater uniformity replaces diversity in the context
of global markets?
A) Differences in business systems and legal regulations lead companies to customize their
marketing strategies, product features, and operating practices to best match conditions in a
particular country.
B) As rival global firms follow each other across countries, they bring with them their brand
names, products, and marketing strategies from other national markets, thus creating some
homogeneity across markets.
C) Truly innovative companies succeed by developing products that serve specific needs of the
local markets.
D) The volume of goods, services, and investment crossing national borders has expanded at a
slower rate than world output for more than half a century.
E) The most global of markets are not typically markets for consumer products, as significant
differences in consumer tastes and preferences still exist among national markets.
30) Agri-Corp manufactures large farm implements and currently sources component parts for
these large machines from fifteen different companies around globe. They use these sources to
take advantage of lower costs. This demonstrates the idea of
A) globalization of markets.
B) containerization of production.
C) dispersal of production.
D) globalization of production.
E) industrialization of markets.
31) Which of these companies is taking advantage of the globalization of production?
A) Daily Diamonds, an American jewelry manufacturer, buys diamonds from South Africa and
exports them to India for the cutting process.
B) Evan Swan, a U.S.-based fashion designer, is planning to open a flagship store in China to serve
the Asian market.
C) Uncle Crab, a U.K. fast food chain, serves customers worldwide through its local franchises.
D) Silver Unicorn Inc. uses sales personnel from the respective host country to sell its products and
services.
E) Pizza Gallery, an Italian pizza chain, customizes its pizzas and pastas to suit the tastes of its
American and Australian customers.
32) West Electronic Corporation sources goods and services for its electronics products from
different locations around the globe in an attempt to take advantage of differences in the cost and
quality of labor and land. This practice is an example of the
A) globalization of production.
B) globalization of markets.
C) dislocation of a developing nation’s economy.
D) restriction on foreign direct investment.
E) regulation of the environment
33) The labor, energy, land, and capital a country relies on to source goods and services are known
as
A) trade tariffs.
B) the globalization of markets.
C) the marketing mix.
D) the globalization of production.
E) factors of production.
34) During early globalization efforts, outsourcing was typically confined to ________ activities.
A) marketing
B) financial
C) legal
D) manufacturing
E) service
35) Which global institution has focused on making low-interest loans to governments in poor
nations that want to make significant infrastructure investments such as building a road or a
bridge?
A) World Trade Organization
B) World Bank
C) Peace Corps
D) International Monetary Fund
E) United Nations
36) Countries that receive loans from the IMF are required to
A) become a member of the United Nations.
B) allow developed nations to create businesses in their country.
C) enforce a democratic government.
D) use the funds to help individual citizens.
E) adopt specific economic policies to attain stabilization.
37) According to the UN Charter, one of the four purposes of the UN is to
A) be a center for harmonizing the actions of nations.
B) encourage high tariffs on imports of manufactured goods.
C) provide enhanced protection for patents.
D) promote the establishment of multinational treaties.
E) facilitate globalization of production.
38) A macro factor underlying the trend toward greater globalization is the
A) rise of communism across the globe.
B) increase in nationalization of private organizations.
C) increase in diversity in consumer tastes and preferences.
D) increase in trade regulations across the globe.
E) dramatic developments in information processing and other technologies.
39) Which scenario best demonstrates foreign direct investment?
A) Pure Pearls, a jewelry store in the United States, imports harvested pearls from Indonesia,
Philippines, and Australia.
B) Chivalry, a U.S.-based phone manufacturing company, has set up its own assembly plant in
Japan to cater to the needs of the Asian market.
C) Delicate Love, a reputable florist company in Holland, exports tulips and roses throughout the
globe.
D) Samantha started an Italian restaurant in her home country, the United States, after she took
cooking lessons from a well-known chef in Italy.
E) Yin and Yang Inc., a Chinese firm, supplies buttons and zippers to major denim brands in the
United Kingdom.
40) Savvy Skin Care, a U.S.-based beauty products manufacturer, has set up a manufacturing plant
in Hong Kong. This is an example of
A) foreign direct investment.
B) international trade.
C) exporting.
D) global rivalry.
E) the globalization of markets.
41) Michelle, an Italian fashion designer, sells her merchandise by exporting it to retail stores in
the United States, United Kingdom, and Brazil. According to this information, Michelle is
participating in
A) foreign direct investment.
B) globalization of production.
C) international trade.
D) multinational enterprise.
E) outsourcing.
42) For foreign direct investment (FDI) to occur, a firm should primarily
A) conduct cross-border bartering with neighboring countries.
B) invest resources in business activities outside its home country.
C) export goods or services to consumers in another country.
D) import goods or services from producers in another country.
E) support strong barriers to international trade.
43) Why did many nations impose high tariffs on imports of manufactured goods prior to World
War II?
A) to protect domestic industries from foreign competition
B) to prevent the occurrence of the Great Depression
C) to safeguard patents, copyrights, and trademarks
D) to promote the trade of services over the trade of manufactured goods
E) to deter any possible attempts to promote communism
44) The main goal of GATT was to
A) limit foreign competition.
B) make loans to struggling nations.
C) increase domestic competition.
D) privatize state-owned organizations.
E) reduce trade barriers.
45) One result of the Uruguay Round was
A) increased trade and investment barriers.
B) excluding the trade of services from international trade.
C) transforming the World Trade Organization into GATT.
D) enhanced protection for patents, trademarks, and copyrights.
E) promoting the worldwide rise of communism.
46) What is implied by the fact that in today’s marketplace, the volume of world trade has been
growing faster than world GDP?
A) More companies are relying on domestic firms to obtain parts of their production process.
B) The economies of the world’s nation-states are becoming less intertwined.
C) More companies are dispersing parts of their production process to locations around the globe.
D) The world has experienced a loss of overall wealth in the last two decades.
E) More countries are imposing trade barriers to minimize competition.