Book Title
International Business: The Challenge of Global Competition 13th Edition

BUS 30955

February 28, 2019
In a 12-country study conducted by Ernst & Young, 65 percent of U.S. companies were
found to be engaged in a strategic alliance.
Hall's high-and low-context framework is based upon communication styles.
The dynamic capability theory states that for a firm to invest overseas, it must have
three kinds of advantages: ownership specific, internalization, and location specific.
Bodies of water, much like deserts and mountains, also serve as barriers to trade.
As a result of Bretton Woods and the dollar's use as a proxy for gold, the United States
ran up a balance-of-payments deficit of around $56 billion, which led to the United
States going off the gold exchange standard in 1971.
Translation exposure occurs when the subsidiary's results are consolidated at the
corporate level.
The national defense argument for trade restrictions suggests that some industries, even
if they are not competitive, need protection from imports.
A company's international operating environment, both currently and as it is expected to
be in the future, is the primary determinant of its organizational structure.
When a firm's personnel have had no experience in a country, management should
probably use the company's research personnel to conduct local market research.
Global trademark protection follows the Office of Harmonization in the Internal Market
While international business as a discipline is relatively new, international business as a
business practice is not.
A recent study reported that 77 percent of companies considered that cross-cultural
training was highly valuable and required such training for their expats or their families.
Developed by the United Nations Conference on Trade and Development, the Trade and
Development Index is a tool whose goal is to assist efforts "to systematically monitor
the trade and development performance of developing countries with a view to
facilitating national and international policies and strategies that would ensure that trade
serves as a key instrument of development."
On an open account, payment can be made once the exports have been sold.
Physical forces inhibit efforts at international product standardization.
The basic concept behind strategic planning is to help ensure that managers have a
sound understanding of the business, the strategy, the assumptions behind the strategy,
the external business environment pressures, and the company's strengths and
When the U.S. military contracts out security details in war zones, it is engaged in
Portfolio investment is the purchase of sufficient stock in a firm to obtain significant
management control.
The combination of an openness to and awareness of diversity across cultures and
markets with a propensity and ability to synthesize across this diversity has been termed
a transnational mindset.
The Doha Development Agenda is an extended development plan for Doha, Qatar.
The source of international law is frequently the United Nations.
Some firms do not grant licenses to other firms because of the fear of having a strong
competitor upon the expiration of the license.
The proportion of merchandise exports coming from Asia increased by over 90 percent
between 1980 and 2010, with China accounting for nearly two-thirds of that increase.
Buyers of consumer goods always act on the same motives the world over.
One reason for using home-country citizens overseas is to prepare them for high-level
positions at headquarters.
The primary reason for sourcing globally is to obtain lower prices.
Voluntary export restraints are imposed by the importing nation to avoid violating WTO
The family is the basic unit of institutions based on free association.
Michael Porter claims that demand conditions, factor conditions, related and supporting
industries, and firm strategy, structure, and rivalry, rather than government and chance,
are factors that affect national competitiveness.
Importing and foreign direct investment are two approaches to meeting overseas
If you are a Westerner and become victim of a miscellaneous law in a foreign country,
all you have to do is call your embassy and you'll be released to your government.
A middle-ground advertising strategy in which the home office and the foreign
subsidiaries agree on marketing objectives is called the computerized-management
(p. 93)-There are few cultural misunderstandings in the discipline of marketing.
The GLED model suggests that there are some individual characteristics that are
antecedent to the development process.
Former British prime minister Tony Blair led the privatization movement.
Generally, the deeper the immediate market penetration desired, the greater the product
modification must be.
Institutions are constructed to provide meaning and stability to social life, regulate the
relations of individuals to each other, and limit behavior of individuals and firms.
Organizational change refers to the way that an organization formally arranges its
various domestic and international units and activities and the relationships among
these various organizational components.
Intermediate technology will create more jobs and require less capital than will
capital-intensive processes.
Because it is a high polluter, coal is on the decline as an energy source.
The experience of suppliers to the youth market indicates that this is an international
market segment:
A. like the retiree market.
B. unlike any other market.
C. like the market for consumer goods.
D. like the market for luxury goods.
E. none of the above.
An organization in which top-level divisions are required to heed input from a staff
composed of experts of another organizational dimension in an attempt to avoid the
double-reporting difficulty of a matrix organization but still mesh two or more
dimensions is known as a:
A. hybrid organization.
B. matrix organization.
C. matrix overlay.
D. network corporation.
E. virtual corporation.
The goal of global leadership development is to:
A. tick off the boxes so that management will recognize your skills.
B. build language fluency.
C. obtain the variety of transformational experiences that are needed to develop global
leadership capability.
D. build allies and networks in the firm where your skills are recognized.
E. all of the above.
Among trading blocs, the EU has the largest GDP per capita.
As we use frameworks to help us understand culture, it's important to remember that
A. describe other cultures with precision.
B. can't be used to describe our own cultures.
C. are comparative, with our own culture being the reference point.
D. all of the above.
Hawalas make currency exchange and:
A. avoid the international currency exchange markets.
B. offer their clients nearly untraceable transactions.
C. transfer funds through the established banking system.
D. A and B.
Hall suggests that communication tends to be implicit and indirect in:
A. the United States.
B. high context (HC).
C. low context (LC).
D. Australia.
A follower firm stands the best chance for success in market-share leadership when:
A. there are high barriers to entry.
B. the firm has small size.
C. there is high potential for imitation.
D. all of the above.
Which country does not belong to the OECD?
A. Belgium
B. France
C. Japan
D. China
The Foreign Corrupt Practices Act has:
A. carried the discussion of transparency and corruption out into the open.
B. impaired American competitiveness abroad.
C. jailed legions of corrupt foreign executives in the United States.
D. introduced clear, concise terminology into the discussion of corruption.
E. been based on the United Kingdom Bribery Act.
________ alliances are driven by similarity and integration.
A. Strategic
B. Trading
C. Pooling
D. Equity-based
E. None of the above
Market forces that set the relative prices of currencies are:
A. not influenced by government policies.
B. not influenced by world events.
C. influenced by many forces including forces external to business, such as world
D. A and B.
Services are generally less complex to market globally than:
A. consumer products.
B. industrial products.
C. luxury products.
D. basic consumer staples.
E. None of the above.
Import duties can be set to encourage:
A. increased imports based on sales volumes.
B. local input.
C. price-fixing.
D. imports from other suppliers.
E. all of the above.
Most top managers:
A. prefer nonquantifiable, directional goals.
B. prefer nonquantifiable but verifiable goals.
C. prefer verifiable objectives.
D. have no preference as to quantifiable and nonquantifiable goals.
E. none of the above.
The existence of the rule of law in a foreign market suggests that:
A. lawyers will be necessary in any substantive business transaction.
B. personal relationships will be less effective than in a country governed outside the
rule-of-law system.
C. none of A, B, D, or E.
D. legal rulings will be the basis of any dispute resolution.
E. foreign investors can assume that their interests will be protected.
This material, when heated to 500C, will yield 25 liters or more per ton of input:
A. shale.
B. biomass.
C. natural gas.
D. light petroleum.
Kinship and free association are:
A. structures for political action.
B. social structures used to develop marketing programs.
C. social institutions found in all societies and categorized by the conditions of their
D. levels of the Masons found in Europe but not the United States.
Companies wishing to export must first choose between:
A. exporting directly and using sales companies.
B. exporting indirectly and using joint ventures.
C. exporting directly and exporting indirectly.
D. exporting directly and licensing.
E. none of the above.
The CE mark in the EU:
A. shows that an export license has been issued.
B. indicates the electric current, DC or AC.
C. shows that the product conforms to health and safety standards.
D. A and C.
Control activities are the efforts to:
A. put plans into effect.
B. learn if plans are working as intended.
C. make corrections.
D. all of the above.
As their overseas operations have increased in importance, companies have felt the
need to:
A. eliminate the international division.
B. establish worldwide organizations based on product, function, region, or customer
classes at the top level.
C. lower production costs by setting up in-bond plants.
D. two of the above.
The final step in the screening process will generally include:
A. a field trip.
B. the use of secondary data.
C. a cost-benefit analysis.
D. a visit to a trade fair.
E. all of the above.
A survey of CEOs of the 162 largest firms on Fortune's list of the 500 largest American
corporations found that the CEOs strongly believed that:
A. an international orientation should be an important part of college business
B. international business skills and knowledge were important for promotion to senior
executive positions but not for appointment to entry-level positions.
C. the importance of international business skills and knowledge for promotion to
senior executive positions was higher for companies anticipating an increased level of
importance of international activities in the next five years.
D. all of the above.
Culture is a group of shared worldviews, social rules, and interpersonal dynamics that
A. chosen consciously by each group to set themselves apart from other groups.
B. learned, interrelated, and shared.
C. used as a way to separate economic classes.
D. a collection of noble pursuits including opera, art, ballet, and classical music.
Global standardization of operations:
A. eliminates the task of maintenance and production control.
B. allows home office personnel to more effectively keep production specifications
C. enables reasonably accurate forecasts of time required to erect plants.
D. all of the above.
According to the text, which of the following is true?
A. Zara's competitive advantage comes from its stylish fashion design.
B. Zara's supply chain management processes have allowed the company to eliminate
C. Two of A, B, and D.
D. Zara removes its product lines, including ones that have been selling well, every two
weeks or so.
E. All of A, B, and D.
The interdependence that confronts global leaders results from:
A. needing to depend on others to implement change plans.
B. increased levels of linkage, both within and outside the company.
C. global logistics conditions.
D. outsourcing of manufacturing.
E. offshoring of personnel.
Collection documents vary from country to country. The most common types of
collection documents that the seller provides to the buyer include all of the following
A. commercial invoices.
B. consular invoices.
C. income statements.
D. certificates of origin.
What is the essential difference between an income tax and a VAT?
A. VAT is European; income tax is American.
B. VAT is indirect; income tax is direct.
C. VAT is greater than income tax.
D. VAT is reimbursable; income tax is not.
Proponents of the horizontal corporation:
A. claim that lateral relationships inhibit innovation and new-product development.
B. state that this approach to organizing helps to place more decision-making
responsibility in the hands of middle managers and other skilled professionals.
C. claim that it enhances increased control and supervision by upper management.
D. all of the above.
Unconscious reference to one's own cultural values when judging behavioral actions of
others in a new and different environment is called:
A. self-reference culture.
B. self-reference values.
C. self-reference criterion.
D. self-reference customs.
E. self-reference environment.
This chapter discusses building a corporate global mindset. What can you do to build an
individual global mindset?
One danger of using the frameworks in this chapter is that if they are applied
prescriptively, they may well lead to a sophisticated form of stereotyping.
Discuss Hall's high- and low-context framework, and suggest how it might be useful in
an international business situation.
What are the disadvantages of joint ventures?
Discuss the requirements of viable markets under the segment approach.
What are the benefits of standardization of global operations?
Explain the different reasons for firms to enter foreign markets.
Why is the design of products and services important to global supply chain
management, and what are the main design alternatives that are available?
Explain the logic of mercantilism and why it is generally viewed as a deficient theory.
What are the reasons for sourcing globally, and what options are available to a firm that
wishes to engage in global sourcing?
Discuss the three environments in which an international company operates.
Economic integration agreements are nice for the insiders, such as the United States,
Mexico, and Canada with NAFTA, but they stand in the way of WTO progress because
they violate basic guidelines of the WTO.
Why is the international marketing manager's task complex?
How might inflation influence the firm in its foreign markets?
Explain why and where decisions are made among ICs and their subsidiary units.
Explain Trompenaars' achievement-ascription dimension, and comment on its
usefulness in an international business setting.
What advice would you give to a friend who wants to develop global leadership skills
and is an English major?
Discuss how new directions in the strategic planning process differ from the old
Answers may vary but may include the following: Strategic planning, particularly in the
more traditional, bureaucratic form that is still practiced in some corporations, has been
described as a calendar-driven ritual, not an exploration of the company's potential. This
traditional strategic planning approach commonly consists of a company's CEO and the
head of planning getting together to devise a corporate plan, which would then be
handed to the operating people for execution. Too frequently, companies' annual
strategic planning processes have become ritualistic and devoid of discovery, with
planners working from today forward, not from the future backward, implicitly
assuming, whatever the evidence to the contrary, that the future will be more or less like
the present. Tending to generate projections based on historical conditions and
performance, this traditional planning approach tends to fall victim to collective—and
frequently outdated—mind-sets about the competitive environment. Not surprisingly,
the resulting strategic planning documents often fail to be implemented successfully.
Increasingly, the old process is being replaced by a strategic management approach,
which combines strategic thinking, strategic planning, and strategic implementation and
which is increasingly recognized as a fundamental task of line management rather than
merely specialized planners in staff positions. Although still susceptible to problems
such as groupthink, this more contemporary approach attempts to incorporate changes
in three areas: (1) who does the planning, (2) how it is done, and (3) the contents of the
Who Does Strategic Planning?
What is supply chain management, and why is it an important issue for a company's
international competitiveness?
Select a country and show a relationship between its physical forces and its economy.