While indirect production-oriented goods have been the focus of management attention
for many years, the purchasing of goods and services that are part of finished goods—
termed indirect procurement—is also critical.
The following is an area in which the UN plays a significant role for international
business: loaning seed money for entrepreneurial start-ups in developed nations.
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.
Only those companies that have foreign operations need to be aware of what is
occurring globally in foreign markets and their industry.
Change is understood differently in different cultures, which suggests that leading
global change is a challenging process.
Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules,
and cash flow projections are all part of the export marketing plan.
Recently, regional trade agreements have grown, a trend that may be seen to strengthen
the WTO, according to the text.
Competencies are skills or abilities required in order to adequately complete a task.
Turnkey projects export technology, management expertise, and capital equipment.
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.”
There is reverse culture shock when an expatriate returns to the home country and
company.
Drastic modifications in the physical product may be necessary because of two
problems prevalent in the developing countries: a tendency to overload equipment and
to slight maintenance.
International business differs from domestic business in that a firm operating across
borders must deal with the forces of two kinds of environments—domestic and foreign.
Strategic business units are an organizational form in which geographic divisions have
been defined as though they were distinct, independent businesses.
Protection of infant industries through trade restrictions is used only in developing
nations.
Global teams are characterized by low levels of diversity and high levels of geographic
dispersion.
The United States avoids extraterritorial application of its laws.
The Bretton Woods meeting in 1944 established a fixed-rate exchange system among
Allied governments that was imposed on the Axis governments.
The disadvantage of an organization divided into geographic regions is that each region
must have its own product and functional specialists.
The primary reason for international trade is a lack of natural resources in the
developed nations.
Supply chains are an integral part of global quality and cost management initiatives,
since a typical company’s supply chain costs can represent over 80 percent of assets.
A candidate’s fluency in the host country’s language is a strong indicator of his or her
ability to effectively adjust within the host country.
Japanese attitudes toward Western women expats assigned to Japan suggest that these
women would be ineffective in their assignments.
The development of expanded regional trade agreements, such as the Association of
Southeast Asian Nations, Mercosur, and the EU, can substantially alter the level and
proportion of trade flows within and across regions.
Interface, the manufacturer of Flor, is an example of a petroleum-based business that
has developed a sustainable model.
Most companies establish worldwide organizations based on product, region, function,
or customer classes.
Because it is a high polluter, coal is on the decline as an energy source.
Commonly, in designing plants for developing countries, engineers will use a hybrid of
capital-intensive processes when they are considered essential to ensure product quality
and labor-intensive processes to take advantage of the abundance of skilled labor.
According to the text, outsourcing is hiring others to do noncore activities.
The e-commerce potential index developed in the text includes three indexes: market
size, market growth rate, and e-commerce readiness.
China, Mexico, and Japan are the three largest trading partners of the United States, in
terms of the total volume of imports and exports.
According to the text, the process of coordinating and integrating the flow of materials,
information, finances, and services within and among companies in the value chain is
called operations management.
Historically, more aspects of marketing have been standardized and coordinated
worldwide by companies than has been the case for other value chain activities such as
research and development and manufacturing.
Brazil, India, and the United States are among the highest corporate tax locations.
In many companies, the purchasing function has been viewed as a prime candidate for
outsourcing to other firms, a trend encouraged by rapid developments in e-procurement.
Stakeholder theory suggests that balancing competing tensions in a business is
impossible and that recognizing this early in the process is helpful.
For controls to be effective, all operating units of an IC must provide headquarters with
timely, accurate, and complete reports, including those dealing with financial,
technological, market opportunity, and political and economic information.
Offshore financial centers operate in low-tax and low-regulation markets such as New
York City and Milan.
Triple-bottom-line accounting is an example of sustainability with economic, social,
and environmental accountability.
China and India combined are using more marketed energy than is the United States,
and this trend is projected to increase.
The most common form of direct government participation in trade is:
A. the subsidy.
B. shipping on national vessels.
C. import duties.
D. a combination of the above.
E. none of the above.
When Lady Gaga took her act to India, she adapted her product, ______, to the local
environment by _______.
A. song performances; changing rhythm tracks to fit Indian preferences.
B. song performance; having an Indian singer redub her songs in Hindi.
C. clothing; adapting the clothing line to the thinner Indian figure.
D. all of the above.
E. two of A, B, and C.
In a free trade area, members drop internal tariffs. External tariffs:
A. are dropped also.
B. are coordinated so that there is one agreed-upon set of external tariffs.
C. are maintained independently by each member.
D. do not apply to an FTA.
The forces over which management does have some command are called:
A. internal.
B. controllable.
C. foreign.
D. external
E. two of the above.
In designing the organizational structure, management knows two concerns,
__________ and __________, run counter to each other.
A. finding the most effective way to departmentalize; coordinating activities
B. earning profits; paying taxes
C. hiring employees; reducing labor costs
D. sales growth; research and design expenditures
E. none of the above.
Assessment instruments can be used to:
A. determine job performance for global assignments.
B. measure cross-cultural adaptability and global leadership competencies.
C. train managers in global leadership.
D. train managers to assess global arena performance.
E. A and D.
Which of the following are reasons that many firms engage in exporting?
A. Exports can allow the firm to meet customer requests for the firm to export.
B. Exports can help a company to remain price competitive in the home market.
C. Exports are the best way for gaining information about foreign markets and
competition.
D. All of the above.
E. Two of A, B, and C.
With regard to globalization’s complexity, the condition of multiplicity means that:
A. many currencies may be used.
B. financial markets may have different rules.
C. there are many more players and many more relationships to maintain.
D. increased ambiguity can work in the global leader’s favor.
E. B and D.
Global leaders confront increased ambiguity because:
A. they find themselves unable to make decisions.
B. their environment is more difficult than that of the domestic leader.
C. much of the information they receive is difficult to give meaning to because it lacks
clarity or has unclear cause-and-effect relationships.
D. they function in a world with too much clarity.
E. A and B.
_______ refers to the transportation of any domestic good or service to a destination
outside a country or region.
A. Importing
B. Foreign direct investment
C. Exporting
D. International business
E. None of the above
“Comparing the total cost of ocean freight versus air freight, air freight may be
cheaper.” What components are considered when making the previous statement?
A. Insurance rates
B. Packing
C. Replacement cost of damaged goods
D. Inventory cost
E. All of the above
There are several criteria for segmenting markets. Which of the following is not a
criterion for segmenting?
A. Definable
B. Accessible
C. Small
D. Actionable
E. None of the above (All are criteria for segmenting.)
Hiring others to perform some of the noncore activities and decision making in a
company’s value chain, rather than having the company and its employees continue to
perform these tasks, is:
A. offshoring.
B. outsourcing.
C. supply chain management.
D. subcontracting.
E. all of the above.
Environment as used in the textbook is the forces surrounding and influencing the life
and development of the firm and is classified as:
A. controllable or uncontrollable.
B. domestic or foreign.
C. internal or external.
D. all of the above.
E. A and C.
According to the text, market screening is a valuable method to:
A. assess the nearly 200 countries to pinpoint the most attractive prospects.
B. help domestic firms expand within their home markets.
C. help multinational companies avoid missing potential new markets.
D. all of the above.
E. A and C.
Foreign exchange risks—transaction, translation, or economic—are caused most
directly by:
A. unanticipated political actions by foreign governments.
B. anticipated movements in interest rates in foreign economies.
C. trade-related distribution risks such as weather, the price of fuel, and transport
strikes.
D. unanticipated movements in exchange rates.
Which of the following is incorrect about scenario analyses?
A. The objective of the process is to force executives to question their assumptions
about the environment.
B. The process attempts to incorporate the uncertainty and potential changes that might
impact strategic and operational performance.
C. Managers develop scenarios and use them for discussion.
D. All of the above are incorrect.
E. None of A, B, or C is incorrect.
Musical tastes vary across cultures:
A. and are built on the solid foundation of the octave.
B. which is why they need to be understood by marketers who use music in
commercials.
C. and come together in the Silk Road.
D. A and D.
Before accepting a foreign posting and becoming an expatriate, you should:
A. arrange with someone fairly high in the home-country company to be your mentor
and look out for your interests.
B. insist that the bosses tell you exactly what the company expects you to accomplish.
C. try to assess how your family will adopt to the major changes involved.
D. all the above.
E. two of A, B, and C.
Discussion of bribery and transparency has generally not come into despite the Foreign
Corrupt Practices Act (FCPA), the OECD convention, and the UN initiative.
When considering where to export, advantages to managers of focusing on a nation that
is already a sizable purchaser of goods coming from the home country include:
A. the cultures of the two countries should be relatively similar and compatible.
B. the climate for foreign direct investment in the importing nation is relatively
favorable.
C. export and import regulations are not insurmountable.
D. all of the above.
E. two of A, B, and C.
The following arrangement can provide a firm with foreign products:
A. domestic subsidiary.
B. independent overseas manufacturer.
C. two of A, B, and D.
D. in-bond plant contractor.
E. all of A, B, and D.
To set corporate objectives, management must first:
A. select a viable market segment.
B. quantify them.
C. define the firm’s mission.
D. research the market.
E. none of the above.
A global mindset involves:
A. a good, fundamental understanding of geography.
B. solid training in foreign languages and geography.
C. an openness to diversity and inclination to synthesize across its borders.
D. early foreign experiences.
E. A and D
Microloans are usually:
A. loans made in small, developing economies.
B. loans made to small, entrepreneurial businesses.
C. small loans made to small businesses, usually in developing countries.
D. pharmaceutical-backed loans.
Adam Smith claimed that:
A. governments, not market forces, should determine the directions, volume, and
composition of international trade.
B. a nation could trade advantageously if it had a comparative advantage.
C. market forces, not government controls, should determine direction, volume, and the
composition of international trade.
D. customers’ tastes are affected by income levels.
E. two of the above.
ISO 9000:
A. is the most used standard for quality in the United States.
B. is a set of five universal standards for a quality assurance system agreed to by the
ISO.
C. ensures product quality.
D. all of A, B, and C.
E. two of A, B, and C.
The increased internationalization of business requires __________ to have a basic
knowledge of international business.
A. all managers
B. managers of multinationals
C. managers of transnationals
D. managers of purely domestic operations
E. none of A, B, C, or D
The EMU (European Monetary Union or Economic and Monetary Union) has
established the euro, a currency that is used in:
A. all of the EU.
B. all of the EU and much of the rest of Europe.
C. 16 of the EU member-countries.
D. the Bank for International Settlements and the IMF.
Basic named perils marine insurance covers:
A. perils of the sea, fires, jettisons, hurricanes.
B. theft and larceny.
C. piracy on the seas.
D. accidents and storms other than hurricanes.
E. flooding, tsunamis, earthquakes.
Sustainable business models:
A. incorporate a more socialist political approach to the marketplace.
B. have as a goal to ensure that the marketplace exists for future generations.
C. regard environmentalism as more important than profit.
D. A and C.
According to the text, __________ are the most insensitive to the foreign environment.
A. high-style products
B. faddish and consumer products
C. industrial products
D. basic consumer staples
E. none of the above
More than one-half of the exports from developing countries go to __________
countries, and this proportion has been _____________ over the past 35 years.
A. developed; increasing
B. developing; increasing
C. developed; decreasing
D. developing; decreasing
E. none of the above
A purchase of foreign goods from the United States (requiring importing) will:
A. be recorded in the BOP as an asset in the current account.
B. be recorded in the BOP as a debit in the current account.
C. have no record in the BOP because the purchase is made in the United States.
D. be recorded in the BOP as a liability in the foreign transfer account.