The marketing approach a company takes internationally should be compatible with its
overall aims and strategies.
The lack of cultural guidebooks and research specifically for international managers
poses a significant problem for global firms.
Infant-industry protection requires some segment of the economy to incur the higher
costs when local production is inefficient.
Companies tend to use geographic divisions when they have large foreign operations
that are not dominated by a single country or market.
In foreign-exchange markets, reporting dealers trade more foreign exchange with other
reporting dealers than with any other category of users.
A global strategy drives performance by making standardized products that are
marketed with minimum adaptation to local conditions.
Offshore manufacturing is attractive because it offers high labor costs, cheap materials
and components, and proximity to markets.
The existence of the four favorable conditions of the diamond of national advantage
does not guarantee that an industry will develop in a given locale.
Wholly owned operations abroad inhibit a company’s ability to pursue a global strategy.
In a command economy, the goods and services that a country produces, the quantity in
which they are produced, and the prices at which they are sold are all planned by the
government.
The headquarters-based compensation method bases the expatriate’s compensation on
the salary of a comparable job in the city where the MNE has its headquarters.
A push strategy is most likely preferable to a pull strategy when the price of the product
is high relative to incomes.
Exporters employ an export management company as part of an indirect exporting
strategy.
The argument for using protectionism to bring about industrialization in developing
countries presumes that gains will occur because the industry will become
internationally competitive.
The term brain drain describes the export of high-technology products in exchange for
low-technology products.
The purpose of “Made in” labels on imported products is to enable countries to keep
records of the origin of imports.
The benefits of managerial visits to foreign subsidiaries can easily be replicated with
frequently submitted and reviewed operational reports and schedules.
Preference for a consultative management style is prevalent in a society with low power
distance.
Technology such as e-mail, VoIP, teleconferencing, and social networks helps MNEs
respond to increasing globality.
Research indicates that democracy is declining around the world and that totalitarian
regimes are increasing.
A company can best benefit from a first-mover advantage by moving into a small
country before entering a much larger country.
Central bank reserve assets are kept in three major forms: foreign-exchange reserves,
silver, and gold.
A car manufactured in the United States by Toyota would be included in the calculation
of the GDP for the United States.
A growing number of MNEs are increasing expatriate allowances to entice employees
to move overseas.
A civil law system anchors itself in the wisdom of daily experience or, more
intellectually, great spiritual or philosophical traditions.
The make-or-buy decision applies only to domestic firms.
Appropriability theory describes a firm’s desire to deny rivals access to its competitive
resources.
An objective of neomercantilism is to build up gold reserves.
The degree of caution companies display in valuing assets and recognizing income is
known as conservatism.
A company that prices its products at a desired margin over cost is using a cost-plus
strategy.
The Big Mac Index perfectly explains the relative size of economies.
A ________ results when free mobility of factors of production is added to a customs
union.
A) customs union
B) common market
C) free trade agreement
D) regional trade agreement
According to the diamond of national advantage theory, the domestic existence of all
four conditions best explains ________.
A) the essence of an industry’s development
B) the position of a product in its life cycle
C) where globally competitive firms develop and sustain themselves
D) why countries rely on abundant factor endowments
A strategy that focuses on lowering operating costs is referred to as a ________
strategy.
A) differentiation
B) cost leadership
C) niche market
D) diversification
The value of the SDR is currently based on the ________.
A) euro
B) U.S. dollar
C) weighted average of four currencies
D) weighted average of six currencies
For U.S. companies, foreign-currency-denominated receivables and payables give rise
to exchange gains and losses ________.
A) at the end of each accounting period
B) only when the dollar strengthens against the foreign currency
C) only when the dollar weakens against the foreign currency
D) whether the transactions are denominated in dollars or the foreign currency
An example of a U.S. merchandise import is an automobile made in ________ and sold
________.
A) the United States by a Japanese company; in the United States
B) the United States by a Japanese company; outside the United States
C) Japan by a Japanese company; in the United States
D) Japan by a U.S. company; outside the United States
Elway, a computer firm, has high foreign sales in Asia and wants to expand sales into
Europe. Which of the following statements provides the most appropriate advice for
Elway executives?
A) Although countries’ market sizes differ, companies usually face about the same
number of competitors in each national market.
B) In most industries, companies face the same competitors in each country where they
operate.
C) It takes about the same amount of resources to gain national distribution in one
country versus another.
D) Being a leader in one country does not guarantee market leadership in another
country.
The measure of the value of production that occurs within a country’s borders without
regard to whether the production is done by domestic or foreign factors of production is
its ________.
A) net national product (NNP)
B) gross national product (GNP)
C) gross domestic product (GDP)
D) gross national income (GNI)
Which of the following countries would be most likely to be classified as high secrecy
and conservatism?
A) Vietnam
B) Chile
C) Turkey
D) Honduras
Critics of offshoring claim all EXCEPT which of the following?
A) Cost savings are seldom passed on to final consumers.
B) Offshoring reduces the incomes of people in low-wage countries.
C) Incomes of workers in countries whose companies offshored production have gone
down as a percentage of national income.
D) Many workers who have been displaced by offshoring do not have the skills needed
for higher-value jobs.
The basis for designing an effective export strategy most likely begins with ________.
A) identifying and developing the firm’s core competencies
B) hiring local personnel in target markets to build the business
C) enlisting the support of an export management company
D) simultaneously targeting a large number of foreign markets
Which of the following BEST describes globally standardized advertising?
A) a campaign that is identical in all markets
B) a campaign that meets the legal and ethical standards of all countries
C) a campaign that is similar but not identical from market to market
D) a campaign that depends primarily on push rather than pull promotion
Which of the following financing tactics would most likely help an MNE avoid
bankruptcy?
A) integrating e-commerce opportunities with domestic sales in order to maintain a
steady balance of income and expenditures
B) agreeing to forward contracts with customers and hedging purchases and sales on
future currency rates
C) organizing the capital structure so that the amount of debt financing is twice the
level of equity financing
D) keeping the percentage of debt in the capital structure to a level that can be managed
even during difficult business conditions
Logan Electronics has a production facility in Bolivia. Recently, the firm was taxed at a
significantly higher rate than a local electronics company. Which type of political risk is
Logan most likely experiencing?
A) systemic
B) procedural
C) distributive
D) catastrophic
Johnson Construction is an MNE that designs and builds commercial buildings around
the world. Johnson has a new contract to construct a building in Pakistan. Tom, a
construction manager, will be relocating to Pakistan with his wife, and he will receive
additional pay to compensate for the dangerous environment. Which of the following
has Johnson Construction most likely offered Tom?
A) repatriation allowance
B) hardship allowance
C) housing allowance
D) spouse allowance
Which of the following BEST describes the concept of serendipity in exporting?
A) modifying products to meet cultural preferences
B) initiating global sales through e-commerce methods
C) relying too much on exports when domestic sales suddenly increase
D) opportunistically responding to unsolicited orders from foreign customers
Which of the following is the price at which the trader is willing to sell foreign
currency?
A) offer
B) bid
C) spread
D) cross rate
Which of the following trends has LEAST likely led to the increased demand for
expatriate talent?
A) market developments
B) technology changes
C) globalization
D) nationalism
Increasingly, media reach audiences in more than one country, such as through satellite
TV that reaches multiple countries simultaneously. What is NOT a problem of
advertising on these media?
A) Because of reaching so many households, the cost is prohibitive.
B) The product may not be available everywhere it is advertised.
C) A company may not be able to advertise prices because they may differ among
countries.
D) The advertisement may reach countries using different languages.
Companies often face problems repatriating executives from foreign assignments to the
home nation due to which of the following?
A) The vacant position cannot be filled overseas.
B) The firm must increase compensation substantially.
C) Different departments compete excessively to hire the repatriated manager.
D) The returning expatriate has less social status and autonomy than when abroad.
A bond issue floated by a U.S. company in dollars in London, Luxembourg, and
Switzerland by a syndication of bonds is an example of a ________.
A) global bond
B) domestic bond
C) Eurobond
D) foreign bond
________ effects of economic integration are the overall growth in the market and the
impact on a company caused by expanding production and by the company’s ability to
achieve greater economies of scale.
A) Dynamic
B) Static
C) Economic
D) Barrier
Which of the following accurately describes a difference between jobs in the home
office versus those in a foreign subsidiary?
A) Cultural empathy is essential for employees in the home office, but is not necessary
for employees in a foreign subsidiary.
B) Employees in the home office do not need to be familiar with a second language, but
employees in a foreign subsidiary must be proficient in the language of the subsidiary’s
host country.
C) Expatriate executives in foreign subsidiaries are less expensive for a company to
employ than executives in the home office.
D) Employees in foreign subsidiaries typically have broader job responsibilities than
employees in the home office.
Which of the following is NOT a characteristic of capitalism?
A) private ownership of assets
B) right to profit from individual effort
C) state control of factors of production
D) private control of investment
A U.S. firm plans to shift from exporting to production in China to serve the Chinese
market. Which of the following statements would best explain this decision?
A) China’s currency is appreciating relative to the U.S. dollar.
B) The firm is nearing capacity utilization in its U.S. plant.
C) The company need not alter its products for the Chinese market.
D) Transportation costs have become low relative to production costs.
Which of the following statements most likely undermines the arguments for a strategic
trade policy?
A) Entrepreneurs, rather than governments, should take business risks.
B) Developed countries have production lead time over developing countries.
C) If big companies can figure out what products to develop, so can governments.
D) Governments have limited resources, so industries with greater growth potential
should be targeted.
A flag of convenience is ________.
A) the declaration that a product is made in a country that has easier legal access to a
given foreign market
B) a designation for products originating within a particular trading group
C) the registration of a ship by a shipping company in a country that charges low taxes
D) the indication that a shipping organization can sail in international waters
The recent global financial crisis has interrupted the trend of national economies
________.
A) rapidly adopting the command market model
B) steadily adopting the free market model
C) moving from the mixed to the command model
D) turning away from the mixed model
Which of the following is an example of an exclusive license agreement?
A) Three licensees have worldwide rights to sell the product worldwide for three years,
during which time no other companies can use the asset.
B) The licensee is currently the only company using the intangible property, but the
licensor has rights to add other licensees.
C) One licensee gets rights for the north island of New Zealand, a second licensee gets
rights for the south island of New Zealand, and the licensor agrees to add no new
licensees to New Zealand for the next five years.
D) The licensee and licensor use the property in the same market.
Which of the following is LEAST likely to trigger the breakup of a joint venture?
A) The partners place a different degree of importance on the joint venture.
B) The partners develop different capabilities to contribute to the joint venture.
C) The partners come from different industries.
D) Objectives evolve differently over time.
Ryan, a foreign-exchange dealer, sold U.S. dollars for Swiss francs in the United States,
then sold Swiss francs for Japanese yen in Switzerland, and then sold the Japanese yen
for U.S. dollars in the United States. Ryan hopes that he will end up with more U.S.
dollars than when he began. Which term best describes Ryan’s actions?
A) arbitrage
B) speculation
C) spot transaction
D) outright forward
Western Union’s role in foreign-exchange trading is best described as ________.
A) setting a fair exchange rate in multiple currencies
B) transferring currency from one country to another
C) transferring Mexican pesos from the United States to Mexico
D) handling all money transfers that occur between North and South America
What are the two major segments of the foreign-exchange market? What types of
foreign-exchange instruments are traded within these markets?
What is the difference between a monochronic and polychronic culture? How do such
cultural differences affect business practices for international firms?
How do countries differ in terms of taxation? In regards to taxation, why do some
MNEs turn to offshore financial centers? Why are offshore financial centers a concern
to the OECD?
What problems are common with the published data available about different countries?
In a short essay, discuss the international application of five common marketing
orientations.
What is the difference between exporting and importing? What are the unique
characteristics of service exports and service imports?
What are some reasons that firms decide to export their products or services? What does
a firm need to consider when developing an export plan?
In regards to accounting, what is the impact of the SEC and Sarbanes-Oxley Act on
international business?
Explain the static effects and dynamic effects of economic integration. What is the
difference between trade creation and trade diversion resulting from economic
integration?
Describe the three ways economies can be categorized.
What is scanning? What opportunities and risks are most relevant to scanning?
What is a turnkey operation? What features generally make turnkey operations different
from other collaborative arrangements?
What are the current trends in expatriate allowances? What are the reasons for these
changes?
What are the roles of compatibility, configuration, coordination, and control in a global
manufacturing strategy? Describe each of these four factors.
Why should domestic managers have an understanding of globalization and
international business? What are the current views regarding the future of
globalization?
Why are financial risks a key concern of SMEs considering international trade?
What are the advantages and disadvantages of global and domestic sourcing? What role
does quality play in deciding between global and domestic sourcing?
List and compare the three common methods of implementing a balanced compensation
plan.
What individual characteristics and qualifications should a company consider when
choosing managerial candidates for foreign assignments? Which one do you think is
most important? Why?
How has technology altered supply chain management? Discuss some of the available
tools.
