Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Governments have facilitated economic integration by lowering barriers to international
trade and investment, harmonizing their monetary and fiscal policies within regional
economic integration blocs.
Many emerging market economies are dominated by family-owned rather than publicly
owned businesses.
Value chain is the collection of logistics specialists and activities that provides inputs to
manufacturers or retailers.
According to Dunning's eclectic paradigm, proprietary technology, managerial skills,
trademarks or brand names, and economies of scale are examples of ownership-specific
advantages.
Decisions about local products that will be sold in only one country are typically the
joint responsibility of corporate and country-level managers, with the latter taking the
lead role.
Through labor relations, management and workers identify and determine job
relationships that will apply in the workplace.
Direct quote is the number of units of foreign currency obtained for one unit of
domestic currency.
The root cause of gray market activity is a large enough difference in price of the same
product between two countries.
A benefit of the monopolistic advantage theory is that firms can operate foreign
subsidiaries more profitably than the local firms that compete in their own markets.
International logistics usually make use of a single transportation mode.
The more diverse the firm's global supply chain, the lesser the cost of logistics.
Training programs designed for preparing employees for assignments abroad consist of
area studies, practical information, and cross-cultural awareness.
Franchising is an advanced form of licensing in which the franchisor allows the
franchisee the right to use an entire business system in exchange for compensation.
The five approaches to analyzing ethical problems rarely conflict with each other.
National industrial policies designed to build new capabilities and encourage the
emergence of new industries typically exclude superior educational systems.
Typically, firms tend to concentrate research and development activities abroad rather
than in their home countries.
Developing economies are countries that have achieved substantial industrialization,
modernization, and rapid economic growth since the 1980s.
Firm strategy, structure, and rivalry of Michael Porter's diamond model refer to the
presence of clusters of suppliers, competitors, and complementary firms that excel in
particular industries.
Foreign direct investment is the least risky entry strategy.
Project-based, nonequity ventures are difficult to set up.
In international business, marketing is concerned with identifying, measuring, and
responding to market opportunities abroad
Environmental challenges of global sourcing include currency fluctuations, tariffs and
other trade barriers, and adverse macroeconomic events.
Incremental pricing refers to setting prices to cover only the firm's variable costs, but
not its fixed costs.
In helping identify ethical problems, the firm's code of conduct should be tailored to
match the norms of each individual region from which the firm operates.
The recent economic turndown is expected to pressure advanced-economy firms to seek
further ways to reduce costs.
Estimates of company sales potential provide managers with the information necessary
to select the most appropriate business partners.
The level of integration of free trade areas is greater than that of customs unions.
Industrialization implies that emerging markets are increasing their dependence on
low-cost labor.
If an individual buys from a supplier whose currency is depreciating against the
individual's currency, the individual will have to pay a larger amount of his own
currency to complete the purchase.
Emerging markets are home to low-wage, high-quality labor for manufacturing and
assembly operations.
The Bretton Woods Agreement was brought into existence in the late 1960s when the
U.S. needed to finance government programs and the Vietnam War.
Monopolistic advantage theory is a framework for determining the extent and pattern of
foreign-based value-chain operations.
Major supply shocks do not affect exchange rates.
While estimating company sales potential, managers may make multiple estimates
based on best-case, worst-case, and most-likely case scenarios.
The five approaches to analyzing ethical dilemmas often lead to similar solutions.
The purpose of capital budgeting is to defer payment for goods and services received
from the parent firm.
An efficient method of gathering information about a target market is to introduce a
product at an industry trade fair.
Which of the following is considered a regional hub?
A) Hong Kong
B) Ireland
C) Canada
D) Russia
Which of the following approaches to ethical standards for corporate governance
reflects the view that the best ethical action is the one that provides the most good or the
least harm?
A) common good approach
B) utilitarian approach
C) virtue approach
D) fairness approach
Which of the following is a characteristic of momentum trading?
A) Investors buy stocks as prices fall.
B) Investors sell stocks when others sell.
C) Investors buy stocks as prices rise.
D) Investors buy and sell stocks spontaneously.
Which of the following countries have the LEAST corruption?
A) Mexico
B) Philippines
C) Russia
D) Denmark
Quik Meal Structure (Scenario)
Quik Meal is a fast-growing MNE that manufactures and sells energy gels for
consumption by serious athletes, such as marathoners and triathletes. The energy gels
produced by Quik Meal taste much better than the gels sold by other firms, which has
led to an increase in sales. Managers and executives with Quik Meal need to determine
the best organizational structure for the young firm. Quik Meal has subsidiaries in Japan
and Brazil, while company headquarters are based in San Francisco.
Which of the following strengthens the decision by Quik Meal executives to centralize
operations?
A) Quik Meal offers five different flavors of energy gels for athletes.
B) Quik Meal executives report a steady rate of sales in the U.S. market.
C) Quik Meal country managers report few requests to alter product ingredients.
D) Quik Meal products use the same trademark and packaging in every country.
Organic Towel Exports (Scenario)
The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool,
England, where the firm has been manufacturing 100% organic cotton towels for five
years. OTC sells towels in the United Kingdom primarily to boutique hotels and
specialty retail stores, as well as to individual consumers through the company's.
Recently, OTC managers attended a trade show in London where they made contact
with numerous foreign market managers. OTC received a request from Earth Waves, an
organic clothing store in Toronto, Canada, for a large order of towels. OTC had not
been looking into expanding, but firm managers are seriously considering the
opportunity to reach a global niche market with their towels.
Which of the following should be considered first in making the decision to export
OTC towels to Canada?
A) What is the probability of OTC and Earth Waves entering into a joint venture?
B) How much fluctuation occurs in the exchange rate between the Canadian dollar and
the British pound?
C) What is the likelihood of Earth Waves opening a subsidiary in Canada?
D) What documentation would be required for OTC to export towels to Asia?
Which of the following should an international manager keep in mind about the
constantly fluctuating exchange rates?
A) The prices the firm charges should be quoted in the firm's currency exclusively.
B) The firm and its customers should use the exchange rate as it stands on the date of
each transaction, there is no scope for an agreement between them to use any other
specific exchange rate.
C) If goods are bought from a supplier whose currency is appreciating against the
buyer's currency, the buyer will have to pay a lesser amount of their currency to
complete the purchase.
D) The time taken between placement and delivery of an order can at times go up to a
few months, fluctuations in the exchange rate during that time can cost or earn the firm
money.
Which of the following is an example of a new global challenger?
A) a firm from Russia that is rapidly growing in the communications industry
B) a U.S. non-profit that focuses on fundraising for children's health care
C) an MNE from France with large-scale operations across the globe
D) an SME from Canada that began international operations early in its development
________ refers to an industrial relations practice in which labor representatives sit on
the corporate board and participate in company decision making.
A) Codetermination
B) Standardization
C) Repatriation
D) Collective bargaining
Representative C is most likely from ________.
A) Canada
B) Sudan
C) North Korea
D) Zimbabwe
When outsourcing, managers can minimize the risk of creating employee tension by
________.
A) increasing the number of junior managers for foreign assignments
B) increasing the annual training budget
C) sending domestic managers to foreign countries for training
D) reaching a consensus of managers and labor
Fun Play Global Sourcing (Scenario)
Fun Play Inc., a company manufacturing toys for children, has decided to outsource
some of its value-chain activities. However, the firm has no experience with global
sourcing and has hired a consulting firm to assist its managers. The consulting firm has
been assigned the task of determining which activities should be outsourced and where
the outsourced activities should be located.
Which of the following would most likely be considered by the consultants while
deciding whether to keep each value-adding activity in the home country or locate it in
a foreign country?
A) Who will be responsible for training suppliers in foreign locations?
B) Can different value-adding activities be effectively configured across the world?
C) Would the HR department of Fun Play be able to ensure smooth repatriation for
managers after they complete their assignments abroad?
D) What are the odds in favor of Fun Play's dominating the children's toy segment in its
home country?
Which of the following most likely complicates international performance appraisals?
A) overproduction
B) distance from the headquarters
C) lack of general consensus among managers with regard to reward systems
D) cost of doing business abroad
________ is a formal process for assessing how effectively employees perform their
jobs.
A) Performance planning
B) Performance management
C) Performance appraisal
D) Performance guarantee
Funding obtained from sources inside a firm is known as ________.
A) structural financing
B) grid loan financing
C) internal network financing
D) intracorporate financing
Organic Towel Exports (Scenario)
The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool,
England, where the firm has been manufacturing 100% organic cotton towels for five
years. OTC sells towels in the United Kingdom primarily to boutique hotels and
specialty retail stores, as well as to individual consumers through the company's.
Recently, OTC managers attended a trade show in London where they made contact
with numerous foreign market managers. OTC received a request from Earth Waves, an
organic clothing store in Toronto, Canada, for a large order of towels. OTC had not
been looking into expanding, but firm managers are seriously considering the
opportunity to reach a global niche market with their towels.
Which of the following most strongly suggests OTC should not export its towels to
Earth Waves?
A) OTC managers are risk-takers with the determination to expand OTC.
B) OTC's towel manufacturing at the Liverpool facility is nearing maximum capacity.
C) Earth Waves has a large client base and publishes a semi-annual catalog.
D) Earth Waves has offered to guide OTC through Canadian regulations.
Companies strive to drive down prices ________, among other strategies.
A) by centralizing manufacturing and procurement to a single source
B) by standardizing what they sell
C) by thwarting the growth of supranational institutions
D) by discouraging competition
The first phase of globalization was characterized by the ________.
A) rise of steel production
B) rise of SMEs
C) dominance of MNEs in the agricultural industry
D) growth of railroads
The practice of pricing intermediate or finished products exchanged among the
subsidiaries and affiliates of the same corporate family located in different countries is
known as ________.
A) transfer pricing
B) breakeven pricing
C) premium pricing
D) discounting
The purpose of material productions in a society is to ________.
A) enable people to cope with their environments
B) help unite people
C) distinguish the dominant culture from minority cultures
D) segregate people based on race and ethnicity
Which of the following is true of a code of ethics?
A) It guides decision-making by all employees in the firm.
B) It does not define the values and principles that are intended to guide organizational
decision making.
C) It emphasizes profit over righteousness.
D) It is a cure for all ethical dilemmas.
Which of the following entry strategies do most firms use in the absence of high tariffs?
A) FDI
B) licensing
C) joint ventures
D) exporting
In international business, firms frequently formulate market segments by ________.
A) selling only those products that create derived demand for other related products in
the market
B) grouping countries based on macro-level variables
C) grouping competitors based on their hiring strategies
D) grouping identical customers in underground economies
Managers consider several different rationales when adapting marketing program
elements, such as ________.
A) high and relatively stable incomes of buyers belonging to the global market segment
B) stable demand of consumer goods worldwide
C) differences in living standards and economic conditions
D) need for improved planning and control
Which of the following statements is most likely to be true regarding a currency's price
if the supply of the currency increases?
A) The price of the currency fluctuates randomly.
B) The price of the currency remains constant.
C) The price of the currency lowers.
D) The price of the currency increases.
Business dealings in low-context cultures are characterized by ________.
A) a high degree of sensitivity to the context
B) a high degree of mutual respect
C) efficient negotiations
D) complex rituals
Current trends suggest that early internationalizing firms will ________.
A) eliminate MNEs worldwide
B) be unable to sustain the rigors of international trade
C) become even more common in international business
D) significantly dampen entrepreneurial efforts of smaller firms
Which of the following is true with regard to competitive advantage?
A) Competitive advantages are typically derived from deliberate national policies.
B) A competitive advantage is difficult for competitors to imitate.
C) A competitive advantage is also known as a country-specific advantage.
D) Competitive advantage includes inherited resources, such as arable land.
Refrigerator Adaptations (Scenario)
Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and
China and ships them to retail stores around the world. Kitchen sizes vary around the
world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large
refrigerators, while European and Asian retailers demand smaller units. Cold-Aire
manufactures over 20 different models of refrigerators, which often vary in size by only
a few inches. Cold-Aire managers are concerned that the firm is losing money because
of product adaptations. Cold-Aire management is meeting to discuss the various
cost-saving options for the firm.
Which of the following most likely supports Cold-Aire implementing a regional
strategy of refrigerator standardization?
A) Refrigerator sizes within Latin America tend to be similar.
B) Distribution channels in Asian countries are usually complicated.
C) American kitchens are typically more spacious than Asian ones.
D) Customers in Europe demand exterior ice and water dispensers.
Minimizing Trade Barriers (Scenario)
National Appliance Corporation (NAC) needs to build a new manufacturing facility to
meet the increasing demand for professional-grade appliances. NAC managers are
considering building the facility in Mexico but are hesitant because of the high tariffs
involved. Another possible location for the facility is India; however, the country also
imposes high tariffs. Wherever NAC builds a plant, parts will need to be imported from
other nations.
Given the high trade barriers in Mexico, the management of NAC is most likely to
consider ________ to be an inappropriate entry strategy.
A) exporting
B) FDI
C) joint ventures
D) licensing
________ in developing economies deter firms from these countries from participating
in the global economy.
A) Low trade volumes
B) Bureaucracy and red tape
C) High inward FDI
D) Lack of a rich cultural heritage
According to Porter's competitive advantage of nations, ________ refer to the nature of
home-market demand for specific products and services.
A) firm strategy, structure, and rivalry
B) factor conditions
C) demand conditions
D) demand liabilities
Which of the following is true about national industrial policy?
A) It is designed to create monetary and fiscal policies, such as low-interest loans, that
provide a stable supply of capital for company investment needs.
B) It explains why nations attempt to run a trade surplus.
C) It demonstrates that what matters is not the absolute cost of production, but rather
the relative efficiency with which two countries can produce the products.
D) It underlines the demerits of rigorous educational systems at the precollege level.
What is a born global firm? Explain one strategic or reactive reason why an SME might
choose to start as a born global.
Describe four advantages of regional integration. Provide an example to illustrate each
point.
Discuss four factors that would persuade firms to adapt elements of their marketing
programs for individual markets. Provide suitable examples.
How are trademarks established in the United States and abroad? What are some of the
difficulties faced by firms regarding the protection of trademarks? Explain with an
example.
Describe the methods used by governments to seize the assets of foreign firms. How
would proactive environmental scanning mitigate this risk?
Explain the differences between equity financing and debt financing, and discuss the
ways international firms obtain equity financing or debt financing.
Describe six unique qualities shared by all cross-border contractual relationships.
Discuss two reasons why a nation might NOT consider a firm's high debt ratio a risky
approach to international business.
Describe the two methods typically used to screen potential foreign markets for
exporting: gradual elimination and indexing and ranking.
In a short essay, explain the four trends that provide evidence for the globalization of
markets. Provide an example to illustrate one of the trends.
Describe five advantages of licensing agreements from the perspective of the licensor.
In a short essay, explain why family conglomerates dominate emerging markets. What
are the benefits to foreign firms who collaborate with FCs in order to do business in
emerging markets?
Describe the role of GATT and the WTO in reducing barriers to trade and investment
worldwide, and explain how this reduction has led to the integration and
interdependence of national economies.
Why are taxes a concern for expatriates? Discuss how firms and governments often
handle tax issues for employees working abroad.
Explain the benefits of a multidomestic strategy to firm internationalization. What are
some of the disadvantages to this approach?
What is meant by the internationalization of a firm's value chain?
