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

BUS 43983

February 28, 2019
The sales agreement should specify as simply as possible the duties of the
representative and the firm.
According to the text, Zara's strategy of speed and flexibility has enabled the company
to eliminate inventory.
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.
In FAS (free alongside ship, loading port) the buyer pays all the transportation and
delivery expenses up to the ship's side and clears the goods for export. Risk passes at
the ship's rail.
The organization of an overseas sales force, the sales presentation, and training methods
are generally very similar to those employed in the home country.
The first step in the market screening process is the economic/financial screening.
Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules,
and cash flow projections are all part of the export marketing plan.
Market indicators measure relative market weaknesses.
In designing an international organization, it is essential that the structures and systems
being implemented are consistent not merely with each other but also with the strategy
the company and its competitors are using.
The export marketing plan is essentially the same as the domestic marketing plan.
A broad statement that defines the organization's scope is the mission statement.
With globally networked transportation, location does not matter as a basic factor
The World Bank is made up of one large institution, IBRD.
To create a sustainable competitive advantage, an international company should try to
develop competencies that are valuable, rare, difficult to imitate, and readily
Research indicates that global leaders are born, not developed through experience or
A management contract is used only by manufacturing companies to earn income by
providing expertise for a fee.
Fair competition is a strong rationale for trade barriers.
Multilateral netting reduces foreign exchange transaction costs.
Trade missions consist of a group of people in search of business opportunities.
Global firms that organize by function at the top level have functional managers that
report directly to the area heads.
The disadvantage of an organization divided into geographic regions is that each region
must have its own product and functional specialists.
A benefit of global strategies is their ability to adjust quickly and effectively to changes
in customer needs across national or regional markets.
Piracy is an option for helping a firm to enter new markets.
Payment terms are incidental once the customer need has been identified and a sales
price agreed to.
Triple-bottom-line accounting is an example of sustainability with economic, social,
and environmental accountability.
Under a polycentric staffing orientation, ICs primarily hire HCNs for subsidiaries and
PCNs for headquarters' positions, and movement from the local subsidiaries to
headquarters' positions is common.
Under U.S. law, price fixing is illegal per se, while in other countries, damage or harm
has to be done; this is the case in the EU.
All decisions are made either at the IC headquarters or at the subsidiary level.
Scenarios are forecasts that extrapolate from past data to make predictions.
The national defense argument for trade restrictions is based on the development level
of the country.
Japanese attitudes toward Western women expats assigned to Japan suggest that these
women would be ineffective in their assignments.
Opponents of free trade point out that globalization has contributed to a decline in
environmental and health conditions.
Exporting can extend a product's life cycle by exporting to currently unserved markets
where the product will be at the introduction stage of the life cycle.
A fronting loan is used when the firm does not have the collateral or reputation to
borrow in a foreign environment.
"When in Rome, do as the Romans do" is a solid, moral guideline.
A pioneer will most likely succeed when there are low entry barriers and the firm has
sufficient size, resources, and competencies to take advantage of its pioneering position.
Performance appraisal for global teams is influenced by national-level culture.
To achieve global objectives, the selection and training of IC managers are the same
whether the candidate is from the home country, the host country, or a third country.
In human resources, laws administered by the Equal Employment Opportunity
Commission, (EEOC) allow an American company to be successful on the cultural
front in all foreign labor markets.
The North-South divide uses climatic differences to explain:
A. population differences.
B. trade patterns.
C. differences in human development.
D. cultural differences.
The kinds of forces in the foreign environment are __________ those in the domestic
environment except that they occur in foreign nations.
A. different from
B. the same as
C. less than
D. more stringent than
E. none of the above
The monopolistic advantage theory suggests that firms in oligopolistic industries are
likely to _______________ foreign direct investment when they have technical and
other advantages over indigenous firms.
A. increase
B. reduce
C. ignore
D. not change
E. none 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 are combined with a strategy of limited
availability of its merchandise.
C. Two of A, B, and D.
D. Zara's approach to the fashion industry enables it to dictate industry standards on
dimensions such as customer satisfaction and order fulfillment.
E. All of A, B, and D.
A decision to move production factors from one country to another would be:
A. affected by currency and political stability.
B. made cooperatively by subsidiary managers.
C. based on tax, labor supply, and market conditions.
D. all of the above.
The IMF initially played a central role in:
A. establishing trade initiatives through GAAP measures.
B. supporting war-torn nations of Europe as they recovered from their devastation.
C. setting fixed exchange rates among nations' currencies with an established par value
based on gold.
D. the monitoring of EU initiatives to restrain trade with South Africa.
Patent trolls are:
A. a record of all patents, recorded by the UN.
B. the numerical controls issued on patents, standardized by the Paris Convention.
C. the organizing system for patent review that is kept internationally by the OECD.
D. modern highway robbers who exploit loopholes in IP protection.
E. the framework used for filing and referencing patents.
Quotas are a quantitative barrier that sets:
A. limits, established by the importer.
B. goals, established by the exporter.
C. precise quantities of imports or exports, based on price.
D. expectations on domestic and foreign sales.
E. two of the above.
The stakeholder model requires businesses to think about:
A. the stakeholders' interest in profitability.
B. the network of tensions caused by competing demands.
C. strategy in light of sustainability.
D. the frequency of social issues faced by the stakeholders.
The three characteristics of evolving sustainable business practices are:
A. local, global, and improving quality of life.
B. environmental sustainability, quality-of-life sustainability, and triple-bottom-line
C. limits, interdependence, and equity.
D. none of the above.
Referring to Hall's high-and low-context framework, in a high-context culture,
A. communication is explicit.
B. the context carries much of the communication.
C. communication is direct and focused on the topic.
D. the context is irrelevant.
High levels of motivation in teams are likely when:
A. the rewards are substantial.
B. the team has low levels of diversity.
C. team members see one another as each member sees himself or herself.
D. the task is challenging.
E. A and B.
The major function of the World Bank is to serve as a:
A. nonprofit banking cooperative for its members to meet development needs.
B. central bank for the world's central bankers.
C. nonprofit cooperative to finance the educational needs of its members.
D. investor of funds in global businesses in order to create value for its shareholders.
Which of the following was stated in the text as being a concern with licensing?
A. It requires the licensor to invest scarce funds in the licensee's company.
B. It can create a competitor.
C. License terms are often not upheld by the courts.
D. All of the above.
According to the text, the failure rate for expatriate assignments, including failing to
achieve performance targets for an international assignment or prematurely returning
from the assignment, ranges from _______ percent.
A. 6 to 10
B. 15 to 25
C. 25 to 45
D. 30 to 55
E. 41 to 65
Reasons for global standardization of manufacturing systems include:
A. simpler organization at headquarters.
B. less design time required for a new plant.
C. easier and more cost-effective purchasing.
D. all of A, B, and C.
E. two of A, B, and C.
Dalton suggests that moral reasoning is a skill:
A. not needed by global leaders.
B. that belongs in the legal arena, not the business arena.
C. needed by global leaders to confront ethical dilemmas.
D. included in the concept of complexity.
E. needed by global managers who implement, not leaders.
Economic integration often progresses:
A. in stages, from free trade area to customs union to common market.
B. in stages, totally dependent on the members' national economic strength.
C. as a result of cultural beliefs and economic strength.
D. in unpredictable ways due to unintended consequences.
"Trade without discrimination" in the WTO means that
A. the MFN principle can be ignored.
B. all trading partners must be treated the same.
C. racially based trading patterns are tolerated.
D. developing and developed nations must be separated for trading purposes.
The primary dimensions that need to be considered when designing the structure of an
international company are:
A. product and technical expertise, geographic expertise, and functional expertise.
B. product and technical expertise, customer expertise, and functional expertise.
C. geographic expertise, functional expertise, and customer expertise.
D. all of the above
E. two of A, B, and C.
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.
The oldest orderly marketing arrangement, which was disbanded through the WTO, is
A. Multi-Fiber Agreement (MFA).
B. Jamaica Agreement.
C. Textile Co-operation Treaty (CTC).
D. Japanese truck export quota.
E. Paris Convention.
Among the external businesses that conduct country risk assessment are:
A. the Economist Intelligence Unit, Euromoney, the Harvard Business Review
B. Moody's, Standard and Poor's, STRATFOR
C. The New York Times, Wilson Quarterly, Forum
D. two of the above.
Most companies enter a market in stages. Which of the following is not listed in the
textbook as a stage of market entry?
A. Exporting
B. Establishment of a foreign sales company
C. Establishing a website
D. Local assembly
E. Local manufacturing
In 1717, Sir Isaac Newton took Britain from the silver standard (pounds sterling) to:
A. floating exchange rates.
B. fixed exchange rates, using silver.
C. the gold standard, with fixed rates.
D. pegged rates.
The end result of legal trade obstacles is often:
A. limited trade, with the recipient of the obstacles withdrawing.
B. political negotiations between the two countries, to smooth relations and reduce
C. higher costs to consumers.
D. lower taxes to citizens due to tariff revenues.
E. none of the above.
Regarding the annual outflows of foreign direct investment:
A. the overall volume that came from developing nations in 2009 was nearly five times
the level from those nations in 1990.
B. the proportion that came from the United States and Europe was nearly 50 percent in
C. much of the recent increase has been associated with mergers, acquisitions, and other
international investments made by companies in industries facing increased competition
and global consolidation.
D. nearly half went to China and its territories from 2007 to 2009.
E. all of the above.
This is the only industrialized country that has not ratified the Kyoto Protocol, a UN
convention on climate change:
A. China.
B. France.
C. Russia.
D. the United States.
Under new institutional theory, institutions can be categorized as formal and informal,
and the informal institutions can be further categorized as:
A. normative and cognitive.
B. normal and abnormal.
C. informally cognitive and formally cognitive.
D. effective and ineffective.
Patent trolling is the process of:
A. looking for loopholes in patent protection and exploiting them.
B. recording and registering patents in foreign countries to protect the firm's IP.
C. searching out patents that have expired and negotiating their replacements.
D. legal research that uncovers obscure, deceased patent holders and liberates their
E. none of the above.
Economic exposure occurs at the operations level and results from:
A. poor decision making in foreign markets.
B. higher tax rates in foreign operations.
C. risks incurred during foreign transactions.
D. exchange rate changes on projected cash flows.
The three largest markets for American exports of goods in 2010 were:
A. Japan, the UK, and China.
B. Japan, Mexico, and the UK.
C. Canada, Mexico, and China.
D. Canada, Japan, and the UK.
E. Japan, Mexico, and China.
Government protection of economic activities is:
A. two of the following.
B. a historical function of government.
C. a recent responsibility of government.
D. a socialist characteristic.
E. stronger in democracies.