1) A criticism of globalization is that as economic growth increases, too many
nonrenewable resources are used
2) In a licensing arrangement, it is rare for companies to agree to a front-end payment to
cover technology transfer costs.
3) The functional structure is inappropriate for firms with products and manufacturing
methods that are largely undifferentiated among countries.
4) El Salvador’s hard peg exchange rate arrangement involves the use of both the U.S.
dollar and its own separate legal tender.
5) The stages of development in a company’s export expansion are tied to company
size.
6) Andrews Enterprises, which uses an international division structure, should be able
to respond quickly to foreign activities but will most likely experience costly
country-to-country duplication.
7) Duty-free zones are special locations for storing domestic and imported inventory in
order to avoid paying duties until the inventory is sold.
8) Because the size of the market increases when trade barriers fall, companies can
increase their production, which will result in lower costs per unit. This phenomenon is
known as ________.
A) trade creation
B) economies of scale
C) diseconomies of scale
D) increased competition
9) Which of the following was primarily responsible for establishing the euro?
A) Lisbon Treaty
B) Treaty of Maastricht
C) European Finance Act
D) Single European Act
10) Korman Industries is a foreign multinational that recently established operations in
the European Union. What is the most likely advantage for Korman as a result?
A) Governance processes are streamlined because local governments have been
eliminated
B) Market size is larger because of the elimination of internal tariff barriers
C) Differential external tariff barriers exist for product shipments
D) The EU uses English as its official language
11) Firms alter their products for foreign markets for all of the following reasons
EXCEPT ________.
A) home country export requirement
B) religious differences abroad
C) weak infrastructures in some countries
D) to respond to legal requirements
12) Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm
has recently developed an innovative blender design that Wharton executives anticipate
being very profitable. Currently, Wharton has production facilities in the U.S. and
China. Wharton executives are trying to determine where the new product should be
manufactured. Which of the following best supports a decision to manufacture the new
product in the U.S. instead of China?
A) Intellectual property rights are strongly protected by U.S. patent laws.
B) A strategic marketing plan can be quickly developed in the U.S.
C) Contract enforcement is a simple process in the U.S.
D) The U.S. is experiencing an economic recession.
13) Which of the following is true concerning the International Accounting Standards
Board?
A) The IASB is an EU institution designed to harmonize accounting standards among
EU member countries
B) The EU has voted to not adopt IFRS issued by the IASB so that it will not hurt its
own convergence efforts
C) The IASB and the FASB of the United States are working closely to harmonize
accounting standards
D) FASB has been ordered by the SEC to not work with the IASB in setting accounting
standards
14) Morris Lighting is a U.S. firm that wants to start exporting its high-end lighting
fixtures to foreign markets. Morris Lighting should seek assistance from U.S.
government agencies for all of the following EXCEPT ________.
A) organizing trade events that help potential exporters make foreign contacts and
explore export opportunities
B) understanding how to comply with domestic and foreign trade regulations
C) acting as an export marketing department or international department for the
company
D) providing information about market demographics and product demand
15) Which of the following is a primary business objective for pursuing ethical
behavior?
A) replacing home-country technology with host-country technology
B) minimizing federal investigations into corporate finances
C) avoiding being perceived as a socially irresponsible firm
D) imposing home-country behavior on the host country
16) Some key ________ factors in a company’s international business external
environment are its product strategy and access to resources
A) geographic
B) political
C) competitive
D) behavioral
17) Firms that compete in the global marketplace typically face the asymmetric forces
of pressures for ________ and ________.
A) global integration; local responsiveness
B) price reductions; cost reductions
C) politically sensitivity; market leadership
D) cost reductions; customer satisfaction
18) A document requesting payment 30 days after delivery is known as a ________.
A) time draft
B) sight draft
C) spot draft
D) futures draft
19) When the pressure for global integration is high and the pressure for local
responsiveness is low, a company is most likely to pursue a(n) ________ strategy.
A) global
B) transnational
C) multidomestic
D) international
20) Cultural change imposed by an alien culture is called ________.
A) multicultural ethnocentrism
B) cultural imperialism
C) collectivism
D) high-context
21) The most common type of tariff is the ________ tariff.
A) export
B) import
C) transit
D) ad valorem
22) Vandelay Designs is a small firm based in Boston that makes and sells scrapbooking
products through its retail store and Web site. Many of Vandelay’s first sales were made
to customers located in Canada, England, and Japan. Vandelay Designs would best be
identified as a(n) ________.
A) incremental exporter
B) occasional exporter
C) born global
D) geo-expo
23) Most people’s basic value system is ________.
A) modified significantly between childhood and adulthood
B) altered during adulthood through imposition
C) affected primarily by teenage peer pressure
D) acquired mainly during early childhood
24) Critics of the Lisbon Treaty primarily argue that the legislation will ________.
A) reduce national sovereignty
B) implement trade restrictions
C) develop a monetary union
D) weaken decision making
25) 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?
26) What is state capitalism? Why do you think state capitalism is becoming
increasingly popular around the world?
27) What are the advantages and disadvantages of using a nation as a point of reference
for a culture?
28) What are the major sources of external funds for an MNE’s normal operations? Why
do MNEs use offshore financial centers to raise funds?
29) How do exchange rate changes affect a company’s marketing, production, and
financial decisions? What predictors should a manager monitor to forecast exchange
rate changes?
30) What are three factors that have led to the increased growth in international
business in recent decades? Which do you think has been most important and why?
31) Why is geography important to most regional trade agreements? Provide examples
of RTAs to illustrate your answer.
32) How do exchange rates affect budgets used to evaluate performance in MNEs?
33) What ethical and labor-related issues are a major challenge to footwear and clothing
MNEs that operate in developing countries? What guidelines are provided by the
Ethical Trading Initiative?
34) Describe the three ways economies can be categorized. Which one do you believe is
best? Why?