The infant industry argument is the latest argument for government intervention in
trade.
As competition intensifies, global standardization strategies and transnational strategies
tend to become less viable, and managers need to orientate their companies toward
either an international strategy or a localization strategy.
The firm that sources from independent suppliers has fewer subunits to control.
Hiring an EMC will help a novice exporter identify opportunities and navigate the
paperwork involved in exporting.
The success of many multinational corporations is based not just upon the goods or
services that they sell in foreign nations, but also upon the core competencies that
underlie the development, production, and marketing of those goods or services.
In a concentrated retail system, there are many retailers but none of them have a
significant share of the market.
Porter’s theory of national competitive advantage recommends unrestricted free trade
between countries.
An oligopoly is an industry composed of a limited number of large firms.
From a strategic perspective, the key issue in international labor relations is the degree
to which organized labor can limit the choices of an international business.
Time drafts cannot be sold to investors at a discount from its face value.
To minimize the risk of an unanticipated change in exchange rates, a company can
protect itself by entering into a forward exchange contract.
An antagonistic relationship between management and labor classes may result in lower
costs of production.
A firm’s organizational culture refers to the values and norms that are shared among
employees of an organization.
The term switch trading refers to the use of a specialized third-party trading house in a
countertrade arrangement.
In a worldwide product divisional structure, each division is a self-contained, largely
autonomous entity with full responsibility for its own value creation activities.
Global capital market often lack information about the fundamental quality of foreign
investments.
The four main differences between distribution systems are retail concentration,
channel length, channel exclusivity, and channel quality.
The rate of new-product development seems to be lesser in countries where more
money is spent on basic and applied research and development.
Investors can reduce the level of risk by diversifying a portfolio internationally.
The cost of capital is the difference between cost of inputs and outputs.
Utilitarian philosophy takes into consideration the principle of justice.
Where an expatriate community exists, firms often devote less effort to ensuring that
the new expatriate family is quickly integrated into that group.
Implementing a fixed exchange rate regime increases the price inflation in countries.
Evidence suggests that technological change has had a bigger impact than globalization
on the declining share of national income enjoyed by labor.
A joint venture is often politically more acceptable than a wholly owned subsidiary and
brings a degree of local knowledge to the subsidiary.
Mercantilist doctrine advocates unrestricted free trade between countries.
Eurobonds fall within the regulatory domain of European Economic Community.
The initial rate, in the Lessard-Lorange Model, refers to the spot exchange rate when
the budget is adopted.
According to supporters of free trade, as countries get richer they commit greater
violation of environmental and labor regulations.
Companies hope to lower their overall cost structure or improve the quality or
functionality of their product offering through globalization of production.
Antidumping policies are designed to punish foreign firms that are engaged in dumping.
The international Fisher effect states that for any two countries, the spot exchange rate
should change in an equal amount but in the opposite direction to the difference in
nominal interest rates for the two countries.
The standards of U.S. Financial Accounting Standards Board and IASB are vastly
different.
Fixed exchange rates lead to speculation and uncertainty in the value of currencies.
In a seminal study, R. L. Tung revealed that for European firms, the top reason for
expatriate failure was the inability of the manager to cope with larger overseas
responsibilities.
_____ are the routine conventions of everyday life.
A. Folkways
B. Mores
C. Rites
D. Beliefs
The amount of value a firm creates is measured by the:
A. economies of scale they are able to achieve.
B. difference between its costs of production and the value that consumers perceive in
its products.
C. profitability the firm achieves.
D. difference between its costs of production and the price that it charges for its
products.
Prior to the introduction of the euro, many EU countries participated in a _____.
A. floating exchange rate system
B. currency board system
C. fixed exchange rate system
D. pegged exchange rate system
Which of the following sociologists made a connection between Protestant ethics and
“the spirit of capitalism”?
A. Karl Marx
B. Max Weber
C. Amartya Sen
D. Adam Smith
A purely domestic capital market faces the problem of _____.
A. foreign exchange risk
B. limited liquidity
C. lack of regulation
D. deregulated markets
Differences in the spot exchange rate and the 30-day forward rate are normal and reflect
the expectations of the foreign exchange market about:
A. anticipated currency swap rates.
B. stability in the global marketplace.
C. future currency movements.
D. the carry trades that will occur.
By identifying and investing early in a potential future economic star, international
firms can _____ and gain experience in that country’s business practices.
A. build brand loyalty
B. learn which government officials need to receive kickbacks
C. begin to stockpile that country’s currency
D. build infrastructure
Which of the following observations about the Foreign Corrupt Practices Act is true?
A. The act outlawed the paying of bribes to foreign government officials to gain
business.
B. There is enough evidence that it put U.S. firms at a competitive disadvantage.
C. The act originally allowed for “facilitating payments.”
D. The Nike case was the impetus for the 1977 passage of this act.
Countries with _____ economies in which property rights are protected tend to achieve
greater economic growth rates than other economies where property rights are poorly
protected.
A. mixed
B. market
C. free market
D. command
The _____ states that, for any two countries, the spot exchange rate should change in an
equal amount but in the opposite direction to the difference in nominal interest rates
between the two countries.
A. purchasing power parity theory
B. efficient market theory
C. international Fisher effect
D. law of one price
The movement toward regional economic integration been most successful in _____.
A. Europe
B. Asia
C. Africa
D. Central America
Which of the following products will have low value-to-weight ratios?
A. Pharmaceuticals
B. Refined sugar
C. Microprocessor
D. Electronic items
_____ occurs when a firm invests resources in business activities outside its home
country.
A. Foreign direct investment (FDI)
B. Direct international investment (DII)
C. International trade (IT)
D. Foreign direct production (FDP)
The relative decline of the United States in the share of world output and world exports
reflects:
A. an increase in the barriers to foreign trade in the United States.
B. the deepening of the global financial crisis.
C. the reduced industrialization in developing nations.
D. the growth in the economic development of the world economy.
An upper-middle-class manager tends to have hostile relationship with the
working-class employees in the firm because of his tendency to perceive himself as
superior to them based on his class background. In this example, the manager exhibits
_____.
A. class consciousness
B. cultural awareness
C. social mobility
D. group orientation
Which of the following refers to the simultaneous purchase and sale of a given amount
of foreign exchange for two different value dates?
A. Currency pairing
B. Carry trade
C. Currency exchange
D. Currency swap
_____ is a nationwide group of international trade attorneys who provide free initial
consultations to small businesses on export-related matters.
A. SCORE
B. SBDC
C. ELAN
D. CIBER
_____ per person figures can be misleading because they don’t consider differences in
the cost of living.
A. Gross domestic product (GDP)
B. Gross national income (GNI)
C. Purchasing power parity (PPP)
D. Human Development Index (HDI)
Analysts who believe globalization of capital has serious risks argue that:
A. capital does not shift in and out of countries as quickly as conditions change.
B. individual nations are becoming more vulnerable to speculative capital.
C. deregulation of trade is helpful for the economic growth in a country.
D. most of the capital that moves internationally is pursuing long term gains.
_____ is a quota on trade imposed by the exporting country, typically at the request of
the importing country’s government.
A. Voluntary export restraint
B. Specific tariff quota
C. Trade reconciliation
D. Ad valorem tariff
The valuable asset of firms, whose competitive advantage is based on management
know-how, is their _____.
A. top management staff
B. USP
C. advertisements
D. brand name
Which of the following statements about values and norms of a culture is true?
A. The values and norms of a society emerge fully formed.
B. The values and norms of a society are not the evolutionary product of a number of
factors.
C. The values and norms of a society are not influenced by religion.
D. The values and norms of a society influence social structure.
_____ is advantageous because it avoids the cost of establishing manufacturing
operations in the host country and because it may help a firm achieve experience curve
and location economies.
A. Licensing
B. Exporting
C. Franchising
D. A turnkey contract
In a concentrated retail system:
A. there are many retailers who have a major share of the market.
B. there are many retailers, no one of which has a major share of the market.
C. a few retailers supply a small segment of the market.
D. a few retailers supply most of the market.
Which of the following is a disadvantage of pursuing a transfer pricing policy?
A. It is not useful in shifting earnings from a high-tax country to a low-tax one.
B. Transfer pricing does not treat each subsidiary as a profit center.
C. It is not effective when significant currency devaluation is expected.
D. A transfer price policy cannot be used to move funds when dividends are restricted.
A(n) _____ has no barriers to trade between member countries, includes a common
external trade policy, and allows factors of production to move freely between
members.
A. economic union
B. common market
C. customs union
D. full political union
Which of the following observations is true of the current system of the foreign
exchange market?
A. Most of the currencies can be converted to gold in the current system of foreign
exchange.
B. The current system is driven by fixed exchange rates.
C. Currencies float freely against others in the current system.
D. The current system is a combination of government intervention and speculative
activity.
United States, Canada, and Mexico are member nations of _____.
A. CAFTA
B. Mercosur
C. the Andean Pact
D. NAFTA
Which of the following issues was not addressed by Mendenhall and Oddou’s study?
A. Expatriate failure due to a spouse’s inability to adjust.
B. Expatriate failure due to a manager’s lack of self-esteem.
C. Expatriate failure due to lack of relationship development.
D. Expatriate failure due to a manager’s inability to empathize.
Lenovo’s ThinkPad laptop computers are designed in the United States, the case,
keyboard, and hard drive are made in Thailand; the display screen and memory in South
Korea; the built-in wireless card in Malaysia; and the microprocessor in the United
States. In each case, these components are manufactured and sourced from the optimal
location given current factor costs. In this example, Lenovo has:
A. vertical integration advantages.
B. a global web of value creation activities.
C. learning effects.
D. high local responsiveness.
What is the main reason that managing an international business differs from managing
a domestic business?
A. International managers are more experienced.
B. Countries differ in their cultures and systems.
C. Countries want to do business with their neighbors.
D. Countries want to keep their transactions simple.
According to the _____ argument, governments should temporarily support new
industries until they have grown strong enough to meet international competition.
A. retaliatory action
B. human rights
C. infant industry
D. antidumping
Hedge funds:
A. are public investment funds that invest in corporate bonds and shares.
B. make long bets rather than short bets.
C. are investment funds managed by the government.
D. make short bets on assets that they think will decline in value.
What is strategy? How does strategy relate to a firm’s profitability?
Imagine that you are meeting with your superiors to discuss entering a foreign market.
Your boss has asked you to analyze a joint venture prospect. Why might you tell your
boss that the joint venture is not a good idea?
Explain the trends in world trade and foreign direct investment since 1950.
Identify the three types of economic systems. How do these three types of economic
systems differ from each other? How are they the same?
Discuss the three advantages of acquiring an enterprise in a target market.
What is a country’s legal system? Why is it important to international businesses?
Why is the role of education in a culture important to international companies?
Explain the problem of trust that persists in international business.
What are ethical dilemmas? Why do they exist?
Discuss the factors that lead to pressure for local responsiveness.
Why does doing business in a country with a relatively unsophisticated economy result
in increased costs?
Discuss Samuel Huntington’s views on Islamic fundamentalism.
Describe the three exchange rates that Lessard and Lorange pointed out.
Describe the process involved in financing imports and exports using a letter of credit.
Why has this system developed? What is the advantage of using this system?
Explain the concept of social stratification.