If a Chinese worker earns $1 a day, then goods produced by this worker will cost less
than the same goods produced by an American earning $18 an hour.
No worldwide court has the power to enforce its decrees.
The World Intellectual Property Organization is a UN agency that administers 24
intellectual property treaties.
Climate, topography, and natural resources refer to environmental scanning.
As Kofi Annan, former secretary-general of the UN, observed, the UN exists to help us
master the challenges of our common, global destiny, which we can do only if we face
them together.
A virtual corporation is also called a network organization.
Piracy is an option for helping a firm to enter new markets.
Kurt Lewin’s model of change involves understanding the need for change, changing,
and evaluating the change.
Porter’s diamond model suggests that Switzerland should not be competitively
successful.
Leadership is universal; all people want to be led by a strong leader.
Direct exporting is simpler than indirect exporting because it requires neither special
expertise nor large cash outlays.
Strategic alliances take many forms, including licensing, mergers, joint ventures, and
joint research and development partnerships.
Although strategic planning is not a widely used management tool among global
executives, according to a Bain & Company survey there is a high level of satisfaction
among those executives who do utilize strategic planning.
Spoken language does not demarcate culture, but body language does.
One of the significant differences between formal and informal institutions is how they
gain compliance.
The level of merchandise exports coming from Africa decreased between 1980 and
2010.
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.
It is not possible for foreign investors to control a joint venture if the host country’s law
prevents foreign investors from having more than 49 percent ownership.
Performance appraisal for global teams is influenced by national-level culture.
External environmental forces are commonly referred to as controllable.
An arrangement in which one or more activities that could be provided in-house are
instead provided by another company is offshoring.
Management contracts can enable the global partner to control many aspects of a joint
venture even when holding only a minority position.
According to the text, the international environment is all of the uncontrollable forces
originating outside the home country that surround and influence the firm.
After setting corporate objectives, the company management must define the company’s
vision and mission.
The traditional functions of purchasing, such as supplier determination, analysis, and
selection, have to be accomplished before the actual purchasing via e-procurement.
In a firm without a global product policy, the preference of the operations management
people in the home office has always been to localize the product or at least the
production process in as many overseas plants as possible.
A historical function of capitalist—but not communist—governments has been the
protection of the economic activities within their geographic area of control.
When the historic growth rates of a product are known, future growth can be forecast
by means of trend analysis.
Multiplicity for global team leaders is evidenced by more players in the game than in a
domestic setting.
There are a number of advantages in focusing attention on a nation that is already a
sizable purchaser of goods coming from the would-be exporter’s country.
The licensee generally pays a fixed sum when signing a license agreement and then
royalties of 5 to 7 percent of sales over the life of the contract.
Trade missions consist of a group of people in search of business opportunities.
Historically, firms engaged in FDI have generally preferred wholly owned subsidiaries.
A vehicle currency is a currency:
A. used to trade in the transportation sector and is usually the dollar, euro, or yen.
B. whose value lies in its function in transfer pricing.
C. specifically used in arbitrage deals as a trading medium only.
D. used for international trade or investment.
If the Japanese yen is strengthening against the U.S. dollar, and the Japanese
government wanted to boost exports, the central bank of Japan might well:
A. sell U.S. dollars in large amounts in the currency markets.
B. buy massive amounts of Japanese yen in the FX markets.
C. sell massive amounts of Japanese yen in the FX markets.
D. buy massive amounts of other hard currencies, such as the British pound sterling and
the euro, to deflect the focus on dollars.
Dunning’s eclectic theory of international production states that if a firm is going to
invest in production facilities abroad, it must have the following kinds of advantages:
A. ownership specific, location specific, and internationalization.
B. strategic, organizational, and technological.
C. political, technological, and human resource.
D. technological, financial, and human resource.
E. none of the above.
The analyst is mostly concerned with which of the following during the second
screening?
A. Trends in inflation
B. Interest rates
C. Exchange rates
D. All of the above
E. A and C
The masculine-feminine dimension is about:
A. task vs. relationship.
B. the gap between men’s and women’s roles in the culture.
C. doing vs. being.
D. quality of work vs. quality of life.
The Eonomist‘s Big Mac index (May 2010) suggests that against the dollar, the Chinese
yuan is:
A. trading fairly, since the Big Mac prices are similar.
B. quite undervalued, since the Chinese Big Mac is almost 50 percent less expensive
than the U.S. dollar Big Mac.
C. is overvalued, since the Big Mac sells for almost 50 percent less in Chinese currency
than in U.S. dollars.
D. trading at a historical premium.
The most serious recent challenge to the EU has been:
A. the recent financial crisis.
B. the arrest of the IMF’s Strauss-Kahn.
C. immigration-provoked social unrest.
D. weather changes that have resulted in rising sea levels and warmer temperatures.
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.
World Bank studies have shown that underdevelopment is often due to:
A. factors such as parasites and viruses that are a part of tropical climates and expand
unchecked because of the lack of winter temperatures.
B. mental slowness in people of the climates around the equator.
C. socialist political regimes.
D. lack of government investment in education.
Uncertainty avoidance describes man’s search for Truth, according to Hofstede,
because:
A. Truth is primary to our human value system; everything else depends upon it.
B. it describes how comfortable the culture’s members feel in an unstructured situation.
C. once you have Truth, you can avoid change, which is always disruptive.
D. All of the above.
Exposure netting is a transaction exposure hedging technique that is similar to:
A. leading and lagging.
B. a forward market contract.
C. multilateral netting.
D. a spot currency contract.
What is the purpose of multilateral netting?
A. To increase market penetration
B. To increase levels of standardization
C. To decrease inflation risk
D. To reduce transaction costs and increase efficient use of funds
The disadvantages of indirect exporting include:
A. firms gain little experience from the transaction.
B. commissions have to be paid to agents.
C. firms are dependent on the agents.
D. all of the above.
E. two of A, B, and C.
_____ are paid by firms in recognition of the fact that expatriates and their families
undergo some hardships and inconveniences and make sacrifices while living abroad.
A. Bonuses
B. Allowances
C. Perks
D. Tax exemptions
E. Two of the above
In larger, older organizations:
A. more decisions are delegated to the subsidiary headquarters.
B. decisions are delegated to empowered, decentralized subsidiary managers.
C. more decisions are made at headquarters of the parent company.
D. all of the above.
E. two of A, B, and C.
Trompenaars’ particularist dimension describes a culture in which:
A. people apply the rules equally to everyone.
B. context is considered when rules are applied.
C. relationships rather than rules regulate behaviors.
D. B and C.
GLED and Right Stuff are models for:
A. developing global leaders.
B. developing and assessing global assignees.
C. understanding global leadership situations.
D. evaluating global leadership performance.
E. understanding global leadership deficits.
Transaction exposure occurs when:
A. the value of the currency changes between when the asset or liability is recorded and
when results are consolidated.
B. the firm has transactions in a foreign currency.
C. the firm’s strategic projections use a currency value that has changed.
D. the recorded value of an asset or liability changes between its being reported and its
consolidation.
International business differs from domestic business in that a firm operating across
borders must deal with what environmental forces?
A. International
B. Foreign
C. Political
D. Competitive
E. Two of the above
The capital structure of the firm can be raised externally through:
A. leveraging and bonds.
B. debt and equity.
C. debt and retained earnings.
D. retained earnings and bonds.
Brake’s leadership triad includes:
A. culture knowledge, foreign languages, and business acumen.
B. business, culture, and geographic acumen.
C. business knowledge, relationship skills, and personal effectiveness skills
D. self-discipline, motivational skills, and business skills.
E. personal, business, and motivational skills.
The major globalization drivers include all of the following except:
A. political.
B. social.
C. cost.
D. market.
E. none of the above. All of the above are major kinds of globalization drivers identified
in the text.
Transfer pricing may serve as a vehicle for:
A. moving blocked goods from one country to another.
B. moving profits and blocked royalties from high-tax to low-tax subsidiaries.
C. manager motivation.
D. A, B, and C.
The approach to design that promotes cross-functional participation in the design stage:
A. helps to identify many of the potential sourcing, manufacturing, and other
difficulties associated with a particular design.
B. may involve customers in the design process.
C. has been called concurrent engineering.
D. all of the above.
E. two of A, B, and C.
Who took the United States off the gold system?
A. President Eisenhower
B. President Kennedy
C. the Supreme Court
D. President Nixon
“Foreign direct investment without investment” is a term sometimes applied to:
A. franchising.
B. exporting.
C. a joint venture.
D. a management contract.
E. contract manufacturing.
Running afoul of miscellaneous laws in a foreign country is:
A. easily understood and forgiven by foreign police.
B. a serious error, so the local law should be known.
C. not a major issue, since the embassy can work out your release.
D. not a serious issue because your country and company stand behind you.
E. none of the above.
An ethnocentric staffing policy:
A. utilizes host-country nationals in key foreign management and technical positions.
B. assigns expatriates who have learned the language and culture of the country of their
assignment.
C. is required in order to prepare home-country citizens for high-level managerial
positions at headquarters.
D. two of the above.
E. none of A, B, and C.
Incoterms are divided into two basic categories:
A. open account and L/C.
B. general and water transport terms.
C. ship and ground transport.
D. export and domestic shipments.
E. risk and nonrisk terms of sale (buyer’s perspective).
UNCTAD, an agency of the United Nations, estimates there are __________
international firms in the world.
A. 5,500
B. 12,000
C. 64,000
D. 82,000
E. over 800,000
Nonfuel minerals:
A. include chrome, manganese, platinum, and arsenic, all necessary for modern living.
B. are mostly sourced through imports in the United States.
C. frequently originate in China.
D. all of the above.
Stakeholder theory pushes managers to be clear about how they want to do business, so
it encourages:
A. recognition of and transparency with values and underlying principles.
B. discussion of profit center margins.
C. strategy development from the top down.
D. B and C.
A term Hofstede uses to describe long-term orientation is:
A. Herculian commitment.
B. Confucian dynamism.
C. big-picture focus.
D. strategic commitment.