Companies that belong to a nation’s internationally competitive industries exist in
isolation from supporting industries.
Scenario: Better Mousetrap Inc.
Better Mousetrap Inc. is a manufacturing company that sells pest control products.
Recently the company launched an innovative mousetrap with a unique design that has
been selling well in the U.S. market. Senior Vice President Marc Wallace, even
recommended expanding sales overseas in order to increase company revenues.
Most of the world’s merchandise trade is composed of trade in agricultural products.
The psychological process of readapting to one’s home culture is seldom difficult for
expatriates who have successfully adapted to new cultures.
Factor proportions theory states that a country will produce and export those goods that
require resources abundantly available within the country.
The potential to conduct written surveys is independent of the literacy rates among the
local population.
A back-to-back loan is one in which a subsidiary acquires a loan from the same bank
where its parent secured the first loan.
Low unemployment rates can lead to higher inflation.
Agency relationships are popular among exporters because they are easy to terminate
should difficulties arise.
Investors increase risk by holding international securities whose prices move
independently.
The process of collecting and analyzing original data and applying the results to current
research needs is called primary market research.
Which of the following is the first stage of the strategy-formulation process?
A) identification of value-creating activities
B) formulation of strategies
C) identification of company mission and goals
D) identification of core competency
A tariff levied by the government of a country that a product is passing through on its
way to a final destination is called a ________ tariff.
A) transit
B) compound
C) export
D) specific
Which of the following was an advantage of the gold standard?
A) It retained trade imbalances.
B) It abolished monetary policies on all countries.
C) It reduced the risk in exchange rates.
D) It increased exchange-rate fluctuations.
Which of the following letters of credit can be modified without obtaining approval
from either the exporter or the importer, by the bank issuing the letter of credit?
A) revocable letter of credit
B) confirmed letter of credit
C) at sight letter of credit
D) usance letter of credit
Some nations encourage ________ because of recent resistance to worldwide trade
agreements.
A) regional pacts
B) homogeneous markets
C) product standardization
D) domestic manufacturing
________ is relatively inexpensive because it has already been collected, analyzed, and
summarized by another party.
A) Primary data
B) Secondary data
C) Raw data
D) Transaction data
Which of the following occurs when the price of a good is lower in export markets than
it is in the domestic market?
A) skimming
B) dumping
C) transfer pricing
D) price escalation
A folk custom can be defined as ________.
A) behavior shared by a heterogeneous group or by several groups of people
B) behavior, often dating back several generations, that is practiced by a homogeneous
group of people
C) positive or negative evaluations, feelings, and tendencies that individuals harbor
toward objects or concepts
D) positive or negative evaluations, feelings, and tendencies that individuals harbor
toward themselves
Which of the following features did Bretton Woods Agreement incorporate in the
international monetary system based on the U.S. dollar?
A) floating exchange rates
B) trade imbalance corrections
C) an enforcement mechanism
D) a strict ban on devaluation
Scenario: Moonland Union
Twenty-six nations of Moonland region, have decided to cooperate with one another to
eliminate trade barriers among them and create the Moonland Union. They are not sure,
however, to what extent they want to cooperate.
The process undertaken by these twenty-six countries is an example of ________.
A) foreign direct investment
B) protectionism
C) economic nationalism
D) regional economic integration
Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to
set up production facilities in other countries and has been advised to assess the
political system of each country before she does so.
Susan decides not to set up production facilities in Konesia because its business laws
are vague and are often interpreted according to the convenience of the government.
Bribery is a common feature in conducting business deals there and a refusal to pay up
is not an option. What kind of government does Konesia have?
A) democratic
B) theocratic
C) totalitarian
D) pluralist
One option that intrigues Alistair is the process in which one company sells to another
its obligation to make a purchase in a given country. This arrangement is known as
________.
A) barter
B) offset
C) switch trading
D) buyback
Transportation costs are one of the driving forces behind the globalization of the
________ industry.
A) health care
B) publishing
C) software
D) steel
The ________ is the collection of agreements and institutions that govern exchange
rates.
A) Bretton Woods Agreement
B) Plaza Accord
C) international monetary system
D) international bond market
Which of the following is a method of restricting trade?
A) export financing
B) local content requirements
C) subsidy
D) foreign trade zones
Which of the following offers insight into a host country’s political, legal, economic,
and social institutions as a way of enhancing environmental briefings?
A) language training
B) field experience
C) sensitivity training
D) cultural orientation
Describe any four factors that affect international product strategies.
Describe key characteristics of a born global firm, and explain why a born global firm
would be attuned to international firm management.
Describe the Association of Southeast Asian Nations (ASEAN).
Discuss the role of business confidence and psychology in currency values.
What role does flexibility play in the make-or-buy decision?
Explain how a pegged exchange-rate system works. Why would a country choose to
follow this system?
Discuss the importance of field trips in last stage of the market-screening process. How
do trade shows and trade missions help companies conducting primary international
research?
Differentiate between folk and popular customs. Why are popular customs seen as a
threat by some cultures? Support your answer with an example.
Explain the concept of cross rates. Include the description of a vehicle currency and the
role it plays in the foreign exchange market.