“Beggar thy neighbor” retaliatory trade policies involved countries progressively
lowering trade barriers against each other, which contributed to the Great Depression of
the 1930s.
Establishment of the euro created the largest currency zone in the world, replacing the
position the U.S. dollar had held for decades.
Political turmoil in several African nations has persistently impeded any meaningful
progress in economic integration.
The bank promises to pay on behalf of the importer when a bank is used as a third party
in international transactions.
Tight cross-functional integration between R&D, production, and marketing maximizes
the time to market.
There is no evidence that psychological factors play an important role in determining
the expectations of market traders as to likely future exchange rates.
A market with a large number of consumers with low living standards will have a
relatively large market when measured in economic terms.
Transformation from centrally planned command economies to market-based
economies can be attributed to the fact that command and mixed economies failed to
deliver the sustained economic performance achieved by countries adopting
market-based systems.
Product liability sets certain safety standards to which a product must adhere.
Bureaucratic control involves personal contact with subordinates.
Import agents are typically limited to independent trading houses.
Organizational structure refers to the totality of a firm’s organization.
A well-functioning market economy requires laws protecting private property rights and
providing mechanisms for contract enforcement.
Judges under a civil law system have more flexibility than those under a common law
system.
Mergers and acquisitions are quicker to execute than greenfield investments.
The cost of microprocessors continues to fall, while their power increases. This
statement supports the predictions made by Moore’s Law.
Since the late 1980s, there has been a strong move away from a more free market
economic model and toward a more centrally planned and mixed economies.
By using the global capital market, investors have a much wider range of investment
opportunities than in a purely domestic capital market.
Mass customization facilitates product customization at low costs.
The product life-cycle theory argues that the developing nations will not produce a
product if the product is highly standardized.
An expatriate manager is a citizen of one country who is working abroad in one of the
firm’s subsidiaries.
A decentralized organization allows managers to respond to environmental changes
more quickly than in a centralized organization.
Gold was declared as the formal reserve asset in the Jamaica agreement of 1976.
For the home country, the current account of the balance of payments improves if the
purpose of the foreign investment is to serve the home market from a low-cost
production location.
Other things being equal, a firm should locate its various manufacturing activities
where the relative factor costs are conducive to the performance of those activities.
Milton Friedman’s basic position is that the only social responsibility of business is to
increase profits, so long as the company stays within the rules of law.
The Foreign Corrupt Practices Act originally allowed “facilitating payments” to secure
contracts that would not otherwise be secured.
Small-scale entry allows a firm to learn about a foreign market while limiting the firm’s
exposure to that market.
Performance ambiguity lowers the cost of control.
Acquisitions rarely produce disappointing results.
According to Porter, the way to create superior value is to drive down the cost structure
of the business and/or differentiate the product in some way so that consumers value it
more.
Firms may choose an ethnocentric approach to staffing as opposed to a polycentric
approach because of the cost savings it promotes.
Mores are:
A. the norms that are seen as central to the functioning of a society and its social life.
B. the routine conventions of everyday life.
C. abstract ideas about what a group believes to be right, good, and desirable.
D. the social rules and guidelines that prescribe appropriate behavior in particular
situations.
Which of the following will help a company hedge against currency fluctuations?
A. Finding a large supplier to supply all the raw materials
B. In-house manufacturing of raw materials
C. Basing business in a single country
D. Dispersing production to different geographic locations
Which of the following is the most widely practiced theocratic legal system in the
world today?
A. Hindu law
B. Sikh law
C. Islamic law
D. Jewish law
According to the Buy America Act, if a company wishes to win a contract from a U.S.
government agency to provide some equipment, it must ensure that at least 51 percent
of the product by value is manufactured in the United States. This is an example of:
A. antidumping duties.
B. voluntary export restraints.
C. import quotas.
D. local content requirements.
While the hump-shaped relationship between income levels and pollution levels seems
to hold across a wide range of pollutants, _____ represent an important exception.
A. sulfur dioxide emissions
B. lead concentrations
C. carbon dioxide emissions
D. water quality standards
According to _____, the trade diversion effects of Mercosur outweigh its trade creation
effects.
A. Alexander Yeats
B. the majority of economists
C. Jacques Delors
D. the World Trade Organization
In a(n) ____, one party agrees to purchase goods and services with a specified
percentage of the proceeds from the original sale and this party can fulfill the obligation
with any firm in the country to which the sale is being made.
A. switch trade
B. offset
C. barter
D. buyback
According to the _____ view of FDI, MNEs extract profits from the host country and
take them to their home country, giving nothing of value to the host country in
exchange.
A. imperialist
B. conservative
C. free market
D. radical Radical writers see the MNE as a tool for exploiting host countries to the
exclusive benefit of their capitalist-imperialist home countries.
Assuming the 30-day forward exchange rate was $1 = ×130 and the spot exchange rate
was $1 = ×120, the dollar is selling at a _____ on the 30-day forward market.
A. premium
B. margin
C. discount
D. subsidy
The veil of ignorance was developed by _____ as part of his approach to justice
theories.
A. Milton Friedman
B. John Rawls
C. Kantian
D. Leon Sullivan
The individualism versus collectivism dimension of Hofstede’s study explored:
A. the extent to which different cultures socialized their members into accepting
ambiguous situations and tolerating uncertainty.
B. the relationship between gender and work roles.
C. how a society deals with the fact that people are unequal in physical and intellectual
capabilities.
D. the relationship between the individual and his/her fellows.
Because of inertia forces, _____ is often no change.
A. big bang change
B. cultural change
C. shock therapy change
D. incremental change
A strong _____, the organization’s norms and value systems, can help a firm to
implement its strategy.
A. corporate culture
B. human resources division
C. mission statement
D. beliefs systems
The “millennium round” ended in 1999 with:
A. a successful record on agricultural products.
B. a new agenda for the next round focusing on financial services.
C. no agreement on the reduction of barriers to cross-border trade and investment.
D. a decision to avoid FDI.
Unions’ bargaining power is:
A. largely derived from their ability to threaten to disrupt production.
B. rooted in their government backing.
C. largely derived from their ability to control corporate managers.
D. rooted in their financial resources.
Labor unions generally try to get better pay, greater job security, and better working
conditions for their members through collective bargaining with management. Unions’
bargaining power is derived largely from their ability to threaten to disrupt production,
either by a strike or some other form of work protest (e.g., refusing to work overtime).
A firm would prefer to buy component parts, or an entire product to:
A. make scheduling of adjacent processes easier.
B. maintain control over its proprietary technology.
C. accumulate dynamic capabilities within the organization.
D. reduce organizational complexity and cost structure.
Exchange rates are _____ under a pure “free float” system.
A. completely balanced
B. determined by market forces
C. wildly variable and unpredictable
D. determined by the government
In the _____, the philosophy is that responsibility for operating decisions pertaining to a
particular product should be shared by the product division and the various areas of the
firm.
A. worldwide product division structure
B. classic global matrix structure
C. worldwide area structure
D. knowledge network structure
Which of the following statements is true of export credit insurance?
A. Exporter will require more insurance if a letter of credit is used in transactions.
B. The FCIA provides coverage against commercial risks and political risks.
C. Private associations cannot offer export insurance in the United States.
D. Organizations do not receive coverage against political risks of global trade.
Currency fluctuations can make seemingly profitable trade and investment deals
unprofitable and vice versa.
The World Bank was established at the at Bretton Woods conference to:
A. establish an international monetary system.
B. promote general economic development.
C. establish gold standard across the world.
D. fund the initiatives of the United Nations.
Primary activities have to do with:
A. the logistics function.
B. the human resource function.
C. the design, creation, and delivery of the product.
D. company infrastructure.
Paul Krugman suggests that strategic trade policy aimed at establishing domestic firms
in a dominant position in a global industry is a beggar-thy-neighbor policy that:
A. provides enhanced protection for intellectual property of those firms.
B. boosts national income at the expense of other countries.
C. reduces domestic agricultural profits.
D. depletes national income to the benefit of other countries.
Which of the following is one of the two types of competitive pressure that affect the
ability of multinational enterprises to compete in the global marketplace?
A. Pressure for cost increases
B. Pressure for local responsiveness
C. Pressure for value creation
D. Pressure for increased profitability
BP, one of the world’s largest oil companies, has made it part of the company policy to
undertake “social investments” in the countries where it does business. There was no
economic reason for BP to make this social investment, but the company believes it is
morally obligated to give something back to the societies that have made their success
possible. BP’s actions are an example of:
A. cultural relativism.
B. the Friedman doctrine.
C. noblesse oblige.
D. the tragedy of the commons.
_____ can be viewed as the decision-making process regarding the raw materials,
work-in-process (component parts), and finished goods inventory for a multinational
corporation.
A. Global supply chain management
B. Global inventory management
C. Global corporate management
D. Global sourcing arrangements
A(n) _____ staffing policy can be expensive to implement because training an
relocation costs increase when transferring managers from one country to another.
A. geocentric
B. eurocentric
C. polycentric
D. ethnocentric
Hofstede’s results, as might be expected, showed that nations such as _____ scored low
on long-term orientation.
A. the United States and Canada
B. Denmark and Sweden
C. Japan and Thailand
D. Great Britain and Mexico
The value of a product to an average consumer is V; and the average price that the firm
can charge a consumer for that product is P. Here, V – P can be termed as:
A. consumer surplus per unit.
B. producer surplus per unit.
C. profit growth.
D. profit per unit sold.
Which of the following statements is true of the use of information technology in
financial services?
A. Information technology prevents the spread of financial crises.
B. Financial services are an information-intensive industry.
C. Financial services do not use decisions making systems.
D. It does not require to process large volumes of information.
_____ are transacted between international businesses and their banks, between banks,
and between governments when it is desirable to move out of one currency into another
for a limited period without incurring foreign exchange risk.
A. Carry trades
B. Currency swaps
C. Arbitrages
D. Currency pairing
What kind of retail systems do rural India and China have?
A. Fragmented
B. Direct
C. Indirect
D. Concentrated
How can a firm increase its profitability?
Discuss the impact of technological change on global markets.
What are the implications of cultural differences for international businesses?
What is a joint venture? What type of joint venture is most common?
Discuss the infant industry argument for intervention in markets.
For a product development team to function effectively and meet all its development
milestones, the team should be composed of at least one member from each key
function.
Briefly differentiate between constant returns to specialization and diminishing returns
to specialization.
Discuss the creation of a global web of value creation activities.
Explain what is meant by the globalization of markets.
What are the typical problems that novice exporters face when trying to export?
What are the arguments for standardized advertising across international markets?
Explain Eurobonds with an example.
Discuss the arguments that favor a floating exchange rate system against a fixed
exchange rate system.
Discuss the issues involved in unfreezing an organization.
What are the possible adverse effects of FDI on a host country’s balance-of-payments
position?